Grant Thornton DRAFT Audit Findings - Slough Council 2021

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DRAFT
The Audit Findings

for Slough Borough Council
Year ended 31 March 2019
9 May 2021
© 2021 Grant Thornton UK LLP | Audit Findings Report for Slough Borough Council | 2018/19
DRAFT
Contents
Section Page
1. Status of the audit and key headlines 3

2. Financial statements 5
3. Independence and Ethics 25
4. Value for Money 27
Your key Grant Thornton Appendices

team members are:
A. Action plan
Julie Masci B. Audit adjustments
Engagement Lead
C. Fees
T: 020 2034 7506
E: [email protected]
Tina James
Audit Manager
T: 020 7728 3307
E: [email protected]
The contents of this report relate only to those matters which came to our attention during the conduct of our normal audit procedures which are designed for the purpose of expressing
our opinion on the financial statements. Our audit is not designed to test all internal controls or identify all areas of control weakness. However, where, as part of our testing, we identify
control weaknesses, we will report these to you. In consequence, our work cannot be relied upon to disclose all defalcations or other irregularities, or to include all possible improvements
in internal control that a more extensive special examination might identify. This report has been prepared solely for your benefit and should not be quoted in whole or in part without our
prior written consent. We do not accept any responsibility for any loss occasioned to any third party acting, or refraining from acting on the basis of the content of this report, as this report
was not prepared for, nor intended for, any other purpose.
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© 2021 Grant Thornton UK LLP | Audit Findings Report for Slough Borough Council | 2018/19 2
DRAFT
Status of the audit and key headlines
This table summarises the key findings and other matters arising from the statutory audit of Slough Borough Council (‘the Council’) and the preparation of the Council's financial
statements for the year ended 31 March 2019 for those charged with governance.
Financial Under International Standards of Audit (UK) Status of the audit

Statements (ISAs) and the National Audit Office (NAO) Code This report provides a further update to the draft audit findings report issued to Audit Committee members at its
of Audit Practice ('the Code'), we are required to committee meeting on 3 August 2020 and 4 March 2021. Since that report, the Council has been working with
report whether, in our opinion, the Council's us to conclude the outstanding matters reported at that meeting. A key aspect of the outstanding areas was to
financial statements: provide us with an updated set of Council and Group financial statements that reflected the adjustments arising
• give a true and fair view of the financial from the audit, as well as updating the accounts to address a number of disclosure corrections and omissions
position of the Council and its income and to ensure the accounts appropriately complied with the 2018-19 CIPFA Code of Local Authority accounting
expenditure for the year; and (the Code).
• have been properly prepared in accordance
with the CIPFA/LASAAC code of practice on Following further discussions with Audit Committee at its meeting on 10 December 2020, we set out in a letter
local authority accounting and prepared in to the Chair of Audit Committee, dated 18 December 2020, our proposed roadmap and timetable for the
accordance with the Local Audit and receipt of updated financial statements from the Council and our review thereof. This was subsequently
Accountability Act 2014. circulated to all Audit Committee members. Weekly meetings have been held with the S151 officer, the chair
We are also required to report whether other of Audit Committee and the Leader of the Council, to review and monitor progress with the preparation of the
information published together with the audited updated financial statements.
financial statements (including the Annual Whilst our work is nearing conclusion, this is subject to completion of audit procedures in relation to the
Governance Statement (AGS), Narrative following:
Report), is materially inconsistent with the
• review of the group consolidation working papers from Council officers;
financial statements or our knowledge obtained
in the audit or otherwise appears to be materially • review of final financial statements with agreed adjustments and disclosure amendments processed;
misstated. • review of management’s updated going concern assessment following 4 March 2021 audit committee;
• receipt of signed management representation letter;
• Completion of final internal review processes.
Key headlines
Our findings are summarised on pages 6 to 24. As previously reported, our audit work has identified a number
of adjustments to the financial statements. Audit adjustments confirmed to date are detailed in Appendix C.
We have also raised a number of recommendations for management as a result of our audit work in Appendix
A. We have concluded that the other information to be published with the financial statements is consistent
with our knowledge of your organisation and the financial statements we have audited.
DRAFT
Headlines
This table summarises the key findings and other matters arising from the statutory audit of Slough Borough Council (‘the Council’) and the preparation of the Council's financial
statements for the year ended 31 March 2019 for those charged with governance.
Value for Money Under the National Audit Office (NAO) Code We have completed our risk based review of the Council’s value for money arrangements. On the basis of our
arrangements of Audit Practice ('the Code'), we are work, having regard to the guidance on the specified criterion issued by the Comptroller and Auditor General in
required to report if, in our opinion, the November 2017, because of the significance of the matters described below and later in our report, we are not
Council has made proper arrangements to satisfied that, in all significant respects Slough Borough Council put in place proper arrangements for securing
secure economy, efficiency and economy, efficiency and effectiveness in its use of resources for the year ended 31 March 2019, this is due to:
effectiveness in its use of resources ('the • Inadequate arrangements in place to understand and use appropriate and reliable financial and performance
value for money (VFM) conclusion’). information to support informed decision making and performance management in relation to Slough
Children's Services Trust
• Significant weaknesses in processes for preparing both the 2017-18 financial statements (which took place
during 2018-19), and ongoing weaknesses in the arrangements to prepare the 2018-19 financial statements
resulting in a number of material adjustments and disclosure corrections.
• Since our last report, in light of the impact of Covid 19 on the future financial position of the Council, coupled
with the impact of a recent business rate appeal and the ongoing discussions with Department for Education
on the recoverability of financial support to Slough Children’s Trust, the Council has recently sought further
financial support through MHCLG and is awaiting final conclusions from this request. This coupled with
further adjustments required to the Council’s reserves arising from the audit, gives indication that general
fund reserve levels (both earmarked and unearmarked) are at unsustainably low levels requiring action from
the Council. We therefore anticipate issuing an adverse qualified value for money conclusion. Our findings
are summarised on pages 27 to 35.
Statutory duties The Local Audit and Accountability Act 2014 As a result of the significant challenges experienced to prepare Code compliant accounts for 2018-19, coupled
(‘the Act’) also requires us to: with the wider findings of the audit and increasingly challenging financial position for the Council, we have
• report to you if we have applied any of concluded that it is appropriate for us to use our powers to make written recommendations under section 24 of
the additional powers and duties ascribed the Act.
to us under the Act; and This is due to inadequate arrangements and insufficient skills and capacity at the Council to prepare reliable
• To certify the closure of the audit. financial statements and supporting working papers. In addition, we identify concerns regarding the Council’s
financial sustainability and levels of reserves and weaknesses in the Council’s financial governance, monitoring
and controls in relation to its Group entities.
Further details of these recommendations are set out in a separate accompanying report to the Council.
Financial statements DRAFT

Summary
• An evaluation of the components of the group based on a measure of materiality
Overview of the scope of our audit considering each as a percentage of the group’s gross revenue expenditure to assess
This Audit Findings Report presents the observations arising from the audit that are the significance of the component and to determine the planned audit response.
significant to the responsibility of those charged with governance to oversee the financial • Substantive testing on significant transactions and material account balances, including
reporting process, as required by International Standard on Auditing (UK) 260 and the the procedures outlined in this report in relation to the key audit risks
Code of Audit Practice (‘the Code’). Its contents have been discussed with management.
We have made updates to our risk assessment from our audit plan, as communicated to
As auditor we are responsible for performing the audit, in accordance with International you on 24 April 2019, to reflect an additional risk identified in respect of our work for our
Standards on Auditing (UK) and the Code, which is directed towards forming and Value for Money conclusion. Further details of the additional risks identified are set out on
expressing an opinion on the financial statements that have been prepared by page 28.
management with the oversight of those charged with governance. The audit of the
financial statements does not relieve management or those charged with governance of We have reported separately on the IT review undertaken. The report included a number of
their responsibilities for the preparation of the financial statements. recommendations relating to security vulnerabilities, penetration testing and account
management. This review was undertaken whilst IT services were provided by an external
Audit approach provider and we understand that the service has since been brought in-house.
Our audit approach was based on a thorough understanding of the group and Council’s Conclusion
business and is risk based, and in particular included:
We have substantially completed our audit of your financial statements and subject to
• An evaluation of the Council’s internal controls environment, including its IT systems outstanding queries being resolved, we will be able to conclude our audit work and issue
and controls; and the audit opinion. These outstanding items are listed on page 3.
Our approach to materiality

The concept of materiality is fundamental to the preparation of the financial statements and Materiality calculations remain the same as reported in our audit plan. We detail in the
the audit process and applies not only to the monetary misstatements but also to disclosure table below our determination of materiality for Slough Borough Council.
requirements and adherence to acceptable accounting practice and applicable law.
Council Amount (£) Group Amount (£) Qualitative factors considered
Materiality for the financial statements 5,980,000 5,982,000 This has been calculated based upon 1.5% of your prior year
gross expenditure
Performance materiality 3,588,000 3,589,000 This has been calculated as 60% of headline materiality, based
upon our assessment of the likelihood of a material misstatement
in the financial statements
Trivial matters 299,000 299,000 This has been calculated based upon 5% of headline materiality.
Financial Statements DRAFT

Significant findings – audit risks
Risks identified in our Audit Plan Commentary
Improper revenue recognition Auditor commentary
Under ISA (UK) 240 there is a rebuttable presumed risk that revenue may
be misstated due to the improper recognition of revenue. We have:
• evaluated the group’s accounting policy for recognition of income from Other Fees and Charges,
For Slough Borough Council, we have concluded that the greatest risk of Grants, and Contracts for appropriateness;
material misstatement relates to Other Fees and Charges income. We
have therefore identified the occurrence and accuracy of Other Fees and • gained an understanding of the Council's system for accounting for income from Other Fees and
Charges, Grants, and Contract income as a significant risk, which was one Charges, Grants, and Contracts and evaluate the design of the associated controls;
of the most significant assessed risks of material misstatement, and a key
audit matter. • agreed, on a sample basis, amounts recognised as income from Other Fees and Charges,
We have rebutted this presumed risk for the other revenue streams of the Grants and Contracts in the financial statements to supporting documents.
group and Council because:
• Other income streams are primarily derived from formula based income Our detailed testing is complete, however we are awaiting the Council’s final assessment to
from central government and tax payers; and demonstrate how they have adequately assessed the impact of IFRS 15 on the preparation of
• opportunities to manipulate revenue recognition are very limited. the Council and Group financial statements.
Management override of controls Auditor commentary

Under ISA (UK) 240 there is a non-rebuttable presumed risk that the risk We have performed the following work:
of management over-ride of controls is present in all entities. The Council • evaluate the design effectiveness of management controls over journals;
faces external scrutiny of its spending and this could potentially place
management under undue pressure in terms of how they report • analyse the journals listing and determine the criteria for selecting high risk unusual journals;
performance.
We therefore identified management over-ride of controls, in particular • test unusual journals recorded during the year and after the draft accounts stage for
journals, management estimates and transactions outside the normal appropriateness and corroboration;
course of business as a significant risk requiring special audit
consideration. • gain an understanding of the accounting estimates and critical judgements applied made by
management and consider their reasonableness with regard to corroborative evidence;
• evaluate the rationale for any changes in accounting policies, estimates or significant unusual
transactions.
Our testing has not identified any issues in relation to this risk.

Valuation of investment property (Annual Auditor commentary
valuation) We have completed the following work:
The group revalues its investment property on an • evaluated management's processes and assumptions for the calculation of the estimate, the instructions issued to the
annual basis to ensure that the carrying value is not valuation experts and the scope of their work;
materially different from the current value of fair
value at the financial statements date. This valuation • evaluated the competence, capabilities and objectivity of the valuation expert;
represents a significant estimate by management in • wrote to the valuer to confirm the basis on which the valuations were carried out;
the financial statements due to the size of the
• challenged the information and assumptions used by the valuer to assess completeness and consistency with our
umbers involved and the sensitivity of this estimate
understanding;
to changes in key assumptions
• tested, on a sample basis, revaluations made during the year to ensure they have been input correctly into the
Management have engaged the services of a valuer
Council's asset register;
to estimate the current value as at 31 March 2019.
• evaluated the assumptions made by management for any assets not revalued during the year and how management
We therefore identified valuation of investment
has satisfied themselves that these are not materially different to current value.
property, particularly revaluations and impairments,
as a significant risk, which was one of the most Our audit work identified an error in the accounting for an asset purchased in 2017/18 which has resulted in a material
significant assessed risks of material misstatement. prior period adjustment to the 2018-19 financial statements. The Council acquired land located at Thames Valley
University campus on 5 April 2017 for a total purchase price of £24.2 million. The terms of the purchase were that this
purchase would be paid for by the Council in the following three instalments:
• £8.069 million on date of completion (5 April 2017)
• £8.069 million one year after completion
• £8.069 million two years after completion.
At initial recognition in 2017-18, the asset should have been recorded in the fixed asset records of the Council at its full
purchase price of £24.2 million, with a corresponding creditor, split between short term and long term, to reflect the
outstanding payments due in future periods. Our work has identified that only the value of the initial payment instalment
had been recognised in the 2017-18 financial statements, therefore resulting in the need for a prior year restatement to
correct the assets values and creditor balances recorded in the prior year accounts and remove the second instalment
payment from additions in the 2018-19 accounts.
Furthermore, in accordance with LG Accounting Code, investment properties are held at fair value and should be reviewed
on an annual basis to determine its fair value. Our work identified that the site acquired at Thames Valley University has
been recorded in the fixed asset records of the Council at a fair value of £9.8m. Upon further investigation and enquiries
with the council and the valuer, this was due to the valuer only being notified of the initial £8.069 acquisition payment and
consequently has resulted in a material misstatement of the fair value recorded in the financial statements.
The Council received a revised valuation on 23 July 2020 and adjustments have been processed in the 2017-18 and
2018-19 accounts to correct this error.
We have made a recommendation in relation to this risk. Further details can be found on page 42.

Valuation of property, plant and equipment (rolling Auditor commentary
revaluation) We have completed the following work:
The group revalues its land and buildings on an rolling five • Reviewed management's processes and assumptions for the calculation of the estimate, the instructions
year basis. This valuation represents a significant estimate issued to valuation experts and the scope of their work
by management in the financial statements due to the size of
the numbers involved and the sensitivity of this estimate to • Evaluated the competence, expertise and objectivity of any management experts used.
changes in key assumptions. Additionally, management will • Discussed with the valuer the basis on which the valuation is carried out and challenge the key assumptions.
need to ensure the carrying value in the Authority and group
• Reviewed and challenged the information used by the valuer to ensure it is robust and consistent with our
financial statements is not materially different from the
understanding.
current value or the fair value (for surplus assets) at the
financial statements date, where a rolling programme is • Tested revaluations made during the year to ensure they are input correctly into the Council's asset register
used. • Evaluated the assumptions made by management for those assets not revalued during the year and how
We therefore identified valuation of land and buildings, management has satisfied themselves that these are not materially different to current value
particularly revaluations and impairments, as a significant We have made a recommendation in relation to this risk. Further details can be found on page 42.
risk, which was one of the most significant assessed risks of
material misstatement.

Property Plant and Equipment - Incomplete or inaccurate Auditor commentary
Financial information transferred to the general ledger We have completed the following work:
In January 2019, the Council implemented an opening • complete an information technology (IT) environment review by our IT audit specialists to document, evaluate
balances exercise on the Property, Plant and Equipment and test the IT controls operating within the general ledger system; and
balances for the 2018/19 financial year. When implementing
this exercise, it is important to ensure that sufficient controls • map the closing balances from the 2017/18 general ledger to the opening balance position in the new ledger
have been designed and operate to ensure the integrity of the for 2018/19 to ensure accuracy and completeness of the financial information.
data. There is also a risk over the completeness and During the audit the finance team notified us that a number of adjustments relating to 2018/19 had not been
accuracy of any data transfer from the previous ledger processed prior to the production of the year end financial statements. These included:
system.
• The removal of Arbour Vale School and associated land which became an academy in November 2018
We therefore identified the completeness and accuracy of the
• Reclassification of two tower blocks and a leisure centre which are scheduled for demolition to surplus assets
transfer of revised financial information to the general ledger
system as a significant risk, which was one of the most • A leisure centre which became operational in year needed to be reclassified from assets under construction to
significant assessed risks of material misstatement. operational assets
Our audit work identified assets included in the fixed asset register which were fully depreciated and should be
written out of the register and accounts.
We have made a recommendation in relation to this risk. Further details can be found on page 42.

Valuation of pension fund net Auditor commentary
liability We have completed the following work:
The Council's pension fund net liability, • update our understanding of the processes and controls put in place by management to ensure that the Council’s pension fund net
as reflected in its balance sheet as the liability is not materially misstated and evaluate the design of the associated controls;
net defined benefit liability, represents a • evaluate the instructions issued by management to their management expert (an actuary) for this estimate and the scope of the
significant estimate in the financial actuary’s work;
statements and group accounts.
• assess the competence, capabilities and objectivity of the actuary who carried out the Council’s pension fund valuation;
The pension fund net liability is • assess the accuracy and completeness of the information provided by the Council to the actuary to estimate the liability;
considered a significant estimate due to • test the consistency of the pension fund asset and liability and disclosures in the notes to the core financial statements with the
the size of the numbers involved and the actuarial report from the actuary;
sensitivity of the estimate to changes in
key assumptions. • undertake procedures to confirm the reasonableness of the actuarial assumptions made by reviewing the report of the consulting
actuary (as auditor’s expert) and performing any additional procedures suggested within the report;
We therefore identified valuation of the • agree any advance payment made to the pension fund during the year to the expected accounting treatment and relevant financial
Council’s pension fund net liability as a disclosures;
significant risk, which was one of the • obtain assurances from the auditor of Berkshire Pension Fund as to the controls surrounding the validity and accuracy of
most significant assessed risks of membership data, contributions data and benefits data sent to the actuary by the pension fund and the fund assets valuation in the
material misstatement, and a key audit pension fund financial statements.
matter.
The net pension liability presented in the first draft of the financial statements did not include consideration of the impact of McCloud
judgement.
The McCloud judgement, during the year The Court of Appeal has ruled that there was age discrimination in the judges and
firefighters pension schemes where transitional protections were given to scheme members. The Government applied to the Supreme
Court for permission to appeal this ruling, but this permission to appeal was unsuccessful. Additional detail can be found on page 17.
The Council commissioned a revised actuary report to include the impact of McCloud and this will be updated in the final version of
the financial statements.
During the process of agreeing the disclosures to the information in the actuary's report it was noted that the disclosure was
presenting some information on a net basis rather than the gross basis within the report. This was discussed with the finance team
and the disclosure was agreed to be amended.
In addition, non-trivial adjustments have been made within the 2018/19 movements which related to the final prior position but which
were not processed in the 2017/18 accounts. We have assessed the value of these adjustments and considered if a prior period
adjustment is required. As these below materiality this is not required and we are satisfied that adjustment in 2018/19 is appropriate.
We have now received assurances from the auditor of Berkshire Pension Fund to enable us to conclude our work for this
risk area.

Valuation, classification and ownership of investments Auditor commentary
Lender Option, Borrower Option (LOBO) loans are complex We have completed the following work:
with terms that can be non standard, including inverse • assessed management’s processes and assumptions for identifying critical judgements;
floating interest rates. Management need to consider the
terms of the loan agreements of these loans and make • gained an understanding of the processes and the controls put in place by management to ensure that the
judgements as to the appropriate accounting treatment. Last loans were not materially misstated and evaluate the design of the associated controls;
year, clarification was issued by CIPFA in relation to the • evaluated the competence, capabilities and objectivity of management experts used in the valuation of the
accounting for LOBO loans. loans;
The Council holds LOBO loans (PY: fair value of £13m in • discussed with management the basis on which the valuation was carried out, including advice received from
2017/18) and has made a critical judgement regarding the treasury management advisers;
accounting treatment and valuation of these loans during the
• evaluated and challenged the reasonableness of the critical judgements and significant assumptions used by
year.
management and their expert in valuing and accounting for the loans.
We therefore identified the valuation and accounting for these
LOBO loans as a significant risk, which was one of the most
Our audit work has not identified any issues in respect of the treatment and valuation of LOBOs
significant assessed risks of material misstatement.

Private Financial Initiatives (PFI) Scheme Auditor commentary
The Council entered into a PFI contract for the design, build We have completed the following work:
and operation of three schools in 2006/07. • review the Council’s PFI model and assumptions therein to inform our audit approach;
The PFI assets are recognised as Property, Plant and • agree the balances in the financial statements to these models;
Equipment within the Council’s balance sheet.
• review the basis of the Council’s accounting treatment and valuation for the PFI schemes;
Accounting for PFI is complex and the transactions are
significant. In addition, the monitoring of the contract is a key • discuss with key group personnel, the underlying substance of the transactions and the judgements made.
requirement for the Authority.
There is a risk that Property, Plant and Equipment may be Our audit work has not identified any issues in respect of the treatment and valuation of PFIs
misstated due to improper valuations and accounting of PFI
schemes in year. We therefore identified the accounting
transactions associated with the PFI model as a significant
risk, which was one of the most significant assessed risks of
material misstatement.

Presentation and Disclosure – Financial Auditor commentary
Statement Level Risk We have completed the following work:
In 2017/18 a significant number of • considered the Council’s arrangements for preparing the financial statements and working papers;
weaknesses and misstatements were
identified in respect of the group’s • discussed with key group personnel, the underlying substance of the transactions and judgements made;
arrangements for preparing the financial • critically assessed the financial statements in accordance with the Code, International Financial Reporting Standards (IFRSs)
statements and working papers. and other relevant accounting guidance;
There is a financial statement level risk that • mapped the closing balances from the 2017/18 general ledger to the opening balance positions in the new ledger for 2018/19
the financial statements may be misstated to ensure accuracy and completeness of the financial information;
due to weaknesses identified. We therefore
• considered the action plan presented to Audit and Corporate Governance Committee and consider progress made by
identified the presentation and disclosure of
Officers against this plan in the preparation of the 2018-19 financial statements.
the financial statements as a significant risk,
which was one of the most significant Our audit work in 2018/19 has identified a number of control deficiencies and misstatement in similar areas that were identified in
assessed risks of material misstatement. the prior year issues were identified with lack of an audit trail between the notes in the accounts and the underlying trial balance
in part due to the use of the CIPFA accounts production process (Big Red Button). In addition, the cashflow statement did not
balance and due to the accounts production process the audit trail of movements was not easily determined.
There is still significant scope for improvement in the quality of the financial statements and in particular the underlying working
papers.
Our audit has identified a number of misstatements in the same areas that were materially misstated in the prior year, including a
material understatement of income and expenditure as a result of income being misclassified as HRA grant income when it was
related to expenditure and misstatements in the PPE balances which impact the prior year.
The short term creditors listing was on a transactional basis which meant there is no year-end Short Term Creditor listing which
can be reviewed for reasonableness.
The capital commitments note has been produced based on the Council’s approved capital programme. This is not in line with
the Code which requires that the disclosure represents the contractual commitments the Council has entered into at the year
end. We have requested that management add disclosure to this effect in the note and review the process for its production for
future years.
The Full Time Equivalent report requested had to be run more than once before it was accurate and complete.
The draft accounts did not include the third balance sheet required due to the prior period adjustment and this was not included
in the draft until the third version was provided in January 2020.
We have made a number of recommendations in relation to this risk. Further details can be found in the action plan in
Appendix A.

Significant findings arising from the group audit
Group Accounts Auditor commentary
The Council is required to prepare group financial statements that We have completed the following work:
consolidate the financial information of its wholly owned subsidiary • reviewed the key agreements to gain an understanding of the agreements put in place on the
undertaking, James Elliman Homes Limited (JEH). establishment of the company;
The Council has a 50% interest in Slough Urban Renewal (SUR), a • discussed with key group personnel, the underlying substance of the transactions and the basis of the
Limited Liability Partnership. Activity increased significantly in group’s proposed accounting treatment of the arrangements;
2017/18; the Council will need to consider whether the entity will be
consolidated into Group Accounts in 2018/19. • critically assessed the economic substance of the transactions to assess the appropriateness of the
accounting treatment adopted by the group in accordance with the Code, International Financial
The Council has a wholly owned subsidiary, Development Initiative Reporting Standards (IFRSs) and other relevant accounting guidance;
for Slough Housing Company Ltd. During 2017/18 the Council
established Herschel Homes Limited which is currently dormant. • reviewed the Group structure of the Council;
In 2017/18 Slough Urban Renewal was not consolidated due to the • obtained an copy of the Group materiality assessment to be prepared by the Council; and
quantitative and qualitative aspects were not considered to be • reviewed the qualitative and quantitative materiality of the Council’s subsidiaries in relation to the
material by the Council. The Council will need to consider whether Council’s operations.
the subsidiary should be consolidated in the 2018/19 financial
We challenged management on the composition of the group and the basis for consolidation of the
statements.
companies included in the group accounts and those omitted including the consideration of the impact of
The consolidation of the subsidiary may give rise to a number of Slough Urban Renewal and James Elliman Homes’ accounts being produced under different accounting
material accounting transactions in the financial statements for frameworks. We requested that the disclosures relating to the group companies be amended to aid clarity
which the economic substance of the transactions needs to be to the user of the accounts.
considered.
During the course of our review and challenge of the Council’s group consolidation process, it was
We therefore identified the accounting transactions associated with identified that a substantial over accrual of anticipated profits from the Council’s interests in
the consolidation of Slough Urban Renewal as a significant risk, Slough Urban Renewal in both 2017-18 and 2018-19, totalling £7.573m overstating general fund
which was one of the most significant assessed risks of material reserves of this amount in the 2018-19 accounts.
misstatement.
Our audit work is nearing completion in this area. Work outstanding includes review of the final
group financial statements and confirmation of the consolidation adjustments.

Significant findings – key judgements and estimates
Summary of management’s policy Audit Comments Assessment
Land and Buildings – Other land and buildings comprises specialised • We have assessed the Council’s valuers, Wilks Head and Eve, to be 
Other assets such as schools and libraries, which are competent, capable and objective.
required to be valued at depreciated replacement • We have carried out completeness and accuracy testing of the underlying
cost (DRC) at year end, reflecting the cost of a information provided to the valuer used to determine the estimate . Our
modern equivalent asset necessary to deliver the work is still ongoing in this area as we are awaiting evidence of indicated
same service provision. The remainder of other floor areas for a number of properties.
land and buildings are not specialised in nature
and are required to be valued at existing use in • We have reviewed the consistency of the estimate against the report by the
value (EUV) at year end. The Council has auditor's expert, Gerald Eve, and reasonableness of the increase in the
engaged Wilks Head and Eve to complete the estimate.
valuation of properties as at 31 March 2019. • We have checked the General Fund valuation report to the Fixed Asset
Register and to the Statement of Accounts with some differences being
identified.
In addition, in light of the valuation issues identified during the course of the
2017-18 audit, the Council commissioned a further review and revaluation of
assets at 1 April 2018, and as a result, required a material restatement to the
opening PPE balances in the financial statements.
Assessment
 We disagree with the estimation process or judgements that underpin the estimate and consider the estimate to be potentially materially misstated
 We consider the estimate is unlikely to be materially misstated however management’s estimation process contains assumptions we consider optimistic
 We consider the estimate is unlikely to be materially misstated however management’s estimation process contains assumptions we consider cautious
 We consider management’s process is appropriate and key assumptions are neither optimistic or cautious

Significant findings – key judgements and estimates
Summary of management’s policy Audit Comments Assessment
Net pension The Council’s total net pension liability Our assessment of the estimate has considered:
liability – £326.9m at 31 March 2019 comprises £329.6m

• Assessment of management’s expert
(PY £307.4m) in relation to the Local
Government Pension Scheme as • Use of PWC as auditors expert to assess actuary and assumptions made by actuary. The
administered by Berkshire County assumptions employed by the actuary have been assessed as reasonable.
Council. This encompasses the
The Council uses Barnett Waddingham Assumption Actuary Value Assess
to provide actuarial valuations of the ment
Council’s assets and liabilities derived Discount rate 2.5% 
from these schemes. A full actuarial
valuation is required every three years. Pension increase rate 2.5% 
The latest full actuarial valuation was
completed in 2016. A roll forward
approach is used in intervening periods, Salary growth 4% 
which utilises key assumptions such as
life expectancy, discount rates, salary Mortality assumptions – longevity at 65 for current male 23.2 
growth and investment returns. Given pensioners (years)
the significant value of the net pension
fund liability, small changes in Mortality assumptions – longevity at 65 for future male 25.4 
assumptions can result in significant pensioners (years)
valuation movements.
Mortality assumptions – longevity at 65 for current 25.3 
female pensioners (years)
Mortality assumptions – longevity at 65 for future female 27.6 

pensioners (years)
• Completeness and accuracy of the underlying information used to determine the estimate
• Reasonableness of increase/decrease in estimate
• Adequacy of disclosure of estimate in the financial statements
We have now received our assurances from the auditor of the Berkshire Pension Fund, to
enable us to conclude our work in this area.
Assessment
 We disagree with the estimation process or judgements that underpin the estimate and consider the estimate to be potentially materially misstated
 We consider the estimate is unlikely to be materially misstated however management’s estimation process contains assumptions we consider optimistic
 We consider the estimate is unlikely to be materially misstated however management’s estimation process contains assumptions we consider cautious
 We consider management’s process is appropriate and key assumptions are neither optimistic or cautious

Significant findings – matters discussed with management
This section provides commentary on the significant matters we discussed with management during the course of the audit.
Significant matter Commentary

Significant events or transactions McCloud judgement Auditor view
that occurred during the year The Court of Appeal has ruled that there was age discrimination in the judges and We have reviewed the updated
firefighters pension schemes where transitional protections were given to scheme actuarial valuation and the
members. assumptions underpinning it, and
The Government applied to the Supreme Court for permission to appeal this ruling, but consider that the approach that has
this permission to appeal was unsuccessful. The case will now be remitted back to been taken to arrive at this estimate is
employment tribunal for remedy. reasonable.
The legal ruling around age discrimination (McCloud - Court of Appeal) has implications
not just for pension funds but also for other pension schemes where they have
implemented transitional arrangements on changing benefits.
The Council requested an updated net pension liability calculation from its actuary to
include the impact of the McCloud ruling. This has been updated in the liability reflected in
the final financial statements.
Accounting for pooled investment The new accounting standard, IFRS 9 Financial Instruments, was implemented from 1 Auditor view
funds April 2018. This required the Council to review the classifications and accounting Following an internal review by our
treatment of its investments. technical team and discussions with
The Council used its external advisor to provide support during this process. management and their investment
The review has resulted in the classification of pooled investment funds under IFRS 9 as advisors, it was agreed that the initial
‘fair value through other comprehensive income’. classification would be amended to
FVPL and the required adjustments
In our opinion IFRS 9 does not permit for these type of investments to be designated made to the accounts. These
under this classification. adjustments impact the Comprehensive
Income and Expenditure Statement
however due to the available statutory
override these do not impact the General
Fund.


Dedicated Schools Grant The Council recognise a deficit reserve of £7,197k within their Earmarked General Fund Auditor view
earmarked reserve Reserves balances in respect of their Dedicated Schools Grant deficit. • We discussed the Council’s current
From 2018/19, all local authorities with a cumulative Dedicated Schools Grant (DSG) deficit accounting treatment with management.
of 1% or more at the end of the financial year must submit a recovery plan to the Education Whilst the use of a negative earmarked
and Skills Funding Agency, showing how they will bring the deficit into balance in a three reserve is not good practice, the net Usable
year time frame. Reserves position is appropriately stated. We
A joint Department for Education and CIPFA statement released in June 2019 confirms that concluded on that basis that the Council’s
both parties are committed to working with other stakeholders to clarify the legal basis for, Usable Reserves are properly stated and that
and accounting treatment of, DSG deficits in time for the 2020/21 budget round and 2019/20 as such a user of the financial statements will
accounts closure. The Joint Statement also confirms that the CIPFA Local Authority be able to take an informed view of the
Accounting Panel (LAAP) considered the issue for 2018/19 and noted concerns regarding Council’s overall level of balances and
the presentation of an earmarked deficit DSG reserve, particularly given that there is not a reserves based on the information within the
clearly identified legislative basis for the ring-fencing of DSG deficits. statements.
Our view is that where overspends arise against Dedicated Schools Grant and are to be • We also requested that management enhance
carried forward as a call against the schools budget in future years, these should form part the disclosure of the accounting treatment
of the un-earmarked general fund. within their draft financial statements.
• We have discussed with management a
number of disclosure adjustments to reflect
the nature of the balance within reserves


Bank and cash We have carried out a detailed review of the working papers provided to support the cash Auditor view
and cash equivalents balance in the financial statements, including analyses of all bank • We have included a recommendation in
accounts and associated bank reconciliations. relation to bank reconciliations on page 39.
This involved a review of the process for inclusion and reconciliation of the school bank
accounts as well as the main council accounts.
The process for bank reconciliations applied by the Council is complex and utilises
numerous account codes within the ledger. During our review of the reconciliations we
identified a number of reconciling items which were several years old. The process makes
oversight of the bank position and accurate and complete reconciling items.
The use of balance sheet holding accounts which delay the posting process, weaken
controls over cash and has inevitably led to the significant delays in clearing old items. The
inconsistent use of ledger codes also adds to the confusion, e.g bank accounts that are not
(Miscellaneous) and cash in transit which isn't cash in transit in the usual sense (Accounting
Officers) but cash in transit through the ledger.


Loans to James Elliman The Council has made a drawdown facility available to the subsidiary, James Elliman Auditor view
Homes – accounting Homes (JEH), to help fund their capital programme with interest charged on part of the • Following an internal review by our technical
treatment and valuation balance and the remainder was provided interest free. As at 31 March 2019, £29.9m had team and discussions with management and
been provided in loans. their investment advisors, it was agreed that
The interest free loan element had been accounted for as ‘deemed equity’ and held at fair the accounting treatment and basis of
value. However, under Code requirements this should be treated as a soft loan and valued valuation would be amended and the required
as based on the discounted cashflows over the life of the loan. adjustments made to the accounts.
The Council reviewed the basis of the accounting and this resulted in the amendment to the
valuation and accounting of the loan. The Council used its external advisor to provide
support during this process.
The revised valuation for the JEH investment provided by management includes the
adjusted value for the soft loans to JEH and an additional valuation for the holding at fair
value which was not part of the original value in the draft accounts.

Significant findings - Going concern
Our responsibility
As auditors, we are required to “obtain sufficient appropriate audit evidence about the appropriateness of management's use of the going concern assumption in the preparation and
presentation of the financial statements and to conclude whether there is a material uncertainty about the entity's ability to continue as a going concern” (ISA (UK) 570).
Going concern commentary

Management's assessment process Auditor commentary
The Council’s accounts have been prepared on the going • As auditors, we are required to “obtain sufficient appropriate audit evidence about the appropriateness of
concern basis. Public sector bodies are assumed to be management's use of the going concern assumption in the preparation and presentation of the financial statements
going concerns where the continuation of the provision of a and to conclude whether there is a material uncertainty about the entity's ability to continue as a going concern”
service in the future is anticipated, as evidenced by (ISA (UK) 570).
inclusion of financial provision for that service in published • We have subjected the 2019/20 budget and high level revenue MTFP to 2020/21 to detailed scrutiny, and reviewed
documents. the planned savings proposals for 2019/20 and 2020/21 in our consideration of the appropriateness of
management’s use of the going concern assumption.
Concluding comments Auditor commentary

• Whilst we are satisfied that the going concern assumption remains appropriate, our work is still ongoing in this area
in light of the impact of Covid 19 on the future financial position of the Council, coupled with the impact of a recent
business rate appeal and the ongoing discussions with Department for Education on the recoverability of financial
support to Slough Children’s Trust.
• In addition, the Council has recently sought further financial support through MHCLG and is awaiting final
conclusions from this request. Management prepared a detailed going concern assessment discussed at the March
2021 Audit and Governance committee meeting and this has been revisited in light of further audit findings affecting
the Council’s reported financial position and useable reserves. An updated position will be considered at the May
2021 Audit and Governance Committee.

Other communication requirements
We set out below details of other matters which we, as auditors, are required by auditing standards and the Code to communicate to those charged with governance.
Issue Commentary
Matters in relation to fraud  We have previously discussed the risk of fraud with the Audit and Corporate Governance Committee. We have not been made aware
 of any other incidents affecting the financial statements in the period and no other issues have been identified during the course of our
audit procedures.
Matters in relation to related  We are not aware of any related parties or related party transactions which have not been disclosed
 parties
Matters in relation to laws and  You have not made us aware of any significant incidences of non-compliance with relevant laws and regulations and we have not
 regulations identified any incidences from our audit work.
Written representations  A letter of representation will be requested from the Council, at the conclusion of our work
  Specific representations will be sought requested from management in respect of the following:
 Confirmation of accuracy and completeness of group relationships
 Assumptions for key PPE valuation estimates
 Assumptions for Pension valuation estimates
 Recoverability of debtors
Confirmation requests from  We requested from management permission to send confirmation requests to investment fund managers and the Council’s banks and
 third parties institutions they have borrowings from. This permission was granted and the requests were sent. All requests were returned with
positive confirmation.
Audit evidence and  Based on work carried out to date, all information and explanations requested from management has been provided.
 explanations/significant
difficulties

Other communication requirements
We set out below details of other matters which we, as auditors, are required by auditing standards and the Code to communicate to those charged with governance.
Issue Commentary
Disclosures  Our review identified a number of adjustments which were required. These included:
  Group disclosures were amended to provide additional clarity to a reader of the accounts
 Capital Commitments disclosures included in the accounts are not in line with the Code requirements and we requested disclosure to this
extent to be added to the accounts
 In Note 30, the interim Director of Place & Development has received remuneration exceeding £150k but initially wasn’t named as required by
the Code
 A third balance sheet and related disclosures was required to reflect the prior period adjustment for property, plant and equipment
 the group notes for PPE did not agree to the Group balance sheet due to the omission of the consolidated values
 The disclosures in relation to the fair value of surplus assets were not sufficient to meet the requirements of the Code
 IFRS 15 disclosures were not adequately included in the financial statements

Other responsibilities under the Code
Issue Commentary
 Other information  We are required to give an opinion on whether the other information published together with the audited financial statements
(including the Annual Governance Statement and Narrative Report), is materially inconsistent with the financial statements or our
knowledge obtained in the audit or otherwise appears to be materially misstated.
No inconsistencies have been identified. We plan to issue an unmodified opinion in this respect.
 Matters on which we report by

exception
We are required to report on a number of matters by exception in a numbers of areas:
 If the Annual Governance Statement does not meet the disclosure requirements set out in the CIPFA/SOLACE guidance or is
misleading or inconsistent with the other information of which we are aware from our audit
 If we have applied any of our statutory powers or duties
We have nothing to report on these matters however we have yet to complete our final consistency checks on the final Annual
Governance Statement.
 Specified procedures for Whole

of Government Accounts
We are required to carry out specified procedures (on behalf of the NAO) on the Whole of Government Accounts (WGA) consolidation
pack under WGA group audit instructions.
As the Council exceeds the specified group reporting threshold of £500m we examine and report on the consistency of the WGA
consolidation pack with the Council's audited financial statements.
• Note that work is not yet completed and will be considered, once the audit of the financial statements has concluded.
Independence and ethics DRAFT

Independence and ethics
Ethical Standards and ISA (UK) 260 require us to give you timely disclosure of all significant matters that may bear upon the integrity, objectivity and independence of the firm or covered
persons (including its partners, senior managers, managers and network firms). In this context, we disclose the following to you:
 In this context, in writing our 2018-19 Audit Plan we needed to bring a specific issue to those charged with governance attention. Gray’s Inn Trading (GIT) Ltd is a group of companies
based in the Slough area. A separate special purpose vehicle, Ground Rent Estates (GRE) 5 Ltd, held by GIT Ltd, was acquired by Slough Borough Council on 8 March 2018. At the
time of purchase, Grant Thornton were responsible for the audit and tax services for GIT Ltd. Audit and tax compliance services had been provided by Grant Thornton during the
2016-17 financial year, including tax compliance work which commenced in January 2018, nearly three months prior to the 8 March 2018 acquisition date. In addition to the tax
compliance work, GT provided tax advice relating to the GRE 5 Ltd company transfer. No work was performed in respect of the 2017-18 year - the firm proposed to continue as the
auditor of GRE5 Ltd for 2017/18 but, in view of the acquisition by the Council of GRE5 Ltd, the firm ceased its tax and accounts preparation services for audit year 2017/18. There is
therefore no ongoing threat to independence as the firm will not be undertaking accounts preparation or tax work in future years.
 For the 2016-17 audit, all fees relating to the audit and tax computation work for the group (including that for GRE 5 Ltd) have been and will continue to be billed to the GIT Group. No
fees were billed to either GRE 5 Ltd or Slough Borough Council. The work is inconsequential to the Council (and is not consolidated within the financial statements of the Council)
and Grant Thornton had substantially completed, and billed, the majority of the work before Slough Borough Council acquired GRE 5 Ltd in March 2018. The only element of work
outstanding at the date of acquisition was the final sign off procedures, including the filing of year end accounts.
 No members of the Slough Borough Council audit team had any involvement with the GIT Ltd or GRE 5 Ltd audit and tax services.
 Following the subsequent discussions with our Head of Ethics, it has been agreed that there is no ongoing conflict of interest and there is no impact upon our independence and
objectivity of the audit of either the Council or the company as the firm ceased its tax and accounts preparation services for the audit year 2017-18. There is therefore no ongoing
threat to independence as Grant Thornton will not be undertaking accounts preparation or tax work in 2018-19 or in future years. Grant Thornton has fully reported the circumstances
to Slough Borough Council and consulted with PSAA on 12 July 2018. PSAA has confirmed that they support this conclusion.
 We are reporting this matter to those charged with governance as required under the Financial Reporting Council Ethical Standard to ensure that they are fully appraised of the
situation.
We confirm that we have implemented policies and procedures to meet the requirements of the Financial Reporting Council’s Ethical Standard and we as a firm, and each covered
person, confirm that we are independent and are able to express an objective opinion on the financial statements.
Further, we have complied with the requirements of the National Audit Office’s Auditor Guidance Note 01 issued in December 2017 which sets out supplementary guidance on ethical
requirements for auditors of local public bodies.
Independence and ethics DRAFT

Independence and ethics
We confirm that there are no significant facts or matters that impact on our independence as auditors that we are required or wish to draw to your attention. We have complied with the
Financial Reporting Council's Ethical Standard and confirm that we, as a firm, and each covered person, are independent and are able to express an objective opinion on the financial
statements
We confirm that we have implemented policies and procedures to meet the requirements of the Financial Reporting Council’s Ethical Standard and we as a firm, and each covered
person, confirm that we are independent and are able to express an objective opinion on the financial statements.
Further, we have complied with the requirements of the National Audit Office’s Auditor Guidance Note 01 issued in December 2017 which sets out supplementary guidance on ethical
requirements for auditors of local public bodies.
Details of fees charged are detailed in Appendix D
Audit and Non-audit services

For the purposes of our audit we have made enquiries of all Grant Thornton UK LLP teams providing services to the Council. The following non-audit services were identified, as well
as the threats to our independence and safeguards that have been applied to mitigate these threats.
Fees £ Threats identified Safeguards

Audit related
Teachers Pensions Return 5,000 Self-Interest (because The level of this recurring fee taken on its own is not considered a significant threat to independence as the fee
Certification work this is a recurring fee) for this work is not significant in comparison to the total fee for the audit and in particular is not significant
relative to Grant Thornton UK LLP’s turnover overall. Further, it is a fixed fee and there is no contingent element
to it. These factors all mitigate the perceived self-interest threat to an acceptable level.
Housing Benefit Subsidy 95,000 Self-interest This engagement is for the provision of a report of factual findings in respect of the local authority's form
certification work Self-review MPF720A. There is no direct impact on the Housing Benefit income and expenditure figures in the financial
statements and there is a very low risk of the work leading to any need for future restatement of the accounts.
The Housing Benefit subsidy engagement does not impact on our independence, objectivity or integrity in
respect of the audit of the financial statements of the local authority.
Non Audit
CFO insights subscription 10,000 Self interest We have provided subscription services only; any decisions are made independently by the Council. The work is
undertaken by a team independent to the audit team.
Value for Money DRAFT

Value for Money
Background to our VFM approach Risk assessment
We are required to satisfy ourselves that the Council has made proper arrangements for We carried out an initial risk assessment in January 2020 and identified a three
securing economy, efficiency and effectiveness in its use of resources and report by significant risks in respect of specific areas of proper arrangements using the
exception where we are not satisfied. This is known as the Value for Money (VFM) guidance contained in AGN03. We communicated these risks to you in our Audit Plan
conclusion. dated January 2020.
Our risk assessment is a dynamic process and we have had regard to new
We are required to carry out sufficient work to satisfy ourselves that proper arrangements information which emerged since we issued our Audit Plan, we identified the
are in place at the Council. In carrying out this work, we are required to follow the NAO's additional significant risk as a result:
Auditor Guidance Note 3 (AGN 03) issued in November 2019. AGN 03 identifies one single
criterion for auditors to evaluate: • Slough Children’s Services Trust (SCST) provides the Council’s children’s social
care services. We identified the possible failure of SCST due to its deteriorating
“In all significant respects, the audited body takes properly informed decisions and deploys financial position and ability to manage demand as a significant risk.
resources to achieve planned and sustainable outcomes for taxpayers and local people.” We carried out further work only in respect of the significant risks we identified from
This is supported by three sub-criteria, as set out below: our initial and ongoing risk assessment. Where our consideration of the significant
risks determined that arrangements were not operating effectively, we have used the
examples of proper arrangements from AGN 03 to explain the gaps in proper
arrangements that we have reported in our VFM conclusion.
Informed
decision
making
Value for
Money
arrangements
criteria
Working Sustainable
with partners resource
& other third deployment
parties

Value for Money
Our work Overall conclusion
AGN 03 requires us to disclose our views on significant qualitative aspects of the Council’s Based on the work we performed to address the significant risks, having regard to the
arrangements for delivering economy, efficiency and effectiveness. guidance on the specified criterion issued by the Comptroller and Auditor General in
We have focused our work on the significant risks that we identified in the Council's November 2017, because of the significance of the matters described below and later
arrangements. In arriving at our conclusion, our main considerations were: in our report, we are not satisfied that, in all significant respects Slough Borough
Council put in place proper arrangements for securing economy, efficiency and
• The council has adequate arrangements in place to ensure financial sustainability, but effectiveness in its use of resources for the year ended 31 March 2019.
arrangements could be strengthen to ensure robust and realistic savings plans are in
place. Since our last report, in light of the impact of Covid 19 on the future financial Recommendations for improvement
position of the Council, coupled with the impact of a recent business rate appeal and We discussed findings arising from our work with management and have agreed
the ongoing discussions with Department for Education on the recoverability of financial recommendations for improvement.
support to Slough Children’s Trust, the Council has recently sought further financial Our recommendations and management's response to these can be found in the
support through MHCLG and is awaiting final conclusions from this request. This Action Plan at Appendix A
coupled with further adjustments required to the Council’s reserves arising from the
audit, gives indication that general fund reserve levels (both earmarked and
unearmarked) are at unsustainably low levels requiring action from the Council. Significant difficulties in undertaking our work
• The recent Ofsted inspection in January 2019 identified an improvement in the We did not identify any significant difficulties in undertaking our work on your
arrangements for Children’s Social Care services, they were no longer rated as arrangements which we wish to draw to your attention.
‘inadequate’, but rated as ‘require improvement to be good’.
Significant matters discussed with management
• The Council did not have adequate arrangements in place to ensure reliable and timely
There were no matters where no other evidence was available or matters of such
financial reporting that supports the delivery of strategic priorities due to weaknesses in
significance to our conclusion or that we required written representation from
processes for preparing the 2017-18 financial statements (which took place during
management or those charged with governance.
2018-19), and ongoing weaknesses in the quality of working papers supporting the
2018-19 financial statements.
• Slough Children’s Services Trust (SCST):-

• inadequate arrangements were in place to deliver strategic priorities or
understanding and using appropriate and reliable financial and performance
information to support informed decision making and performance management
including where relevant, business cases supporting significant investment
decisions.
• during 2018/19 the Council did not demonstrate sound governance arrangements to
ensure that elected members (Cabinet or the Education and Children’s Scrutiny
Committee) were updated on the progress of SCST through formal committee
meetings.
We have set out more detail on the risks we identified, the results of the work we
performed, and the conclusions we drew from this work on pages 29 to 35.

Value for Money
Key findings
We set out below our key findings against the significant risks we identified through our initial risk assessment and further risks identified through our ongoing review of documents.
Significant risk Findings Conclusion

Financial Sustainability of the Council - Medium Medium Term Financial Strategy Auditor view
Term Financial Strategy (MFTS) The Council should take urgent action to develop a clear,
The Council has an agreed Medium-Term Financial Strategy
The ongoing challenge of meeting the savings outlined sustainable financial plan to significantly replenish its levels
which was presented to Cabinet in December 2017 and
by Central Government continue to put pressures on of useable reserves in order to ensure financial resilience for
subsequently updated and reported in July and October 2018.
Local Government finances. Slough Borough Council the future. Further details are set out in our separate
Reasonable assumptions have been made for CT, retained
currently has a budget gap of £1.291m over four years to accompanying report, where we have set out
business rates and RSG. The MTFS included the savings
2022/23. The Council has set a balanced budget for recommendations under section 24 of the Local Audit and
required across the three years, 2018/19 to 2020/21 of
2019/20 to 2021/22. Accountability Act.
£11.012m.
In the short term, the Authority has one off reserves that
can be used to mitigate these pressures but the longer The budget and savings identified in the MTFS are updated
term implications are challenging. The Authority expects and approved within the budget setting process which was
an estimated £9m reduction in central funding per completed in February 2019, savings of £6.3m were agreed
annum to 2024/25 which further enforces the need to for 2018/19.
identify alternative methods of achieving the Authority’s
financial position for the future. Savings Plans
In 2018/19 the Directorates were not given specific savings
We will review the Authority’s arrangements to prepare targets but asked to offer up what savings they could deliver.
robust savings plans and how these have been Those savings that were identified it was the Directorates
challenged and consider the plans to identify further responsibility to risk assess the savings plans, ensure they
savings to address the future funding gap. are deliverable and have action plans/business cases in place
to ensure delivery.
We will review monitoring arrangements, including the
robustness of the Council’s Medium Term Financial The Directorates identified a range of different savings, 34 in
Strategy, the delivery of the 2018/19 budget, and the total which included savings as well as additional income to
action taken when plans are not being delivered. the value of £6.262m. These were agreed by CMT and
reported to Cabinet as part of the budget setting process in
February 2019.
The Council does not have a corporate assurance or project
management process in place to assess the savings schemes
or to check the robustness of the action plans.

Value for Money
Key findings

Financial Sustainability of the Council - Medium Savings Plans continued See previous page
Term Financial Strategy (MFTS)
Progress on delivery of the savings plans is reported quarterly to Cabinet in
the Revenue Budget Monitor Reports. These reports include the financial
The ongoing challenge of meeting the savings outlined
position against budget for each Directorate. In 2018/19 the Council
by Central Government continue to put pressures on
delivered a small overspend of £0.051m, although four of the five
Local Government finances. Slough Borough Council
Directorates overspent, except for the Chief Executive Directorate, with £3m
currently has a budget gap of £1.291m over four years to
underspend in non-service areas.
2022/23. The Council has set a balanced budget for
2019/20 to 2021/22. The Council reported achieving savings £6.42m, although these were not
always as planned and included a high proportion of income. The savings
In the short term, the Authority has one off reserves that plans were not supported with detailed savings plans and business cases.
can be used to mitigate these pressures but the longer Arrangements could be strengthened by introducing corporate oversight
term implications are challenging. The Authority expects and review of savings plans to ensure they are robust and realistic.
an estimated £9m reduction in central funding per
annum to 2024/25 which further enforces the need to Update since August 2020 audit committee meeting
identify alternative methods of achieving the Authority’s Since our last report, in light of the impact of Covid 19 on the future
financial position for the future. financial position of the Council, coupled with the impact of a recent
business rate appeal and the ongoing discussions with Department for
We will review the Authority’s arrangements to prepare Education on the recoverability of financial support to Slough Children’s
robust savings plans and how these have been Trust, the Council has recently sought further financial support through
challenged and consider the plans to identify further MHCLG and is awaiting final conclusions from this request. This coupled
savings to address the future funding gap. with further adjustments required to the Council’s reserves arising from
the audit, gives indication that general fund reserve levels (both
We will review monitoring arrangements, including the earmarked and unearmarked) are at unsustainably low levels requiring
robustness of the Council’s Medium Term Financial action from the Council. A substantial over accrual of anticipated profits
Strategy, the delivery of the 2018/19 budget, and the from the Council’s interests in Slough Urban Renewal has resulted in a
action taken when plans are not being delivered. further reduction of general fund reserves of £7.573m in the 2018-19
accounts. Thus reducing current forecasted General Fund Reserves
down to only £550k.

Value for Money
Key findings

Principles and values of sound governance There remained weaknesses and material misstatements in the preparation of the Auditor view
and internal control 2017-18 Statement of Accounts that took place during the 2018-19 financial year. The We consider that adequate arrangements
Council set out a detailed action plan at the conclusion of the 2017-18 audit and we were not in place due to:
In the prior year, the Authority’s auditor recognise that many of these actions will take time to implement and embed into the
identified significant weaknesses in Council’s financial processes and procedures. Action has been taken by the Council weaknesses in processes for preparing the
arrangements to prepare the financial to address capacity issues in the finance team and seek additional external advice and 2017-18 financial statements (which took
statements to support informed decision support on a number of areas of the financial statements, but there is still significant place during 2018-19), and ongoing
making, resulting in a modified opinion on the scope for improvement in the quality of the underlying working papers to ensure that weaknesses in the quality of working papers
use of resources for the year ended 31 March the financial statements are free from material error. supporting the 2018-19 financial statements
2018. The Council has had difficulties producing supporting information for a number of
areas in the financial statements resulting the 2018-19 audit not yet being completed.
We will consider the Council’s system of They have relied on the use of the CIPFA Big Red Button which has resulted in issues
internal control and governance procedures understanding the audit trail between the ledger and Trial Balance and how these
and its progress in addressing the previously reconcile to the Council’s financial statements.
identified recommendations.
Our 2018-19 audit work to date has identified a number of in year and prior period
adjustments particularly in the area of PPE valuations and accounting for additions and
disposals of assets. The valuation errors have resulted in the client commissioning
external experts to produce a new valuation for the opening balances as at 1 April
2018, as well as the closing position at 31 March 2019.
Our audit has identified a number of control deficiencies in internal controls in respect
of:
• Quality of working papers supporting the financial statements
• Lack of critical review of the draft financial statements and supporting audit working
papers prior to audit
• Inadequacy of reconciliation and review of debtors and creditors
• Lack of clarity around bank reconciliations, particularly in relation to School bank
accounts
• Inadequate maintenance of the fixed asset register, with examples identified where
prior year transactions had not been correctly removed from the asset register or
material transactions had been incorrectly accounted for during the year.

Value for Money
Key findings

Principles and values of sound governance and In addition as part of our overall VFM work we reviewed the draft Auditor view
internal control Annual Governance Statement (AGS) as published on the Council’s We consider there is scope to ensure that the Annual
website. Governance Statement (AGS) more clearly sets out the
In the prior year, the Authority’s auditor identified The draft AGS sets out how the Council complied with the seven processes and procedures to enable the Council to
significant weaknesses in arrangements to prepare the principals of good governance, however this document could be carry out its functions effectively.
financial statements to support informed decision clearer on how the governance arrangements have been reviewed.
making, resulting in a modified opinion on the use of Priority outcomes are discussed, as defined in the Council’s 5 Year
resources for the year ended 31 March 2018. Plan, with a summary of progress against these outcomes but not
how the governance arrangements support their delivery. An update
We will consider the Council’s system of internal control is provided on the LGA peer review. In addition, an update is
and governance procedures and its progress in provided on the issues reported in 2017/18, the action taken in
addressing the previously identified recommendations. 2018/19 and if this is still an issue in 2019/20.
Arrangements could be improved by developing the AGS and

introducing:
• assessment of the effectiveness of the framework
• how the Council is defining outcomes in terms of sustainable
economic, social and environmental benefits
• an action plan, that brings together and addresses all the
significant issues faced by the Council
• a formal mechanism that monitors and assesses the progress of
the issues and recommendations raised in the AGS throughout
the year.

Value for Money
Key findings

Children’s Social Care Services The arrangements within Children’s Social Care Services have been viewed Auditor view
In the prior year, Ofsted identified weaknesses in as inadequate by Ofsted since 2011. In January 2019 Ofsted undertook a We consider that adequate arrangements are
Children’s Social Care services, resulting in a modified detailed inspection which concluded that services had improved, although in place as indicated by the improvement in
opinion on the use of resources for the year ended 31 the services ‘require improvement to be good’. rating following the Ofsted inspection.
March 2018. This change in rating occurred nine months into the year and the inspection Significant progress is still required to improve
We will consider the: report acknowledged that the pace of change had accelerated in the six the Ofsted rating further.
months prior to the inspection. In addition, the monitoring report completed
• Council’s progress against the previously identified
in May 2018 concluded that there continues to be positive improvement.
recommendations
• actions taken by the Authority to address the Prior to this inspection Ofsted were making regular contact with the Council
recommendations raised by Ofsted every two to three months. A Joint Improvement Board, a multi-agency non-
public board was responsible for monitoring and ensuring progress. The
• Authority’s processes for monitoring the progress Board met monthly during 2018/19. This Board was disbanded following the
against recommendations raised improved rating being awarded.
• results of any follow up inspections by external
Significant improvement is still required to improve the Ofsted rating in
bodies.
subsequent inspections and the Slough Children’s Services Trust (SCST)
has developed an action plan to address the recommendations raised by
Ofsted. This is monitored by the Council through its Partnership Board
meetings and in one to one meetings with the Director of Children’s Services
and the Chief Executive of SCST, as well as by the SCST Board.

Value for Money
Key findings

Slough Children’s Services Trust (SCST) In 2015 following two Ofsted judgements of ‘inadequate’ the Secretary of Auditor view
SCST provides the Council’s children’s social care State exercised her powers under the Education Act 1996 to set up a We consider that adequate arrangements were not
services. We identified the possible failure of SCST separate organisation to carry out the Council’s children’s social care in place:
due to its deteriorating financial position and ability to functions. In October 2015, SCST was established and took over the • to support informed decision making and
manage demand as a significant risk. management of Council’s children’s social care services. The cost of performance management including where
establishing SCST was met by the DfE, whilst the Council provided a relevant, business cases supporting significant
We will review the: working capital loan to the value of £4.2m to be repaid after six years. investment decisions.
• arrangements to monitor performance of SCST and The Council pay SCST in the region of £24m for the delivery of the
action to address underperformance children’s social care services.
• the current financial position of SCST and what SCST was the result of a Statutory Direction from the Secretary of State
action the Council plans to undertake on the Council and to begin with this had a detrimental impact on the
relationship between SCST and the Council. Following changes in
• understand the contract arrangements with regards
personnel within both organisations this began to improve.
to managing demand and if the Council is required
provide additional funding. The Council has a legally binding contract for the delivery of services with
SCST and retains statutory responsibility. However, this is not a
commercial contract, changes require agreement of the DfE and the
Council does not have step in rights and cannot terminate the contract. In
2017 the contract was reviewed and all parties recognised the
inadequacies of the contractual arrangements. However, due to a lack of
capacity and so has not to detract from the improvement journey and the
expected imminent Ofsted inspection a decision was made to complete a
deed of variation (DoV). This decision included the Council, SCST and
the DfE. The deed of variation DoV looked to improve governance and
oversight of the contract by clarifying and strengthening the contract
management arrangements.
In 2018/19 the financial position of SCST began to deteriorate, SCST
continued to report a deficit and growth monies were requested to reduce
the risk of insolvency. As a result an LGA review of the financial situation
facing SCST was commissioned by the Council. This review highlighted
inadequacies in the governance arrangements and that SCST’s position
was not sustainable without additional funding.

Value for Money
Key findings

Slough Children’s Services Trust (SCST) The Council agreed to provide additional growth funds in the Auditor view
SCST provides the Council’s children’s social care region of £1.4m and the Council and SCST continued to work We consider that adequate arrangements were not in place:
services. We identified the possible failure of SCST together to replay the working capital loan (£4.2m). • to support informed decision making and performance
due to its deteriorating financial position and ability to Senior Officers of the Council maintained regular contact with management including where relevant, business cases
manage demand as a significant risk. SCST and elected members were informed through meeting supporting significant investment decisions.
We will review the: with the Lead Member. However, neither Cabinet or the
Education and Children’s Scrutiny Committee received any
• arrangements to monitor performance of SCST and formal updates. SCST’s Annual Report was not received by
action to address underperformance the Council until August 2019.
• the current financial position of SCST and what The 2019 LGA peer review also confirmed that governance
action the Council plans to undertake arrangements were immature in both SCST and the Council
• understand the contract arrangements with regards and that line of accountability, contract monitoring and shared
to managing demand and if the Council is required financial responsibility were unclear.
provide additional funding. Contract and performance monitoring were the responsibility
of the Directorate and were predominately focused on the
changes required to improve the Ofsted rating. Financial
monitoring was limited and constrained by the quality of the
financial information received by SCST.
The Council did not fully recognise the dire financial position
of SCST until August 2019 at which point the deficit had
significantly increased. The Council and SCST then held
additional discussions, information was requested and
elected members were informed of the developing situation.
The Council has devolved contract management
arrangements and responsibility sits with the Directorates. It
does not have a corporate commissioning/procurement
function from which specialist knowledge or expertise can be
sought. The Council has agreed contract procedure rules
within its constitution for which each Directorate is
responsible for ensuring compliance.
Appendix A DRAFT
Action plan
We have identified recommendations for the Council’s as a result of issues identified during the course of our audit. We have agreed our recommendations with management and we will
report on progress on these recommendations during the course of the 2020/21 audit. The matters reported here are limited to those issues that we have identified during the course of
our audit and that we have concluded are of sufficient importance to merit being reported to you in accordance with auditing standards.
Assessment Issue and risk Recommendations

Agreed savings are not supported The Council should:
 by robust savings plans and as • ensure that savings are supported by robust savings plans and business cases
such are at risk of not delivering • strengthen arrangements by introducing a corporate function, which could assess the likelihood of delivery, the
as anticipated. robustness of proposed savings and their supporting plans as well as monitor delivery.
Management response
The Council has recently undertaken a number of actions that will address this and related issues
The Council has amended its officer Strategic Finance Board (SFB) chaired by the Chief Executive to ensure that the
Executive Board is fully aware of all pertinent financial matters within the Council and gains a holistic understanding of
the Council’s finances. This Board is receiving papers on financial standards, the accounts, the budgets and other
matters
As part of this the Council has:
• Revised its revenue business case and process to ensure that the business case focuses on the case for change,
value for money and affordability before moving into the technicalities of procurement etc. Thus assisting in
ensuring that the Council’s base budget is as robust as it can be and hence helping to provide a more informed
base from which to generate any necessary savings
• Related to savings, the Council has a separate business case for savings which has been supplemented by a
Saving Action Plan to assist in the verification and tracking of saving plans going forward
• The finance service is leading the process for the budget and will in the short term be working with service
colleagues to review and challenge all budgeted and future savings, monitor delivery, identify pressures and seek
from colleagues mitigations as necessary. It has also revised the equality impact documentation. Going forward a
further revised process will be established that will bring into the assessment of savings plans colleagues from other
disciplines such as legal, HR, ICT etc – all working closely with service officers
• Supplementing this the Council is revising its officer budget process to accelerate the timeline for production of the
budget to allow for full engagement and scrutiny by Members in all their roles and likewise for full consultation and
communication with other stakeholders
Controls
 High – Significant effect on control system
 Medium – Effect on control system
 Low – Best practice
Appendix A DRAFT
Action plan
We have identified recommendations for the Council’s as a result of issues identified during the course of our audit. We have agreed our recommendations with management and we will
report on progress on these recommendations during the course of the 2020/21 audit. The matters reported here are limited to those issues that we have identified during the course of
our audit and that we have concluded are of sufficient importance to merit being reported to you in accordance with auditing standards.

We consider there is scope to ensure that The governance aarrangements could be improved by developing the AGS and introducing:
 the Annual Governance Statement (AGS) • assessment of the effectiveness of the framework, it should be more than a description of what is in place
more clearly sets out the processes and • how the Council is defining outcomes in terms of sustainable economic, social and environmental benefits
procedures to enable the Council to carry • an action plan, that brings together and addresses all the significant issues faced by the Council
out its functions effectively. • a formal mechanism that monitors and assesses the progress of the issues and recommendations raised in
the AGS throughout the year.
Management response
The preparation of future AGS is under review and will be considered at a future meeting of the SFB. This will
enhance the preparation and use of the AGS. The Chief Executive has also instigated a review of
Governance across the Council which will see further enhancements to our Governance arrangements. The
outcome of this work will incorporate these recommendations.
The Council consolidates a number of group To facilitate a smooth and efficient group accounts preparation, the Council should work with its group entities
 entities into its financial statements, however to align all accounting year ends to 31 March.
the accounting year ends are not all Management response
consistent with the Council, being 31 March,
which adds additional complexity and This work will commence in June 2021.
consolidation adjustments for the Group
financial statements.
Controls
 High – Significant effect on control system
 Medium – Effect on control system
 Low – Best practice
Appendix A DRAFT
Action plan
Effective governance arrangements are not Cabinet and scrutiny should be regularly updated on the performance of their key services and be able to
 in place to ensure those charge with challenge this performance and have the opportunity to make informed decisions in formal committee
governance are able to make decisions in an meetings.
open and transparent way Management response
Agreed. We have recently begun the preparation of holistic financial briefings for Officers and Members and
these will be further developed in the future. We have also as noted above revised the budget timeline which
will allow for more informed Member consideration of the budget and have introduced quality guidance for
finance and other officers on the production of budget monitoring reports and financial implications in reports.
We will ensure that key service financial and performance information is included as a regular agenda item
for Cabinet, Scrutiny and the Audit and Governance Committee.
Effective contract management The Council should consider and ensure effective arrangements are in place in the following areas:
 arrangements are not in place to effectively • Role of elected members, including Members of the Board, as possible shareholder committees or
manage statutory services that are delivered monitoring committees such as the Commercial Sub-Committee, as well as the role of scrutiny committees
by third parties. • Elected members who are Board Directors of the SCST need to understand their responsibilities
and duties to SCST and ensure they effectively manage any conflicts of interest. All company
directors have a duty to act in the best interests of the company rather than in the best interests of
the body that has appointed the Director to the company (eg the Council)
• Elected members committee functions, this should include those charged with governance who
would have oversight of the effectiveness of the SCST Board in line with Council’s strategic
objectives and statutory duties as well as scrutiny.
• The Council would benefit from applying consistent arrangements across the Council for dealing
with all its third-party companies and ensure the role of the Commercial Sub-Committee is
effective and understood
• Those charged with Governance should receive updates and reports on a regular basis (quarterly as a
minimum) to enable informed decision making.
Management response
The Council has begun reviews of its management of third-party organisations and will be implementing a
series of changes which will include among other matters appointing appropriate Senior Responsible Officers
to ensure that companies meet their objectives, put in place new arrangements for holding companies to
account, reviewing how the companies meet the Council’s objectives, a review of the work undertaken by the
companies, developing a clear approach to testing value for money etc.
Appendix A DRAFT
Action plan
Effective governance arrangements are not • The Council should introduce contract management to ensure services are delivered as planned and any
 in place to effectively manage statutory mitigating actions can be taken in a timely manner.
services that are delivered by third parties. • The Council should consider using its internal audit service to gain assurance that its contract procedures
are being effectively applied across all Directorates.
Management response
The first recommendation is being dealt with as noted above. In respect of gaining assurance this will be
undertaken in two ways – through internal audit as described and through reviews by the Finance and
Commercial team. The S151 officer is liaising with internal audit to ensure that this requirement is picked up
in their 2021/22 and onwards planning and will co-ordinate the work of those undertaking these reviews
Quality of working papers and clarity of We recommend that the Council:
 the audit trail
• Review the process used to produce the year end accounts and identify areas where further improvement
As noted on page 13, the audit process was needs to be made
hampered by issues with the clarity of the
audit trail including: • Ensure that all disclosure have supporting working papers and there is a clear mapping between the
general ledger and the financial statements
- insufficient audit trail to support the
movements in the cashflow statement
Management response
- Lack of supporting audit trail for key
notes in the accounts such as analysis of The Council has begun a review of the process and will be introducing:
the income and expenditure by nature • a comprehensive accounts plan which will be linked to the auditors required by client schedule. This plan
will include a comprehensive training plan, a communications plan and a resource plan
• a three stage quality assurance process will be implemented covering financial standards papers and
accounts templates and covering 1) preparation, 2) technical review and 3) sign off review
• a whole team approach will be instigated through the involvement of the whole finance service to bring
greater resilience and resource to this key requirement.
• improved communication through the project plan which will include regular and early communication to
all stakeholders.
• comprehensive training and development for finance staff which will include how to prepare, and also
regular reviews of, working papers that include evidence of the transactions in the ledger, an enhanced
checklist of requirements, quality assurance review, links between the working papers and clear mapping
to the ledger.
• Quarterly reports to Strategic Finance Board, the Audit Committee and Cabinet starting in October 2021
on progress and issues identified.
Appendix A DRAFT
Action plan
Review of financial statements We recommend that the Council:
 A number of inconsistencies and disclosure omissions  Develop a year end timetable for the production of the accounts which include sufficient time
were identified during our review of the financial for management review
statements. This indicated a lack of internal critical
review prior to the financial statements being presented  Utilises the CIPFA checklist to ensure that disclosures are complete and produced in line with
for audit. code requirements
Management response
This will be fully covered as noted above.
Group Accounts The Council should ensure it prepares a clear and comprehensive group consolidation schedule
 The basis of preparation of the Council’s Group to support the preparation of its group accounts.
accounts was unclear and the working papers did not
provide a comprehensive group consolidation schedule Management response
setting out how the group accounts and consolidation
adjustments had been determined. This will form part of the much revised and enhanced accounts plan as noted above.
Bank reconciliation process We recommend that the Council:

 As noted on page 19, our review of the bank  Perform a review of the bank reconciliation process to simplify the bank reconciliation process
reconciliation process identified that the process in and remove all old and out of date reconciling items and ensure that amounts included in the
place in 2018/19 was overly complex and made reconciliation and the ledger are valid cash items.
identification of reconciling items and their clearance
difficult. There were also issues identified with the
descriptions of reconciling balances within the balance. Management response
This is in the Council’s financial action plan and will be begun in June and will be undertaken
monthly thereafter once any issues have been resolved.
Appendix A DRAFT
Action plan
Accounting treatments We recommend that the Council
 The loans made to JEH had not been accounted for in line with  establish a process for significant transactions such as investments and loans, to be
the Code requirements resulting in amendments to the formally considered against the requirements of the Code and the consideration
valuation and disclosure in the final accounts. documented and reviewed before being applied..
This was a new transaction in 2017/18 although it was not a
material balance in the prior year and the accounting treatment Management response
had not been documented against Code requirements before
inclusion in the financial statements. All transactions that require review will be considered against the requirements of the
Code to ensure that the accounts going forward are fully Code compliant.
Debtor and creditor reconciliations We recommend that the Council

 During our testing of the debtor and creditor balance there were  Perform review of the debtor and creditor account codes to ensure that balances are
issues with the client producing reconciled balances which appropriate and valid and clear those that are not.
should represent the year end debtor and creditor positions
excluding in year movements. Our sample testing of debtors  Establish a reconciliation process for all debtors and creditor accounts to ensure the
and creditors has not identified any material balances that are balances are fully supported and valid debtors or creditors
not supported.
We have discussed this with management and confirmed that a Management response
process has been undertaken in 2020 to review debtor and This is in the Council’s financial action plan and will be begun in June and will be
creditor codes and cleared down items which are no longer undertaken monthly thereafter once any issues have been resolved.
valid balances.
Appendix A DRAFT
Action plan
Income and Debtors We recommend that the Council
 There is no review process over invoices issued before they  Review the internal processes over invoice raising to ensure there is sufficient review
were sent out to clients. The Council relies on customers to of invoices before they are sent to clients
identify and inform them of any errors noted. However there is
risk that if the invoice is undercharged and the customers may
not raise error, and the Council may suffer a loss from Management response
undercharging. This is in the Council’s financial action plan and will be begun in June and will be
undertaken monthly thereafter once any issues have been resolved.
Declarations of interest We recommend that the Council:

 Councillor and Senior Officer declaration forms are not dated.  ensure that all forms are signed and dated as part of their standard procedures
There is a risk that the declaration record is incomplete or
insufficient as a result. The most recent forms for three  consider whether Officers, including interim staff, should complete declaration forms
Councillor declaration forms were signed, but not dated. as they may be able to have a significant influence on the council's high level
Signing / dating a declaration form should be standard practice, decisions.
as it could lead to forms being misfiled, or new interests not
being declared in a timely manner. Management response
Senior Officers that were working for SBC through a contracting The Council requires every entry to the members register of interests to be signed and
company are not required to complete a Declaration of Interests dated, it is standard practice that this is always followed. In the past 12 months the
form. Council has strengthened the process and a democratic services officer must always
Interim staff are not required to complete the Registers of countersign each form received from a councillor to ensure completeness.
Interests and Gifts and Hospitality. Senior officers declaration forms are not part of this process, and are in fact part of the
declaration process for all staff which uses an online HR process to gather the
submissions.
The Council will look to implement a process by July 2021 to ensure that any interim staff
or those recruited through contracting companies are required to complete a declaration
of interests form and where appropriate complete their Directorate gifts and hospitality
register
Appendix A DRAFT
Action plan
Fixed asset register We recommend that the Council:
 The client informed us of a number of properties  establish a process to perform and annual review of assets to ensure that all disposals and
which had not been removed / reclassified in the reclassifications are amended
fixed asset register prior to the production of the
year end financial statements.  establish an in-year process for capital movements to be notified on a timely basis to the finance
team to ensure the fixed asset register is maintained accurately. This should be reconciled to the
We also identified material assets which had been accounts as part of the year end closed own procedures.
fully depreciated and were held at net nil valued in
the fixed asset register and accounts.
Management response
The Council be moving to a quarterly closedown process once it has undertaken a through review of
all accounts and budgets which will pick up the above on a much more timely basis.
Capital accounting process We recommend that the Council

 The purchase of Thames Valley University had  establish a process for reviewing and documenting the accounting treatment of significant
been accounted for using the stage payments as transactions to ensure they are accounted for in line with the Code. This should be subject to
additions rather than the cost and a liability. This internal review
resulted in a material error in the current and prior
year.
Management response
All transactions that require review will be considered against the requirements of the Code to ensure
that the accounts going forward are fully Code compliant. As noted above the Council will be
introducing a three stage quality assurance process throughout its accounts preparation.
HRA valuation records The Council should ensure that a regular reconciliation process is carried out between its Capita
 Our testing identified inconsistencies in the Housing Rents system and the Council’s fixed asset register to ensure records are consistent and
accounting records between the categorisation of provide an accurate basis to inform the valuation of its HRA properties in the financial statements
HRA properties held on the Capita Housing Rents
system and the Council’s fixed asset register. It is Management response
important that these two systems are reconciled on
a regular basis to inform the Council’s HRA All reconciliations across the whole of the Council’s finances are being reviewed including this, bank
valuation. accounts and debtor and creditor reconciliations accounts as noted above and will begin in June and
be undertaken monthly thereafter once any issues have been resolved.
Appendix B DRAFT
Audit Adjustments
We are required to report all non trivial misstatements to those charged with governance, whether or not the accounts have been adjusted by management.
Impact of adjusted misstatements
Impact on total
Comprehensive Income and net expenditure
Detail Expenditure Statement £‘000 Balance Sheet £’ 000 £’000
1 Plant, property and equipment: Grossing up of the opening cost and depreciation of assets with nil
net book value. This has nil impact on the value in the Balance Sheet and is made in the disclosure
note for Plant, Property and Equipment.
DR Opening cost 6,894

CR Opening accumulated depreciation (6,894)
2 Plant, property and equipment: Asset additions and disposals were adjusted following review of the
fixed asset register. This also resulted in amendments to the depreciation and revaluation
movements following the adjustment to asset holdings
DR Asset additions 1,514

CR Asset disposals (32,147)
CR Asset revaluation (46,525)
CR Revaluation movements 987 987
3 Investment property: an asset had been included in as an addition in the current prior year on the
basis of the staged payments being made for the purchase whereas it should have been
recognised in full in the prior year with a corresponding creditor. These adjustments impact the
current year and prior year.
2017-18:
DR Investment property additions 16,139
CR Investment property valuation movement (8,536)
DR CIES – valuation movement 8,536 8,536
CR Creditors (16,139)
2018-19:
DR Investment property valuation movement 9,130
CR Investment property additions (8,069)
DR Creditors 8,069
CR CIES – valuation movement (9,130) (9,130)
Overall impact
Appendix B DRAFT
Audit Adjustments
Impact on total
4 The loan to JEH was accounted for as fair value equity investments when they were soft loans.
Adjustment was required to the valuation which impacts the SOFP and valuation movements in the
CIES
DR Long term debtors 23,282

CR Long term investments (17,564)
CR Movement on valuation and interest (5,718) (5,718)
5 Adjustments to debtors, creditors and bank balances for amounts identified as unsupported
following an internal review
DR Creditors 1,969
DR Cash at Bank 338
DR Debtors (181)
CR Long term debtors (5)
CR Inventory (2,088)
CR Cost of services (53) (53)
6 Release of unapplied capital grant identified as having been applied in year
DR Reserves 4,366
CR Debtors (4,366)
7 It was identified that the Collection Fund debtor and adjustment had been double counted
DR Debtor 1,536
CR Cash at Bank (1,536)
Overall impact
Appendix B DRAFT
Audit Adjustments
Impact on total
8 Grossing up of credit balances on debtor accounts
DR Debtors 19,199
CR Creditors (19,199)
9 Amendments to net pension liability and associated movements due to revised actuary report
14,209
DR Long term liabilities (16,870) (16,870)
CR Remeasurement of net benefit liability 2,674 2,674
CR Cost of services (13) (13)
CR Financing and investment income and expenditure
10 Adjustments to initial draft accounts to incorporate the adjustments for miscoding and adjustment
for income not reflected in Note 8
DR Creditors 2,411
DR Financing and investment income and expenditure 15,370 15,370
CR Cost of Services (9,260) (9,260)
CR Other operating expenditure (1,166) (1,166)
CR Taxation and non-specific grant income (389) (389)
CR Other comprehensive income and expenditure (2,144) (2,144)
11 The CCLA Property Fund was initially disclosed as FVOCI but the investment does not meet the
definition of equity due to being puttable and so this designation is inappropriate. It was agreed
that this would be reclassified as FVPL and then the statutory override applied to remove the
impact upon the general fund.
Overall impact
Appendix B DRAFT
Audit Adjustments
Impact of unadjusted misstatements
Impact on total
1 Adjustments made to debtors and creditors in 2019/20 which related to 2018/19 following internal
review of unsupported balances
DR Cash 579
DR Creditors 1,255
CR Debtors (795)
CR Inventory (5)
CR CIES (1,035) (1,035)
Overall impact
In addition, at the conclusion of our work, we will need to assess the impact of any unadjusted misstatements arising from the previous year’s audit for the 2018-18 financial year
undertaken by BDO, where these have a continuing impact on our audit for 2018-19.
Appendix B DRAFT
Audit Adjustments
Misclassification and disclosure changes
The table below provides details of misclassification and disclosure changes identified during the audit which have been made in the final set of financial statements.
Disclosure omission Detail Auditor recommendations

 Our review identified a number of adjustments which were required. These included:
 Group disclosures were amended to provide additional clarity to a reader of the accounts
 Capital Commitments disclosures included in the accounts are not in line with the Code requirements and we requested disclosure to this extent to be added to the
accounts
 In Note 30, the interim Director of Place & Development has received remuneration exceeding £150k but initially wasn’t named as required by the Code
 A third balance sheet and related disclosures was required to reflect the prior period adjustment for property, plant and equipment
 the group notes for PPE did not agree to the Group balance sheet due to the omission of the consolidated values
 The disclosures in relation to the fair value of surplus assets were not sufficient to meet the requirements of the Code
 IFRS 15 disclosure were not adequately included in the financial statements
 Leases disclosure required to be amended in line with working papers
 Disclosure of the deficit Dedicated Schools Grant
Appendix D DRAFT
Fees
We confirm below our final fees charged for the audit and provision of non-audit services.
Audit Fees
Scale fee Final fee
Council Audit £98,193 TBC
Additional fees in relation to additional work required for the

following issues in 2018-19
Interim fee variation (reflecting work completed to end Sept 2020 –
approved by PSAA in January 2021) £223,002
Final fee variation at conclusion of work TBC
Total audit fees (excluding VAT) TBC
Non Audit Fees
In addition to those listed below which have been billed in 2018/19, we have performed the following work:.
Fees
Fees for other services £
Audit related services:

• Housing Benefit subsidy certification 95,000
• Teachers pension Certification 5,000
Non Audit
CFO insights subscription 10,000
DRAFT
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firms, as the context requires.
Grant Thornton UK LLP is a member firm of Grant Thornton International Ltd (GTIL). GTIL and the member firms are not a worldwide partnership. GTIL and each member firm is a
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© 2021 Grant Thornton UK LLP | Audit Findings Report for Slough Borough Council | 2018/19

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What is the purpose of the audit findings report?

What is the purpose of the audit findings report?

What sections are included in the audit findings report?

What sections are included in the audit findings report?

Commercial in confidence

The Audit Findings

Year ended 31 March 2019

1. Status of the audit and key headlines 3

Your key Grant Thornton Appendices

Financial Under International Standards of Audit (UK) Status of the audit

Financial statements DRAFT

Our approach to materiality

Council Amount (£) Group Amount (£) Qualitative factors considered

Financial Statements DRAFT

Management override of controls Auditor commentary

Financial statements DRAFT

Financial statements DRAFT

Financial statements DRAFT

Financial statements DRAFT

Financial statements DRAFT

Financial statements DRAFT

Financial statements DRAFT

Financial statements DRAFT

Financial statements DRAFT

Financial statements DRAFT

Mortality assumptions – longevity at 65 for future female 27.6 

Financial statements DRAFT

Significant matter Commentary

Financial statements DRAFT

Significant matter Commentary

Financial statements DRAFT

Significant matter Commentary

Financial statements DRAFT

Significant matter Commentary

Financial statements DRAFT

Going concern commentary

Concluding comments Auditor commentary

Financial Statements DRAFT

Financial Statements DRAFT

Financial statements DRAFT

 Matters on which we report by

 Specified procedures for Whole

Independence and ethics DRAFT

Independence and ethics DRAFT

Audit and Non-audit services

Fees £ Threats identified Safeguards

Value for Money DRAFT

Value for Money DRAFT

• Slough Children’s Services Trust (SCST):-

Value for Money DRAFT

Significant risk Findings Conclusion

Value for Money DRAFT

Significant risk Findings Conclusion

Value for Money DRAFT

Significant risk Findings Conclusion

Value for Money DRAFT

Significant risk Findings Conclusion

Arrangements could be improved by developing the AGS and

Value for Money DRAFT

Significant risk Findings Conclusion