Agenda item

External Audit Progress Report and Sector Update


The Partner, Grant Thornton UK LLP updated members on the progress to date on the work of external audit in relation to the 2019/20 Financial Statements Audit, 2019/20 Value for Money conclusion and certification of the Housing Benefit Subsidy claim for 2021/22.  In respect of the Financial Statements Audit, the Partner highlighted that although significant progress has been made in moving towards completion of the audit, there were two remaining areas of audit challenge that he did not anticipate would be resolved.  This was likely to lead to a modified audit opinion.


An initial draft of the Value for Money Conclusion for 2019/20 had been shared with council officers, with the report focusing on the St Georges transaction with Aviva Investors and Reef.  The final report would come to a future meeting.


By way of context, the Partner set out that in December last year there were 600 local audit opinions outstanding nationally, and the Government has suggested two different methods as an approach to address these delays:


1)    Back Stop – outstanding audits will be given a date by which they must be completed. If they cannot be completed by this date, the external auditor will be required to publish a disclaimer on the financial statements. This is not an ideal situation, and also poses the risk that accounting issues simply get pushed into the following year and do not get resolved. It was expected that back stop dates could be announced within the next few months. The government’s aim was to clear the back log by March 2025.

2)    A new Audit Code of Practice is expected to be adopted later this year which will reduce the level of regulatory requirements directing the amount of work auditors do on asset evaluations and pension liabilities, intended to help speed up the audit process.


Following questions and comments from Members, the Partner, Grant Thornton UK LLP advised that:


·    There was an on-going issue with a shortage of skilled auditors and people entering the profession.

·    In his view, the external audit team in 2018/19 did not necessarily scrutinise the St Georges transaction in the same way that the new audit team did.

·    The Housing Benefits Audit process was complicated and based on a set of instructions outlined in a mandated workbook. Grant Thornton was required to report any errors, down to the pence and had no room within the regulations for adopting any other approach.

·    The Assistant Director advised members that the Housing Benefit workbooks had been received in March 2023 for audit, but that there had been some system access issues for Grant Thornton.

·    The article ‘Current Local Audit Deadline’ (page 110) provided a generic outlook from Grant Thornton on the way local authority finance teams were resourced, as a contributing factor to why local audit deadlines were not achievable.   The Partner clarified that the specific reason there was a delay in the audit with GBC was due to technical accounting issues, rather than any resourcing issues.

·    There was no scope for pragmatism within audits; the external audit process is highly regulated and audit firms have been fined for deficient audits.


The committee noted the report.


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