Agenda item

Audit Findings Report 2019/20

Minutes:

The Committee was provided with a report that updated them on the current findings of the council’s External Auditor, Grant Thornton UK LLP, from the ongoing audit of the council’s financial statements and arrangements for securing Value for Money for the year ended 31 March 2020.

 

The Chair stated that the version of the report before the Committee was in its draft form and Management hadn’t a chance to feed their comments in the final version; the Chair further stated that a special meeting of F&A Committee would be convened sometime in the future with the sole purpose being to receive and consider the Council’s final, audited financial statements for 2019/20 alongside the associated external audit report and governance matters linked to this.

 

The External Auditor, Grant Thornton delivered a presentation and outlined the headlines from the report to the Committee:

 

 

The External Auditor, Grant Thornton also updated Members on the current position of Local Audit delays:

 

·       The Government were concerned about the number of delayed audit opinions in the country which had risen to 913; the original deadline for the 2022/23 accounts was 30 September 2023 and only 1% of audits due had been completed by this time. The Government were in consultation with the Financial Reporting Council about finding a solution and had discussed various methods.

·       One method being discussed, was the potential to require outstanding audits to be completed by an agreed cut-off date, potentially 31 March 2024.

·       This approach would enable all external auditor firms to focus on the 2023/24 accounts next summer. Discussions would be had with the Director (Corporate Services) concerning the best way forward with the Councils accounts once a clear direction from government had been given.

·       Annual Statements of Account during the intervening period that would not have been subject to audit would likely receive a statutory disclaimer which would likely apply to a large number of audits around the country.

·       There were risks associated with the wholesale signing off of multiple years of accounts and those risks could surface in several years’ time, but the upside was that all local authorities would be in the same position from 01 April 2024 

·       Proposals were also being considered by the Government and accounting and auditing bodies to reduce the amount of work involved in non-investment asset valuation and accounting code requirements.. Local councils and external auditors were aligned in their views that a disproportionate amount of time was spent on asset valuation, and it delayed the rest of the audit of accounts

 

The External Auditor, Grant Thornton fielded questions from Members and explained that:

 

  • Grant Thornton admitted that the external auditors in 2007 or in subsequent years should have raised queries around the accounting of the HRA Revaluation Reserve, noting that the adjustment required was a technical adjustment and would have no impact on the 19/20 closing position of the council.
  • The delays to the audits came about due to various reasons but a significant reason was after 2018/19 there was a change in regulations and the government enacted requirements on the Financial Reporting Council to demonstrate higher levels of scrutiny in all professions which led to increased workloads and made the auditor profession, both in private and public sectors, a less attractive option to work in. Auditing firms were finding it hard to retain and recruit staff and with a bigger focus on the technical aspects of audits it led to inevitable delays with completing the audit of accounts.

 

The Committee asked that the language in the report should be amended to be more balanced and recognise that some areas were outside the Council’s control and many of the issues concerning lack of resources and capacity were shared with other local authorities.

 

The Committee noted the report.

 

Supporting documents: