Agenda item

To inform the Committee of the result of the external audit of the council’s 2022/23 Statement of Accounts, to receive the external auditor’s Audit Findings Report and to approve the council’s letter of representation from the Council’s s151 Officer (Deputy Chief Executive & Executive Director of Resources). 

Witnesses:

Barry Stratfull, Chief Accountant (Corporate)

Ade Oyerinde, Grant Thornton

Nikki O’Connor, Strategic Finance Business Partner (Corporate)

Paul Dossett, Grant Thornton

Key points raised in the discussion:

1.    The Chief Accountant (Corporate) noted that the report included Grant Thornton’s Audit Findings Report. In respect of the Statement of Accounts 2022/23 there were a few last-minute audit checks and reviews being undertaken. It was expected that Grant Thornton would issue an unqualified opinion on both the Council and the Pension Fund accounts, to be signed in the next week or two. It was not expected that anything material would result from the final checks, if that did arise then the accounts would be brought back to the Committee.

2.    The Grant Thornton representative noted that:

·         The work was substantially complete, the main outstanding areas were around the valuation of Property, Plant and Equipment (PPE) and investment properties; since the report was issued the work on investment properties was substantially complete, final queries were being addressed regarding the valuation of PPE.

·         To date, there were no material amendments to the Council accounts or Pension Fund accounts, it was anticipated that they would issue an unqualified opinion on both accounts in the next few weeks. Final work was underway on the Pension Fund accounts around the journals and testing on benefits paid.

·         The materiality was set out in the report.

·         There were no issues identified in respect of their independence as auditors.

·         The appendices set out the recommendations identified, the majority were IT related issues that had not resulted in the identification of any material errors. Most of the recommendations were assessed as low or medium and were being followed up, including those from last year’s accounts.

·         The audit adjustments were being worked through to ensure consistency with what had been audited and the agreed expected changes.

·         Once the audit is completed the estimated audit fee would be reviewed, to be approved by PSAA.

3.    The Strategic Finance Business Partner (Corporate) clarified that the Committee’s approval was sought as it was expected that it was the last time the Committee would see the 2022/23 Statement of Accounts with final sign off to be provided by the Chairman and Section 151 Officer. Noted that the delay in completing the audit was due to several reasons and lessons learnt were being incorporated going forward, the delays to the previous year’s audit impacted this year’s audit and there were national issues affecting local authority audit sign offs in many authorities. Noted that if the accounts were to be signed off in the next few weeks, the Council would be one of only a handful of local authorities to do so to date. 

4.    A Committee member referred to Appendix B - Action Plan around the recommendations concerning the IT system and asked whether Grant Thornton had discovered cases where someone had breached the segregation of duties or had user access when they should not have; what was the cause of those issues, were they related to the new IT system or had those issues not been picked up previously. The Grant Thornton representative noted that work was under the remit of the IT audit team, however concerning the segregation of duties, testing had been undertaken around journals and no issues had been identified. He noted that Grant Thornton’s approach was cyclical in terms of a detailed IT review every two to three years. It had not resulted in material changes required to the accounts. The Strategic Finance Business Partner (Corporate) noted that the audit for 2022/23 looked at controls within the old SAP system, some cases related to incorrect user access to specific functions or reports within the system but that had not materialised into wrongdoing and had been addressed. The issues that were relevant to the new system were being incorporated going forward as useful learning points.

5.    A Committee member referred to the lateness of the report and wondered whether it would be helpful for the Committee to receive a report analysing the reasons for those delays and a timetable for next year’s audit. The Strategic Finance Business Partner (Corporate) noted that regarding the timetable for next year, the Council’s new auditors took over on 1 April 2023 and the Committee would receive their audit plan. The deadlines remained the same: draft accounts by the end of May and audited accounts by the end of September. Regarding the reasons for the delay, whilst a separate report could be produced those reasons were contained in the report and had been detailed in previous progress reports.

6.    In addition to the above, the Grant Thornton representative explained that nationally, there had been an increase in the workload for auditors particularly around increased testing, issues around infrastructure assets had delayed sign off by a year and delays due to the triennial pension update. The Council faced challenges in 2021/22 with multiple changes to the accounts, and staffing issues, that delayed the sign off. Good progress had been made on the 2022/23 accounts and noted optimism for next year around the Chartered Institute of Public Finance and Accountancy (CIPFA) code update that might reduce the time spent on asset valuations. The Government would be consulting on the backstop arrangements - 30 September - it was anticipated that no more than 50% of accounts up to and including 2022/23 would be signed off. The profession needed to return to the sign off of audits within the same calendar year to make them useful. The Cabinet Member for Finance and Resources noted that his regular Briefing to Council meetings noted the status of signing off on the Statement of Accounts.

7.    A Committee member asked if the Committee would receive the audit plan from the new external auditors at the March Committee meeting, otherwise it would come after the end of the financial year that it was addressing. The Strategic Finance Business Partner (Corporate) would share that request with the new external auditors.

8.    The Chairman queried the final audit fee for the Council Group which was £300,729 for 2021/22 and asked whether that included the additional fee, if so was the original fee of around £200,000 set too low. The Grant Thornton representative explained that the original audit fee was an estimate at the time, that fee was set by PSAA in 2019 and that had not been updated annually so did not account for the changes to the International Standards of Auditing (ISA) or the additional requirements from the CIPFA code. For 2023/24, PSAA was reviewing that and would set a more realistic fee.

RESOLVED:

1.    Noted the contents of the Audit Findings Report (AFR), as attached at Annex A.

2.    Approved the 2022/23 Statement of Accounts, as attached in Annex B, for publication on the council’s website.

3.    Approved the Executive Director of Resources’ letter of representation, which is attached in Annex C.

4.    Noted that the Pension Fund Audit Finding Report will be circulated to Committee for consideration, before the Statement of Accounts are formally signed.

5.    Approved the group letter of representation and Pension Fund letter of representation attached at Annex D.

6.    The Committee delegated any residual matters relating the audit of the accounts, the Group accounts and/or the pension fund accounts to the Section 151 Officer.

Actions/further information to be provided:

1.    A5/24 - The Strategic Finance Business Partner (Corporate) will share with the external auditors the request for the Committee to receive the audit plan from them at the March Committee meeting.