Agenda item

To update the Audit & Governance Committee on the progress of the external audit of both the County Council’s and the Surrey Pension Fund’s Statement of Accounts for 2023/24. 

Speakers:

Janet Dawson, Partner (Surrey County Council audit), EY

Hassan Rohimun, Partner (Surrey Pension Fund audit), EY

Nicola O’Connor, Strategic Finance Business Partner

Key points raised in the discussion:

1.    The Partner for the Surrey County Council audit (EY) noted that the report set out the findings and progress to date against the key risk areas identified in EY’s audit plan. Highlighted that as it was the first-year audit for the Council, the first year of the new MySurrey system and with changes in staff members within the Council’s Finance team, the process was taking longer than anticipated. The aim was to complete the field work by 18 December 2024, several amendments had been identified so far, subsequently including lease disclosures. Draft Value for Money (VfM) commentary was included, anticipated having no exceptions to report, no risks of significant weakness had been identified.

2.    The Partner for the Surrey Pension Fund audit (EY) noted that the focus was on the key risk areas. EY was on track to provide IAS19 assurances to the auditors of the scheduled bodies by the end of November. Since the report was written there had been progress regarding the Level 3 investments work, the position had reduced concerning the areas under consideration.

3.    A Committee member noted that there were a few things outstanding, queried whether the December deadline for the completion of the fieldwork had been communicated, asked whether EY was confident that would be met. The Partner for the Surrey County Council audit (EY) noted that the two teams were working closely to the timetable in place and was confident that date would be achieved.

4.    A Committee member referred to the data migration issue from SAP to MySurrey which was a significant risk identified regarding the Surrey Pension Fund audit, sought a date when those results would be known. Queried whether the findings from the external audit would be provided to the MySurrey Stabilisation Board. The Partner for the Surrey County Council audit (EY) noted that the same area of focus was included in the Council’s audit, work had been completed for the Council’s financial statements and EY was satisfied with the information provided, there were no issues to report. The Partner for the Surrey Pension Fund audit (EY) noted that work was being reviewed, any issues arising would be included in the Audit Findings Report which would be shared with management and reported to the January Committee meeting as scheduled.

5.    A Committee member asked what impact the anticipated in-year adjustment of around £20.7 million to the Private Finance Initiative (PFI) would have on the Council. The Strategic Finance Business Partner explained that it was an adjustment between the draft Statement of Accounts previously presented to the Committee and the final version scheduled for January’s Committee meeting, it reflected the changes made to the waste PFI during the 2023 financial year. The adjustment would increase the value of the assets held offset by an increase to the long-term liability to pay the provider over the remaining contract life.

6.    A Committee member referred to the mapping issues and misstatements, noting the difficulties faced in mapping the underlying data to the accounts provided by management, asked what those issues were. The Strategic Finance Business Partner noted that it was unfortunate that it related to cash and debtors, provided assurance that the cash figure was not incorrect. The codes on the new system had to be remapped, the specific code was included in the wrong category on the balance sheet so was being restated in the final accounts.

7.    The Chairman queried whether the mapping issues was the main cause of the delay. The Partner for the Surrey County Council audit (EY) noted that it was one of the fundamental delays at the start of the audit, the new system had to be mapped by the Council, there had been issues in terms of EY ensuring that the Council understood how the system worked. The other issue was getting to know the organisation and for the Finance team to understand how to present back to EY what their judgements are in the way requested. The Strategic Finance Business Partner agreed that it was a different approach to audits undertaken in recent years, a high level of detail was requested.

8.    The Chairman asked what the performance materiality was on the audit. The Partner for the Surrey County Council audit (EY) noted that it was around £44 million, the mapping issue was below that. The Strategic Finance Business Partner noted that high level of materiality did not mean that the audit was only looking at numbers above that, significant lists of transactions were being tested and evidence being provided at levels significantly lower than that.

9.    The Chairman asked whether the final Statement of Accounts would be scheduled at January’s Committee meeting. The Strategic Finance Business Partner clarified that was the aim, subject to anything further being found.

RESOLVED:

Noted the progress reports from EY (attached as Annexes 1 & 2).

Actions/further information to be provided:

None.