Minutes:
The Chief Accountant (CA) confirmed that the audit had resumed, and progress had been made in relation to the 2019/2020 Statement of Accounts. The recent delay was due to a member of the audit team being signed off sick. It was intended that the Audit Findings Report (ISA260 Report) was to be presented at the next meeting of the Committee, taking place on 7 March 2022.
However, BDO added a caveat that, given the possibility of further issues arising in the audit, they could not guarantee that the ISA260 Report would be ready by the next meeting. BDO explained that there was still ongoing complex work in relation to the audit which could present challenges going forward. Therefore, BDO was erring on the side of caution. The Chief Financial Officer (CFO) added that a paper would be provided to the Committee at the next meeting, updating them on the audit, so that the Committee would have something to determine.
The fieldwork relating to testing was expected to be completed by early February 2022. BDO employed another audit firm to assist them in clearing the backlog in auditing grant claims. As a result, the audit was back on track with grant claims, including those for 2021. Housing benefit claims were being audited by the audit firm employed by BDO.
BDO signed off on the audit of four subsidiaries within the Companies House deadline. Three entities were nearing audit completion and were expected to be complete by 11 February 2022. It was intended to complete the audit as quickly as possible.
For the fiscal year 2021-2022, BDO had resigned as auditors of Barking and Dagenham Reside Ltd (Reside) and the board would be appointing new auditors in due course. BDO explained that the resignation was due to Reside being unable to commit sufficient staff. BDO noted that Reside had different sectors that required differing accounting requirements. BDO advised that Reside required improvement in in-house quality control and the ability to detect errors and misstatements.
The Chief Financial Officer (CFO) explained that Reside is an independent entity and the Council can only advise. The CFO also stated that he had stressed to Reside to commit more resources, especially in relation to finance and the audit and to reduce its dependence on Council staff. There had been progress as staff had been recruited by Reside. The CFO assured the Committee that planning had been undertaken but unfortunately, they did not always succeed, although the outcomes had been achieved in some circumstances.
The IA suggested that the Committee’s terms of reference be amended to clarify the extent of the Committee’s role in the audit of the Council’s subsidiaries. The Chair agreed and requested that an item relating to this, be placed on the Committee’s work programme for the next municipal year.
BDO representatives provided additional information explaining that field work was still ongoing in relation to personal protection requirement (PPE) valuations. BDO explained that it was time consuming owing to the requirements surrounding the analysis. Review work was ongoing, and it was expected to be completed in February 2022.
As part of the work, errors had been detected and correcting the misstatements was technically challenging. BDO was working on addressing the areas in cooperation with the Council and was confident that this would be completed in time for the next meeting of the Committee.
The Chair appreciated the update but expressed concern at the continuing delay, noting that the Audit and Standards Committee was required to submit an annual report to the Assembly, but had been unable to do so owing to the audit delay.
In response to the Chair’s concerns, the Chief Accountant explained that the Audit Manager had to take time off on medical grounds. However, BDO did mitigate the issues that arose as a result and the audit was placed back on track in January 2022, and momentum had picked up.
In relation to grant claims, Grant Thornton was carrying out the audit on BDO’s behalf. Usually, the grant claim audits were brief and the required information was ready, which hastened the process.
In relation to the housing benefit audit, Grant Thornton was providing support and in terms of future working in 2021-2022, a decision had not been made yet. In the event that BDO did not have capacity, then the Council would consider appointing another auditor. The CFO added that the audit was severely affected by Covid-19 owing to staff absences and that this had been particularly acute in the previous six months.
The Committee noted the report