Agenda item

The Principal Accountant (PA) updated the Committee.

BDO was unable to conclude their work as the Audit Partner (AP) was signed off sick. BDO was now targeting a window of four weeks in mid-March to carry out all remaining work on the Audit Completion Report, with the intention of signing off the audit by the end of April 2023. Therefore, the next meeting of the Audit and Standards Committee had been rescheduled to 24 April 2023 in light of this.

The PA reported that the 2021/22 audits of the Council’s subsidiaries were completed more quickly than the previous year and were unqualified. At the time of the presentation, the audit of all but two of the Council’s subsidiary companies had been completed and accounts filed with Companies House. All of the subsidiaries had been audited by a different firm and not BDO.

The audit of Reside had been challenging and the PA disclosed that the Council had sought, and been given, authorisation by Companies House to extend the filing deadline. The PA expected the Reside and BD Giving audits to be signed off and filed with Companies House by the end of February 2023. The audit work for BD Trading Partnerships’ 2021/22 accounts had been largely completed and was in its final phase.

The Committee expressed its disappointment at the latest delay to the 2019/20 Audit completion report and the non-attendance of BDO representatives.

The Strategic Director of Finance and Investments (SDFI) acknowledged the Committee’s concerns. The SDFI disclosed that the AP was undertaking a phased return to work. In addition to this, the AP had pre-planned leave. Upon their return, the AP would work only on Barking and Dagenham’s audit as well as that of Barnet Council. This was deemed sufficient time to carry out all outstanding work. It was expected that audit work would be completed in April 2023 and the Audit Completion Report submitted to the Committee for consideration soon after. The SDFI also disclosed that the plan for the 2020/21 audit would follow.

BDO had written to the Chairs of the Audit Committees and the Chief Financial Officers of the councils that it was auditing, informing them that it would not commence work on 2021/22 audits and beyond until they had cleared their backlog of earlier audits.

There was a shortage of auditors who were qualified to carry out local government audits, as evidenced by the dependence on specific individuals and the SDFI emphasised that this was not unique to BDO. Appointing a new Audit Partner would also result in further delays as they would need time to understand the Council’s structure and review already completed work. The Financial Reporting Council (FRC) had recruited a new Head of Local Audit who had a background in local government auditing. It was hoped that this would result in changes to requirements in relation to local government audits, which the SDFI said differed little from private sector requirements despite major differences in operational requirements.

The Committee asked what the outcome would be if the April deadline was not met. The SDFI explained that April was when BDO, in line with other auditors, would focus on NHS-related audits and therefore the completion report would be delayed to July 2023. It was hoped that this would be avoided.

The IA and the SDFI clarified that the Council faced no penalty for late completion nor was there a requirement for the filing of audits under the relevant legislation. However, the Council was required to publish accounts with a statement that the audit had not been completed.

The IA clarified that the law stipulated that local authority auditors must be separately licenced and only those auditors were permitted to sign off local authority audits adding that there was a limited number of auditors qualified to do so. The IA, responding to the Committee’s questioning, said that if there were further delays, the Council had the option of directly approaching PSAA, which appointed the auditor.

The Committee noted the update.