Agenda item

Yinka Ehinfun, Interim Chief Accountant presented a covering report attaching as appendices Grant Thornton’s proposed approach for delivering their responsibilities as the Council’s appointed external Auditor for the 2023/24 financial year (Appendix A), an up-to-date summary of emerging national issues and developments within the sector (Appendix B), and details of the Council’s management responses to key questions (Appendix C) as part of GT’s risk assessment procedures to obtain an understanding of management processes and the Council’s oversight of general enquiries of management, fraud, laws & regulations, related parties, going concern, and accounting estimates. 

Paul Dossett, GT Key Audit Partner, explained that they had prepared their workplan as presented in the context of not finalizing all of the planning work and so it could change, although he did not envisage any major changes. He highlighted the significant risk areas which were standard to all audits, seen as the risk of management override of controls and the potential for materially misstating the valuation of Council assets, investment properties and net pension fund liabilities. These would be assessed against the most recent set of audited accounts, those being the 2019/20 semi completed set. The Group Accounts would also be assessed taking into account the consolidation of all the Council’s significant subsidiaries as listed.

Finally in terms of timetabling, planning visits were noted as taking place between February and March with a final visit expected in July 2024, subject to the 2023/24 draft financial statements being produced by the Council. 

In response to the presentation a number of questions and comments arose as follows:

The presentation referenced the significant risk areas including the valuation of Council assets in respect of which GT’s views were sought as to whether the Council had this right.  It was noted that GT were intending to engage an expert valuer to assess the valuations prepared by the Council’s valuers and for which the auditor expert fees would cover. This piece of work was required so as to be compliant with accounting and auditing standards. However, this was not viewed as high risk in relation to either the General Fund or the HRA, as valuations would not have any material impact on service provision. There would of course be issues where assets were disposed of, and that was something all Councils would be expected to reflect on as there would be a risk to the public purse if the valuations were not right. From GT’s perspective they would be focusing on whether the numbers in the Council’s Accounts were right. What was important would be the valuation of investment properties as the Council would be looking for these to produce a year-on-year yield as well as maintaining their value for the long term.

Members were interested as to how prepared were the officers to meet the requirements/deadlines set by GT for the 2023/24 Accounts audit. GT had been liaising closely with Council officers in the Finance team during the planning stage of the audit. Monthly meetings were scheduled in calendars to keep abreast of progress with the Accounts for 2023/24 to ensure they were on track ready for the commencement of the main audit in July 2024. One of the key areas that officers were working on was closing down the 2022/23 financial statements including the Group Accounts. In respect to the latter,  GT had identified that a number of the subsidiary companies were up to date with their audited accounts, and consequently at this stage they were not unduly concerned that the Group Accounts would delay the overall audit timetable. 

Reference was made to the value for money arrangements based on the guidance issued by the National Audit Office and specifically the three key areas the Code identifies that auditors are expected to consider namely financial sustainability, governance and improving economy, efficiency and effectiveness. To that end GT updated the Committee with their findings to date, flagging up the risks they had identified as set out in Appendix A.

Michael Bate, the newly appointed interim Deputy Section 151 Officer reflected on his own observations as to the progress with the 2023/24 audit. He confirmed that following problems identified with the earlier audits additional resources had been allocated to the Finance Team, and that officers were working tirelessly to ensure that the deadlines set by GT were met and delivered accordingly to the reported timetable. This view was echoed by the Interim Chief Accountant who added that the team were also working hard to conclude the 2020/21 and 2021/22 audits so they could focus on the 2023/24 audit.

Moving on to GT’s audit risk assessment set out in Appendix C, and specifically their general enquiries of management, the Chair sought and received clarification from the Interim Chief Accountant as to officer response to the question around awareness of any circumstances that would lead to impairment of non-current assets.The officer also confirmed to the Chair that a separate audit risk assessment would be conducted by GT in respect of the Council Pension Fund Accounts.

The Committee noted the report.