Agenda and minutes

The Independent Advisor (IA) to the Committee, Stephen Warren, wished to record an interest in relation to item 6 on the agenda (the Implications of the Redmond Review on the Council and the Audit and Standards Committee). The IA stated that he was currently engaged by Public Sector Audit Appointments Limited, which was the company that appointed the Council’s external auditor.

The work that the IA was engaged to undertake involved advising on the potential impact of new and changed auditing accounting standards on the volume of work necessary to be performed by external auditors, and therefore the potential implications for fee variations.

The IA stated that his analysis was of general application and did not involve advising on applications for fee variations for individual authorities. He did not believe that the engagement presented any professional conflict of interests; however he did feel that it was appropriate to declare the interest to the Committee.

The minutes of the meeting held on 16 November 2020 were confirmed as correct.

The Council’s Chief Financial Officer delivered a verbal update on the lessons learnt from the 2018/19 Accounts Audit. Both the External Auditors (BDO) and the Council’s Corporate Finance Team were keen to undertake a review to better understand the reasons why delays had occurred during the 2018/19 Accounts Audit and how best to avoid a repeat situation from reoccurring. A Root Cause Analysis (RCA) approach was suggested by BDO, to provide a structured way to organise the review, with an external facilitator.

Six half day sessions were attended by Council officers and BDO auditors, to agree a problem statement and hold discussions into any underlying causes, effects, mitigations and solutions. As a result of this process, over 90 solutions had been identified and the analysis of these was currently being undertaken. A final session was to be arranged for mid-February 2021 to assess the final 43 solutions. The Chief Financial Officer stated that he would bring the full report arising from the lessons learnt process, along with the action plan for implementation, to the Committee’s 27 April 2021 meeting.

In response to several questions, the Chief Financial Officer stated that:

• The focal point of the lessons learnt review was that the audit had not been completed in a timely fashion. This statement had enabled both Council officers and BDO to branch off into different areas that they had collectively agreed.
• Council officers and BDO looked into different causal paths, noting the different root causes that had resulted in the audit not being completed in a timely fashion.
• Through the four elements of the cause-and-effect analysis, Council officers and BDO were able to consider each other’s perspectives as to the difficulties behind the audit process, look carefully at what had caused those issues to occur and continue to branch out further to understand any problems.
• A lot of the solutions that had been suggested as part of the lessons learnt process had already been considered as part of the planning for the 2019/20 accounts audit.
• The Council’s Chief Accountant had developed a plan to deliver the 2019/20 accounts. He had already reflected on what could have been improved, with many of these suggestions having been reflected on as part of the Root Cause Analysis.
• Other solutions that had been identified, as well as how many had already been implemented by both the Council and BDO, and those that were still outstanding, would be detailed within the full ‘Lessons learnt from the 2018/19 Accounts Audit’ report that would be presented at the 27 April 2021 Audit and Standards Committee. Any actions that were outstanding at this point would be detailed within an Action Plan for presentation to the Committee, with target dates for implementation.
• Part of the process that the Council and BDO went through was to evaluate each solution and identify which ones were feasible. If any solutions were not feasible, these were discounted and removed from the process of work.
• Communication could have been improved between the Council, BDO and  ...  view the full minutes text for item 49.

The Senior Audit Manager for BDO delivered a report on BDO’s External Audit Plan for 2019/20, detailing the key areas of this and proposed action to be undertaken.

In response to several questions, the Senior Audit Manager stated that:

• It was the objective of BDO to complete the 2019/20 accounts audit in April 2021 and that they had added extra resource to their team in order to facilitate this. If BDO were not able to complete this by April 2021 for any reason, they would inform the Audit and Standards Committee as soon as possible. After this, they would provide a clear timeline for the accounts audit completion.
• One of the mechanisms introduced as a result of the Root Cause Analysis had been to increase the number of meetings, at both operational and strategic levels. This had resulted in a weekly update on the progress of the audit. If there was any slippage, BDO was working with their team and with the Council’s Corporate Finance team to ensure that work could be caught up, although this had not occurred so far. The Council’s Chief Financial Officer stated that additional meetings had already been scheduled between BDO and the Council and it was suggested that the meeting that had been scheduled between the Chair of the Committee, the Independent Advisor and the Chief Accountant for 19 March 2021 could be used to inform the Chair of progress.
• BDO had planned to have the audit fees finalised by the end of January 2021, but had had to refrain from giving an exact date as the BDO Engagement Lead had been taken ill. As such, BDO were unsure as to when she would return, but were aware that the Engagement Lead would need to provide the audit fee sign-off from their side. As BDO had only recently been made aware of this, they were looking into moving into contingency plans but emphasised that this would not delay the progress of the audit. BDO would provide the Committee with the finalised audit fees by mid-February 2021.
• If the BDO Engagement Lead was to be off-sick for a longer period of time, BDO would flag this with the Audit and Standards Committee and inform them of their contingency plans.
• The completion of the Risk Assessment was dependent on BDO receiving the group accounts, which they hoped to receive at the end of January 2021. If these were received by this date, they could be fed into the BDO fee plans. It was emphasised that this would not change the communication of the finalised audit fees to the Committee, which would be provided by mid-February 2021. BDO was still working through the Single Entity details and would need to receive sign-off from the Engagement Lead (or the designated contingency officer).
• The Sustainable Finances (use of resources) section of the Audit Risks Overview on page 18 of the agenda showed that whilst the risk rating was significant, the fraud risk present, the testing approach and the impact  ...  view the full minutes text for item 50.

The Council’s Chief Financial Officer delivered a report on the implications of the Redmond Review on the Council and the Audit and Standards Committee. The Redmond Review was commissioned to review the transparency and quality of the local audit market, and following its publication in September 2019, the Redmond Review made a number of recommendations which could be considered by both Central and Local Government. Those which could be implemented by Local Authorities without a change in legislation, were detailed within the report.

In response to several questions, the Chief Financial Officer stated that:

• If adopted by the Council, the Statement of Summarised Accounts would be a new statement that would summarise the accounts and link these back to the Council’s budget. The aim of these would be to simplify the information that was in the accounts into layman’s terms. This would therefore help all Members across the Council, as well as members of the public, to understand the content of the Statement of Accounts and whether the Council was delivering an effective public service that delivers value for money services.
• The Council was waiting for further guidance on the standardisation of these statements, which they were expecting to come from the Chartered Institute of Public Finance and Accountancy (CIPFA), with a possible trial for the Council’s 2020/21 accounts.
• The reason for waiting for the Statement of Summarised Accounts to be standardised, was to allow comparison to be drawn between different Councils. There was currently some discretion as to what councils had to include in their statutory accounts and the format that these took, which could make comparing the statutory accounts of different councils quite difficult. With standardised statements across the entirety of the local government sector, it would be much easier to make comparisons between different councils.
• In paragraph 2.10 on page 62 of the agenda, there was a recommendation for the External Auditor to submit an annual report to Full Council (Assembly). However, this recommendation was notwithstanding any other reports that the Committee may have wished to produce, such as their own annual report.

In response to this final point, the Independent Advisor (IA) to the Committee stated that:

• He agreed with the comments of the Chief Financial Officer, in that the Redmond Review recommendation was for the External Auditors to produce an annual report for Assembly. This would reinforce the importance of the external audit role and would provide an independent view directly to Assembly.
• He fully supported the idea of an annual report to be produced by the Committee itself, which if presented to Assembly at the same time as the External Auditor annual report, could valuably compliment this.
• The initial Government response to the Redmond Review was to reject its key recommendation, namely the establishment of a new office of local audit regulation, bringing together various functions in respect of standards, procurement and specification of local audit. 
• The sector awaited the full Government response to the Redmond Review, which was due in the first quarter  ...  view the full minutes text for item 51.

The Head of Law presented a report updating the Committee on complaints received against Members of the Council.

In response to several questions, the Head of Law stated that:

• The details from the findings of the complaints were not to the knowledge of the Chair of the Committee. As a result, she would take this back to the Monitoring Officer for further discussion.
• Whilst there were some issues around confidentiality and GDPR, she would discuss how the Committee could be provided with further information about complaints, as well as the potential to have a Members Update on these, with the Monitoring Officer.
• She would find out further information about any external legal costs that were associated with Member complaints.
• In relation to the length of time that complaints took to resolve, whether these time periods were proportionate to the matter being investigated and how the length of time affected the complainant in terms of welfare issues, was an evaluation that would be made by the Monitoring Officer. There was no time limit in terms of looking at these cases, but these factors would be considered by the Monitoring Officer when they decided to continue with the complaint. As such, she would speak to the Monitoring Officer in order to provide the Committee with further clarity around this.
• In relation to the importance of Members following the Nolan principles of public life and that these being emphasised in Assembly, she agreed to discuss this with the Monitoring Officer and see how best to reinforce this position.

The Committee resolved to note the report.

The Chair informed the Committee of the following change that had been made to the Committee’s Work Programme 2020/21, subject to the Committee’s agreement:

• The Committee had been due to receive a Risk Management Update at its 18 January 2021 meeting; however as an update had been provided around this at the 16 November 2020 Committee, it was felt that it would be more appropriate to bring this item back to the Committee at a later date.

Following on from the verbal update provided during the ‘Lessons learnt from the 2018/19 Accounts Audit’ item at this meeting, it was felt that an item should be added to the Committee’s 27 April 2021 agenda, that would allow the Committee to consider the issues in greater depth, after the lessons learnt process had been concluded.

The Chair also confirmed that as agreed by the Committee during item 6 (‘Implications of the Redmond Review on the Council and the Audit and Standards Committee’), the preparation of an annual report by the Committee would also be included in the Work Programme going forward.

In response to a question, the Chair stated that the Covid-19 pandemic would only impact on the content of the reports received by the Committee, rather than the reports themselves. She cited the Internal Audit Report 2020/21- Quarter 1 and Quarter 2 (minute 41 from 16 November 2020 refers) as an example, noting that this report included information as to how the Council had responded to Covid-19, the effect of this on its systems and the mitigations put in place. Any reports that were presented on a quarterly basis to the Committee would still be presented in accordance with their expected timings.

The Committee resolved to note the Work Programme.