Agenda and minutes

There were no declarations of interest.

The minutes of the meeting held on 27 July 2020 were confirmed as correct.

The Council’s Chief Accountant introduced a report on the Statement of Accounts 2018/19 and the associated ISA260 Report from the Council’s external auditor, BDO. He regretted that Appendix 5 of the report, the Group Accounts for 2018/19, which was marked as ‘to follow’, was not provided to the Committee, as changes were still being made to these accounts. He assured the Committee however, that BDO had almost completed their work on these accounts, which would soon be subject to their internal review.

The Chief Accountant explained that any significant adjustments made to the Statement of Accounts since the Committee received the draft version in July 2019, had been highlighted in yellow to enable Members to compare and note the changes made.

BDO’s Senior Manager provided an overview of the ISA260 report, highlighting that:

·  Testing work relating to the single entity accounts was now almost complete; and

·  The net value of uncorrected misstatements identified during the audit was £422k in the Comprehensive Income and Expenditure Statement and £422k in the Balance Sheet, which was below the materiality tolerance of £11m for the single entity accounts.

BDO’s Assistant Manager provided an update on the audit of the group accounts, since the last meeting, stating that:

·  BDO was unable to support some of the values being used in the version that was being reviewed at the time of the last meeting; however, these had now been corroborated;

·  Some of the consolidation adjustments which were identified as incorrect had now been corrected;

·  There were some errors in material intergroup loans in 2017/18 values that had now been corrected;

·  The position now was that BDO considered the group accounts to be materially accurate, and they were now subject to senior review; and

·  The next key piece of work in relation to the group accounts was to conclude the review on post balance sheet events.

The Chair expressed her significant disappointment in relation to the following issues, with regards to the Statement of Accounts:

·  Despite all the assurances given at the previous meeting, the Committee still had not been presented with a complete set of accounts and a complete ISA260 report;

·  There was no effective communication with her in advance of the papers being circulated and the meeting itself, about the delay in finalising the Statement of Accounts and the reasons for it; and

·  The ISA260 report, in respect of the pension fund, was not provided until requested, and was only received this morning via email circulation. 

Members concurred with the Chair’s comments and asked what the reasons were for the further delay in presenting a final Statement of Accounts. They urged Council officers and BDO not to procrastinate and do everything necessary to conclude the audit of the 2018/19 accounts, so that the impact on the audit of the 2019/20 accounts could be minimised.

The Council’s Finance Director stated that much hard work had gone on to get the audit to the current position. Whilst he understood and shared the Committee’s frustration at not having  ...  view the full minutes text for item 36.

The Chair asked officers to update the Work Programme to include the report requested under item 4 of the agenda on the lessons learnt from the 2018/19 accounts audit process.

The Independent Advisor stated that the other issue to consider going forward was the implications on the Work Programme of the Redmond Report published this month, which detailed the outcome of a wide ranging review of how local government external audit is regulated, procured and market managed. Most of the recommendations to arise from this report were addressed to the Government, which was yet to formally respond. However, the following three recommendations were ones which local authorities could respond to on their own initiative:

·  That audit committees include at least one Independent Member;

·  That audit committees produce an annual report; and

·  That local authorities produce a report in summary form of expenditure or financial performance against their budgets.

The Chair asked the Finance Director to make arrangements to prepare a report for a future meeting of this Committee, summarising the implications of the Redmond Report for the Council and the Committee, with recommendations as to any arrangements that need to be put in place in light of it. The Chair also asked that the Redmond Report be circulated to the Committee for information.

The Finance Director stated that earlier in the year, the approval of the 2019/20 Accounts and the associated Audit Completion Report (ISA260) had been scheduled for the 16 November 2020 meeting; however, it was now clear that officers and BDO would not be in a position to present these reports in November. The draft 2019/20 accounts had been published and officers were working closely with BDO on the options as to the best approach to take to the audit.

The BDO partner described the challenges faced by external auditors in terms of resourcing and working in remote settings, with many audit firms, including BDO facing significant delays in audit work. Given the experience of the 2018/19 accounts audit, she did not wish to make promises to the Committee that could not be kept. She confirmed that it would not be possible to bring the Audit Completion Report for the 2019/20 accounts to the November meeting; however, she hoped that the audit would be completed within approximately, a four month period. A clear timeline for delivering this audit would need to be developed and shared with the Committee, and this could be presented at the meeting in January 2021.

The Council’s Finance Director stated that he hoped that the 2019/20 accounts audit would be complete before the end of this financial year and officers would be working with BDO to develop a timetable. The Chair thanked Finance Director and the BDO Partner for their transparency.

The Chair asked that the Work Programme be updated to reflect the above discussions.