Agenda item

The papers relating to this item are to follow.

The Council’s Chief Accountant introduced the Interim Audit Completion report that had been circulated as ‘Supplementary 1’ to the main agenda, stating that substantial progress had been made in the external audit of the Council’s 2018/19 accounts, with the Council now in a position to make the adjustments required to achieve an unqualified opinion.

The Senior Manager representing the Council’s external auditors, BDO, stated that:

·  The audit was currently going through the Council’s and BDO’s quality review processes;

·  Group accounts were in the process of being audited and the Interim Audit Completion report did not include any errors relating to that area;

·  BDO had identified creditors, debtors and the misclassification of transactions between the Council and the various group entities as significant risks in the audit, which had resulted in more detailed work having to be carried out;

·  The current net effect of uncorrected misstatements was £30.9 million on the comprehensive income and expenditure statement and £78.6 million on the balance sheet but the Council’s Finance Team were working to reduce the number and value of uncorrected errors so that an unqualified opinion could be given;

·  BDO had received an updated set of the ‘Statement of Accounts’, which it was in the process of reviewing;

·  Outstanding actions included undertaking a full review of the prior period adjustments and their total impact, reviewing the group accounts and agreeing any further adjustments with the Council’s Finance Team;

·  A draft letter of representation from the Council, which was appended to the report, asked the Council to confirm a number of matters relating to the audit and would be further updated once BDO had concluded its detailed audit work; and

·  BDO was independent of the Council and had no conflict of interest in undertaking the audit.

The Chair stated that she wished to put forward the following observations on behalf of the Committee and the Independent Advisor:

·  There were concerns at the further delays in the finalisation of the audit of the Council’s 2018/19 accounts since the last meeting of the Committee in February 2020 - regular updates would have kept the Committee better informed of the reasons for delay. She was aware that the Covid-19 pandemic would have impacted progress and asked officers to provide further detail for the Committee’s information;

·  In relation to the audit of the 2019/20 accounts, officers and BDO should work together to provide a detailed timetable to the Committee;

·  Officers should prepare an action plan in response to the recommendations made by BDO in their Interim Audit Completion report;

·  The Committee would like a future report on the additional fees proposed for the external audit of the Council’s 2019/20 accounts, together with an explanation of the proposed fees; and

·  The Finance Director should liaise with the Chair prior to the signing of the final version of the letter of representations on the Council’s 2018/19 accounts, to ensure that all the matters identified had been addressed.

In response to the point regarding the delay in the progress of the audit, the Finance Director stated that the day-to-day functions of the Finance Team had been significantly impacted by Covid-19, as they were supporting the Council’s overall response to the pandemic, which included capturing the expenditure relating to the pandemic and producing various reports for London Councils and the Department for Housing, Communities and Local Government, which required significant resources. Against that backdrop, the Team were working hard to complete the 2018/19 audit and move on to preparing the 2019/20 accounts.

A BDO Partner assured the Committee that BDO had revisited the timetable for the completion of the audit of the 2018/19 accounts, having received the second version of the Statement of Accounts and the group accounts, and had re-programmed the reviews required, which were due to take place in the first two weeks of May. It was anticipated that BDO would be in a position to give an opinion in the week beginning 18 May 2020.

In response to the Chair’s other observations, officers stated that:

·  There would be an opportunity to discuss the timetable for the audit of the Council’s 2019/20 accounts under item 7 on the agenda;

·  As the audit of the 2018/19 accounts had not been concluded, BDO’s proposed additional fees had not been discussed in any detail; however, this information could be provided once discussions had taken place with BDO; and

·  Appropriate arrangements would be made with the Chair before the final version of the letter of representation was due to be signed.

The Committee resolved to note the Interim Audit Completion report.