Agenda item

The Council’s External Auditor Hayley Clark to present a report that summarises their work performed and conclusions reached to date for the Council’s  financial statements for 2020/21.

Report to follow.

Hayley Clark, External Auditor introduced the report, the purpose of which was to summarise work performed and conclusions reached to date for the Council’s financial statements for 2020/21.

Ms. Clark confirmed that audit procedures were well progressed.  External Audit continued to work through quality review procedures as well as general procedures on the review of the updated financial statements, with the aim of submitting a further report to Committee with its formal and final audit results in the New Year.

Ms Clark provided a brief analysis of the risks (fraud, significant, other) detailed in Section 2 of the report:

Fraud Risk

·       Misstatements Due to Fraud and Error.  External Audit considered this risk on all their audits and there were no matters to report to Committee.

·       Risk of Fraud in Revenue Recognition.  External Audit considered this risk on all their audits and there were no matters to report to Committee.

·       Risk of Fraud in Revenue and Expenditure.  There were no matters to report to Committee.

Significant Risk

·       Valuation of Property, Plant and Equipment (Land and Buildings and Investment Properties.  This was elevated to a ‘significant risk’ due to a change in the Council’s valuation specialist.  There were no matters to report to Committee.

Other Risk

·       Pension Valuation – Local Government Pension Scheme (LGPS).  This represented a heightened focus but not a significant risk.  As this audit was still in progress External Audit was required to consider any impact on the Council's financial statements.  This audit would be completed as soon as possible.

·       Going concern - there were some changes to the auditing standards that required External Audit to undertake more work on this.

Suyash Maharaj, External Auditor provided an overview of the Audit Differences, detailed at Section 4 of the report:

·       Five misstatements had been identified, two by senior management (change in pension figures/disclosures and tax income guarantee accrual reversal) and three by External Audit (capital adjustment account disclosure, officers' remuneration disclosures and provision disclosure).  These had been corrected and reflected in the current version of the financial statements.

·       Two misstatements had been identified by External Audit.  Disclosure relating to pensions benefits paid for 2020/21 had not yet been corrected by senior management.  Disclosure relating to the New Burdens Grant had been corrected by senior management.  However, External Audit had retained this misstatement on the uncorrected schedule, in order to review the final financial statements and verify the correction.

·       There were two uncorrected misstatements from the prior period financial statements, which had a turnaround impact on 2020/21.  The net impact of the misstatements was £1,826.

During discussion the following points were noted:

·       External Audit confirmed that the term ‘misstatements’ in their report referred to identifying an error or an adjustment made to the figures, as they appeared in the Council’s financial statements and there was no concerned about a broader risk of error across the financial statements.

·       External Audit explained that the disclaimer in their report, advising that it was ‘intended solely for the information and use of the Audit and Standards Committee, other members of the Council and senior management.  It was not intended to be and should not be used by anyone other than these specified parties’, was included in all their reports to ensure that External Audit would not be accountable if those outside the people specified relied on the information within the report.

·       External Audit advised that the outstanding actions detailed at Appendix B – Outstanding Matters were being progressed and would be completed as soon as possible.  They were aware of the need to prioritise audit procedures and had a focus on completing outstanding audits by redirecting resources and capacity.  It was anticipated that a further report would be submitted to the Committee in January or March 2024.

·       External Audit confirmed they were working towards a deadline of the 31 March 2024 to sign off the Council’s accounts.

·       The Committee thanked External Audit for the update they had provided.

RESOLVED that the Committee NOTED the work performed and conclusions reached by External Audit for the Council’s financial statements for 2020/21 to date.