Agenda item

Purpose: To inform Members about the work of the External Auditor, Grant Thornton.

The Committee considered a report (Agenda Item 5) concerning the External Audit - 2021/22 and 2022/23 Audit Findings Report from the Council’s external auditors, Grant Thornton.

Representatives from Grant Thornton (GT), Sophia Brown, Jasmine Kemp, and Paul Dossett introduced the report and highlighted that the audit findings made clear limitations about the scope imposed by the backstop. This resulted in GT not being able to provide an opinion on the 2021/22 and 2022/23 financial years. Work had been done on the 2021/22 audit, including the fieldwork and selection of samples. However, by the time this was paused in April 2023, work had not been completed.

The representatives from GT discussed the timeline of their work and what information had been requested from the Council and at what point. They highlighted that information about the valuation of assets was needed by GT for July 2023, but that this was only provided in October 2023. In addition, when they did receive the valuations in October, they indicated that the financial statements had not been updated to account for that revised valuation.

On their Value for Money work, a significant weakness in terms of financial sustainability was identified in 2022/23 and had been reported to the Committee in April 2024. On audit fees for 2021/22 and 2022/23, the Committee were informed that the Public Sector Audit Appointments (PSAA) would assess the work done by GT on those audits to determine if the Council should be due a fee rebate. As no substantive work had been conducted on the 2022/23 accounts, this was considered likely.

Finally, the GT representatives noted that the delay in certification of the 2022/23 accounts was due to the receipt of an objection, which was being reviewed by an objection consultant. However, they confirmed that the complaint had no material impact on the 2022/23 financial statements.

Members asked for clarity about why there was a delay in the provision of information about the valuation of assets. In response, the Interim Chief Executive clarified that all the information was made available to GT, but that additional work had been needed to secure the valuations. It was also highlighted that other work could have been done alongside the request for the valuation and that this not happening may have contributed to the elongated audit period. The representatives from GT clarified to the Committee that the resource provide to them precluded work beyond the valuations at that point and that, as the valuation figures were not included in the financial statements when they were provided, this meant that they could not begin their testing. Members expressed concern about the length of time needed to get the necessary valuations as well as the failure to successfully complete these historic audits.

On a question about the Council’s weakness on financial sustainability and if this had got worse since it was identified, the representatives from GT confirmed that this was being addressed by the authority. They also confirmed to Members that it was a widely acknowledged point and something they had raised at the Governance Committee meeting in April 2024.

The Committee enquired into the language GT used in their disclaimer of opinion for the 2022/22 and 2022/23 audits. In response, the representatives from GT confirmed that this was the standard language that they used for all local authority audits that they would be disclaiming. The Interim Chief Executive also added that, due to the backstop of audits, a disclaimed audit opinion would be likely for the next two financial years as there would be limited assurance over the opening balances.

In response to a question about the lessons that had been learnt from these backstopped and disclaimed audits, the Interim Chief Executive indicated that there was a recognition that more resources would be needed to ensure they were completed in a timely manner. This would be reflected in the significantly higher audit fees for the upcoming period than had been agreed for the previous period of 2018 to 2023.

Overall, as the Committee were satisfied with the responses to their questions, they agreed to note the External Audit - 2021/22 and 2022/23 Audit Findings Report.