Agenda item

The Director of Finance submits a report that includes an update on progress of the statement of accounts for both 2020/21 and 2021/22 and the delays arising due to issues around asset valuation.

The Deputy Director of Finance submitted a report which provided an update on the progress of the Statement of Accounts and external audit for 2020/21 and 2021/22. The report also provided an update on audit fees for 2022/23 and the appointment of the Council’s external auditors and audit fees from 2023/24 onwards.

The Chief Accountant introduced the report, noting that the delays in finalising the audits were due to a number of factors including a known national accounting issue involving infrastructure assets which was now being worked through as new legislation and guidance had been received. There were also 3 other main items causing a delay to the 21/22 audit which all involved the valuation of assets. It was important to note that whilst the committee needed to be updated on these items in the accounts, they were purely technical matters involving the valuation of fixed assets and did not affect the money the Council had to run its services. It was the intention to bring the finalised accounts to the March meeting.

Grant Patterson, Director, Grant Thornton, noted that following receipt of the government guidance, he expected a certificate could be issued for the 20/21 accounts, but there was further work to certify the audit as closed.

Members of the Committee considered the report and raised a number of points and questions.

It was queried how confident Grant Thornton were in signing off the 2021/22 Statement of Accounts. The Director, Grant Thornton noted that there were about 3 or 4 matters related to property, plant and equipment to be resolved, but the external audit report of the accounts should be completed in time for the March meeting of the Committee.

It was queried why the audit fees for 23/24 were forecast to increase so significantly. The Director of Finance in response noted that the auditors had faced many challenges, particularly around the increasing standards and complexity of audits, particularly around the valuation of assets. It was noted this increase was anticipated. The Director, Grant Thornton also commented that that Council joining the Public Sector Audit Appointments (PSAA) joint commissioning arrangements provided the best value for money. He also referred to the problems faced in terms of recruitment and retention of auditors and the need for staff to maintain a healthy work / life balance. The Director of Finance further noted that it was important that audits were completed in a reasonable timescale as delays diverted officers attention away from day to day service priorities. Noting further concerns about the increase in fees and value for money, the Director of Finance undertook to provide further information at the next committee meeting.

A further comment was made querying whether the delays, ie in relation to legislation / government guidance or audit methodology were likely to have been deliberate decisions by the government and create an ongoing impact. The Director, Grant Thornton noted that some of the delays to audits arose due to the pandemic and also issues regarding the valuation of assets. He also noted problems with recruitment to the sector. He felt that the government had shown some flexibility by setting new legislation to resolve the national Infrastructure accounting issue. He further noted that there were likely to be some further delays on audits in the short term, but the aim was to get back to the usual timetable as soon as possible.

RESOLVED:

1)    That further information be provided at the next meeting of the Committee regarding the increase in audit fees forecast for 23/24.

2)    That the report be noted; and

3)    That the appointment of Grant Thornton as the Council’s external auditor for a further five years from 2023/24 be noted.