Agenda item

Debbie Hanson [KM1] from Ernst Young LLP introduced the report, reminding the Committee that the provisional report was produced and presented in April 2022. She referred back on several errors which had been identified, which the auditors and the Finance Department had constructively worked on to resolve. 

Debbie Hanson said that she recognised the pressures which the Finance Department had been under. She said that she hoped that the Committee would approve the accounts, for which she would then undertake final checks and be in a position to issue an unqualified opinion and conclusion.  

The Chairman asked how the pandemic had affected audits in terms of the time spent by auditors on site in offices and with regards to audit fees.

Debbie Hanson said that pre pandemic all audits were completed on site, but that for 2020 these were wholly undertaken remotely using remote technology. She said that although this had worked well, there was no substitute for people being in the same room. She said that extra observational work had been required with remote working to ensure competency and accuracy which was reflected in the fees relating to covid. 

The Chairman said that the understood the difficulties which the Finance Team had been working under and extended his thanks to them.  

Debbie Hanson drew Members’ attention to the Executive Summary which started at page 14 of the report. She said that changes to the plan had been identified relating to Covid, that the risk around the Minimum Income Provision had been removed and that no risks had been identified around value for money.

Debbie Hanson referred to page 17 of the report which highlighted key risks, findings and conclusions and gave Members an overview of these. 

Debbie Hanson referred to page 18 of the report and said that the Business Rates error which was identified was a specialist’s calculation error had been corrected in the council’s financial statements. She said that the error which was identified in the group cash flow statement had also been corrected by management. She said that no issues had been identified in relation to grant income associated with Covid-19.

Debbie Hanson referred to page 34 of the report which detailed audit differences and gave Members an overview of these. She said that a number of these differences were outside of the council’s control, but some were classification errors, with the biggest error relating to PPE.

The Business Finance Partner said that the procedure relating to PPE was correct, it was the presentation which was incorrect. Debbie Hanson confirmed that this had no effect on the council’s balance sheet. 

Debbie Hanson drew Members’ attention to page 35 of the report, which detailed a national issue which was identified in early 2022 in relation to accounting for infrastructure assets. She said that this issue effected all local authorities and a statutory override had been applied to enable the reporting of such assets on a net book basis until 2024/25.

The Chairman asked why the override was in place until 2024/25. Debbie Hanson said this was a temporary solution which had been put in place whilst the sector looked for an alternative for the accounting infrastructure assets. The Business Finance Partner said that the council had infrastructure assets such as bridges and footpaths.

Debbie Hanson referred to page 43 of the report which gave an assessment of financial controls. She said that the lease point was highlighted within this section, and a recommendation made that the council should robustly monitor all active leases through the capital asset register. She reiterated again that this was a disclosure and presentation issue.

The Chairman thanked Debbie Hanson for her report. He referred to page 49 of the report and asked if the Public Sector Audit Appointments (PSAA) would look at the fees charged. Debbie Hanson said that all fees would be submitted to PSAA. She said that compared to ten years ago the complexity and expectations of the work carried out by auditors was incomparable.  

The Chairman said that it was fair to say that audit fees were increasing. The Head of Strategic Finance and Property said that such fees had tripled. He confirmed that the audit was procured by the PSAA competitively, with the fees being those   which were bid.

Councillor Alder asked if the Head of Strategic Finance and Property was confident that he had enough staff to carry out a review of procedures in a timely manner. The Head of Strategic Finance and Property said that the aforementioned report to the Chief Executive included a bid for extra staff to both deal with the issue of debtors and to assist with the production of   the accounts (the latter of which was a considerable piece of work, which became more complicated every year).

Councillor Alder said that she thought that Members were in agreement that the council should concentrate on the recouping of it’s loses to bring in revenue. She said that although it was important for the council to record the value of any property this should not be so much of a priority.  

It was moved by Councillor Alder and seconded by Councillor Fernando that the recommendations as detailed, be approved. After being put to the meeting and a vote taken, the motion was declared CARRIED.

RESOLVED – that the External Auditor’s Audit Results Report 2020/2021, be received.