Agenda item

The Head of Strategic Finance and Property introduced his covering report. He said that the External Auditor would follow his introduction to present their report, which would set out the final results of their delayed audit of the 2020/21 statement of accounts.

The Head of Strategic Finance and Property drew Members’ attention to the links provided within the summary paragraph of his report. These links took followers to the Minutes of the meetings of the Committee held on 5 April 2022 and 16 March 2023 where the Interim Audit Results Report 2020/21 and the Receipt of the External Auditor’s Audit Results Report 2020/21 where received.

The External Auditor sought to clarify some of the points within the Head of Strategic Finance and Property’s covering report.

The External Auditor referred to page 79 of the report and said that the protracted timeframe described was in part due to the communication method used between the Auditors and the Council’s Finance Team. She explained that the submission of papers was completed via a canvass portal, which was more secure than email and allowed multiple staff members to view documents, but which could cause users to have to load papers multiple times. She said that this was an issue which would be looked at and streamlined for next year.

The External Auditor said that the problems which related to the errors in the calculation of the net pension liability affected all the bodies within Hertfordshire. This resulted in the Actuary having to produce an updated ISA19 report, which has impacted all the audits in Hertfordshire.

The External Auditor said that to catch up, work for the 2021/22 audits started in January of this year, before the previous audit for 2020/21 had been concluded. She said that the target to complete work for 2021/22 was March 2023, but that requests for information from the Council had been understandably delayed due to the Council’s budget and other internal actions. She said work was now required to produce a clear timetable for completion, and she assured Members that the External Auditor was now working towards an estimated completion date of November 2023.

The Chairman thanked the External Auditor for her clarification, and asked Members if they had any questions.

Councillor Deering asked if the Council was reserving its position as the delay to the Audit was very significant and had consequences for the Council.

The Head of Strategic Finance and Property said that the Auditor had included additional fee analysis at Appendix B to their report. He said that the scale fees were set by the Public Sector Audit Appointments Limited (PSAA), and any additional fees would also be moderated by the PSAA.

Councillor Deering said that, as detailed in the report, the delays had caused the Council inconvenience, extra work and extra cost, and asked if the Council was therefore seeking reimbursement from the Auditors or if it was reserving its position. 

The Head of Strategic Finance and Property said that no such conversation regarding fees had taken place with the Auditors. He said that the Audit was conducted under a statutory regime, and he would therefore need to take advice from the Monitoring Officer. 

Councillor Deering asked that the Head of Strategic Finance and Property report back to the Committee once he had consultation with the Monitoring Officer.

The External Auditor said that it should be noted that some of the delays were caused by the Council not having the capacity to provide information to the Auditors in a timely manner. She said that it would not be appropriate to attribute all the delays to the Auditor.

Councillor Deering said that he understood what was being said and that he did not wish to apportion blame, hence the neutral term used in his question.  

The External Auditor introduced her report. She said that the report was required to be produced following the conclusion of the Audit work and included commentary on the Council’s Value for Money Arrangements.

The External Auditor referred to page 86 of the report which gave an unqualified opinion on the Council’s financial statements for which there were no concerns.

The External Auditor said that there were four adjustments which reflected errors in previous years. She said that these would feed through into the provisional audit plan which Members would also be taken through for the next item on the agenda.

The External Auditor referred to page 105 of the report, which gave Value for Money commentary against three key areas, financial sustainability, governance arrangements and arrangements to improve economy, efficiency and effectiveness. She said that there were no concerns in these three areas.

The Chairman thanked the External Auditor for her report and asked Members if they had any questions.

Councillor Jacobs referred to page 87 of the report and asked for clarification on the Auditor not yet issuing their certificate for 2020/21. He asked if the Audit was therefore incomplete.

The External Auditor said that every council in the country found itself in the unusual situation where a certificate of a completed audit could not be issued until the National Audit Office had clarified the additional work they may require for sampled bodies. She said that potentially the Audit was incomplete should East Herts Council be selected for sample, and that this was out of the Council and the Auditor’s control.

The Chairman asked the External Auditor if the 2021 Audit was a reflection on how the Council had been audited in previous years.

The External Auditor said that it was difficult for her to comment as she had not completed the previous year’s audit.   She said that the level of errors identified was greater than in prior years, but this in part due to an increase in focus on certain areas. She said that some of the errors identified were technical and had no impact on the bottom line, being presentational only.

RESOLVED – that the External Auditor’s Audit Results Report 2020/21 be received.