Agenda item

The Azets Partner introduced the item, which comprised of a progress report -giving interim findings and what was likely by the next audit backstop date of 28 February 2025, and a briefing note – which summarised guidance for the government’s local audit backlog recovery period.  

The Azets Partner said that the assumption was that the council would miss the audit backstop date of 13 December 2024, as the public inspection period for its 2022/23 accounts (which were being audited by the council’s previous auditors, EY LLP) would run until 18 December 2024.

The Azets Partner said that work had been undertaken earlier in the year in anticipation that the backstop date of 13 December 2024 would be met. He said that as this was now not the case, and as there would be too much work to complete (for a council with two years of unassured accounts) to meet the 28 February 2025 backstop date, the probability was that a disclaimer would also be issued for the 2023/24 accounts.

The Azets Partner said that EY LLP’s Value for Money (VFM) work would be considered when they undertook their own VFM work for 2023/24. He said that he saw little benefit to causing further delays with this, and so as soon as EY LLP had concluded their VFM work, they would also issue theirs in line with the backstop dates.

The Azets Partner said that the report set out the areas which were planned to be undertaken (if possible). He said for those areas where work was not possible, the report illustrated the build back position for a number of years to come.   

The Azets Partner said that the guidance aimed to build back evidence for clean opinions, but that in the interim disclaimers were likely. He said that the audit years before Azets’ appointment would need to be revisited, and that some work undertaken to maintain a full trail for assurance, a plan for which and updates would be shared with the Committee. He said the biggest risk for this was the council’s general fund.

The Azets Manager drew Members attention to key paragraphs within the report, which included the planned procedures for the 2023/24 audit, and detail on possible further procedures from page 93. She referred to page 99 which showed areas in red and amber which were anticipated not to obtain assurance, and page 100 which showed VFM work, with no significant risks identified.    

The Chair thanked the Azets Partner and Manager for the report.

Councillor Deering asked if the Azets Partner could give assurance to residents that the audit backlog/issues were not of the council’s making.

The Azets Partner said that it was not surprising that delays had occurred, as a perfect storm had occurred with a change in regulations, leaner finance teams and more complex work placing a greater challenges on authorities. He said that he could not comment on the council’s relationship with EY, and that the situation was a multi-faceted piece.

The Head of Strategic Finance and Property said that The Society of District Council Treasurers have asked the Chartered Institute of Public Finance and Accountancy (CIPFA) and the government to consider reducing the audit workload on local authorities. He gave examples of processes which could be streamlined, noting that council accounts used to be approximately 25 pages in length, and now comprised of over 200 pages.

Mr Sharman asked for a timeline of when the 2023/24 accounts would be produced.

The Head of Strategic Finance and Property said the target for production of the accounts was Christmas 2024, with the public inspection period to begin in January 2025. He said that due to staff sickness this timeline could now not be guaranteed.

Mr Sharman asked for the impact of this potential delay on Azets audit work.

The Azets Partner said that if the timeframe as stated (by the Head of Strategic Finance and Property) was met then the 30-day inspection period would end in late February 2025, and therefore the backstop date of 28 February 2025 could still be met. He said that any delay would impact Azets recovery work for future years.

The Chair asked the Azets Partner if he was receiving engagement form the council.

The Azets Partner said that they were receiving engagement from the council, but that not all of the work had been completed by the interim stage as wished. He said that an unplanned additional visit was carried out, and that the desired position had now been mostly achieved.

The Azets Partner said that they were conscious that the Finance Team was small, and that they were also dealing with EY LLP, but Azets work was dependent of the production of the financial statements. He said that it was intended that the next report would come to the January 2025 meeting of the Committee.

RESOLVED – that the External Audit Interim Progress Report 2023/24 be noted.