Issue - meetings

Verbal update by external auditors

Andrew Smith, Grant Thornton, gave a verbal update to the Committee highlighting the following information:

a)  It is positive that recruitment has been successful and there is now greater capacity within finance teams, however there are still areas that the External Auditor is waiting for information on, for example in relation to valuations and adjustments to the Housing Revenue Account (HRA). 

b)  The key area that the External Auditor is waiting for information from the Council about is the extent of override of management controls.  A review is about to commence, but the External Auditor has raised concerns about the scope of the review with the Chief Executive and Section 151 Officer and will be putting those concerns into writing.

c)  The Value for Money report will be presented to the Committee at its meeting in February 2023.  It is anticipated that the report will be adverse for 2019/20 with significant weaknesses in 2020/21.  The weaknesses will not be a surprise for the Council and relate to the issues identified by the Ofsted inspection of children’s services, procurement arrangements, financial management reporting arrangements, HRA unlawful payments and general financial capacity within the Council and the impact of this on driving forward improvement.

d)  It is also anticipated that the findings and recommendations from the review of selective licensing, which came about as a result of a matter being raised by a member of the public, will be available in February.

During subsequent discussion the following points were made:

e)  Progress has been made in relation to the last few months of the operation of Robin Hood Energy but issues have not yet been resolved to the External Auditor’s satisfaction.  However, there is a fair degree of confidence that the issue won’t result in accounts being qualified.  Over 50% of the necessary information is now available and that will be sufficient for the group accounts. 

f)  The third party review of the management override of controls will make use of work that has already been carried out in relation to this issue to avoid duplication.  The review will focus on new areas that haven’t been looked at yet such as ring-fenced grants that the Council receives.  The External Auditor anticipates that other examples where controls did not work will be identified through this process.  EY was appointed to carry out the review ten days prior and is now mobilised and collecting data.  It is anticipated that the review will take approximately ten weeks and conclude in mid-February 2023.

g)  The External Auditor was happy with the scope for the review of management override of controls that went out to tender, but has significant concerns about the approach proposed by EY.  The approach seems to be focused on controls assurance rather than investigatory and therefore doesn’t fully fulfil the scope.  There have been lots of conversations about this but agreement has not yet been reached, and therefore the External Auditor will be putting his concern in writing to the Chief Executive within  ...  view the full minutes text for item 50