Agenda item

Joint Report of the Chief Fire Officer and the Treasurer to the Fire Authority

Becky Smeathers, Head of Finance and Treasurer to the Authority, introduced the report which presents the External Auditor’s draft ISA 260 report to members and seeks the approval of the management representation letter to the External Auditors.

Neil Harris, External Auditor of Ernst and Young LLP, joined the meeting via zoom.

The following points were highlighted:

a)  the audit, and so report, have been delayed due to national issues which have been previously reported to members;

b)  the Service’s Finance Team are thanked for their co-operation and assistance in preparing the audit in challenging circumstances;

c)  since an update was last provided substantial progress has been made on the key areas of the accounts and financial statements, including risk and higher risk;

d)  there are no material adjustments that have arisen from the Audit, only matters of disclosure which do not affect the overall figures;

e)  areas of procedures are being examined  but to date an unqualified opinion is predicted;

f)  value for money is also examined and areas of risk due to weakness sought, but none have been found;

g)  the audit report is not in a position to be issued and work continues regarding matters referred to in appendix B to the report. It is anticipated work will be completed and the audit ready to be signed off at the Authority’s meeting on 22 July 2022.

Authority members’ questions were responded to as follows:

h)  with regard to the uncorrected disclosure misstatements referred to within the audit differences section, this is a turnaround error required to be reported but was a projected difference that was adjusted for that year, which moves into the 2020/21 audit and is below audit materiality;

i)  the Audit Team found a small error of 2% on a sample which then was expanded to 2% across the whole expenditure, which totalled £1 million. £1 million was not the value of the actual error;

j)  55% of organisations have had their accounts completed, whilst 45% are yet to be signed off. This is a similar picture across all audit providers and the sustainability of public sector audit has been the subject of much review, including the incremental shift and the growing requirements of auditors to apply an increasing number of professional regulatory standards;

k)  Ernst and Young would never charge additional fees as a result of delays if the fault sits with the company. Auditors have highlighted for the past few years that the scale of fees across the board are not appropriate for the level of audit required to meet quality and professional standards. This is an issue which Central Government needs to resolve.

Members’ comments included:

l)  mounting financial pressures, including inflation, are impacting on everyone, including the people we employ so we need to keep lobbying with regard to pay;

m)  whilst the annual audit fee was initially set at £23,000, it has now reached £45,000. Resilience needs to be built into a contract so that such additional charges do not evolve. The Authority needs to know what the final cost will be to manage our finances;

n)  it’s frustrating that the delay in finalising the audit is an ongoing issue and accounts won’t be ready until July. Also it’s a concern that a fee has been agreed and has since risen significantly. We need to ensure we receive the correct level of service to ensure citizens have confidence in the Authority;

o)  Yes, the completion delay and rising costs has been an on-going issue and is widespread across the public sector. The Chair and members have been lobbying Central Government regarding this to ensure it isn’t repeated.

Resolved to note the contents of the draft External Auditors ISA 260 report is attached as Appendix A to the covering report.