Agenda item

Report of the External Auditor

Andrew Smith and Mary Wrenn, representing the Council’s External Auditors (Grant Thornton), presented the External Auditor’s Audit Findings Report for 2023/24. The following information was highlighted:

a)  The draft accounts were published in December 2024, ahead of the backstop date in February 2025. However, the Audit Opinion to be given will be a ‘disclaimed opinion’ for the 2023/24 financial year due to it not being possible for the audit to be fully completed. A new ledger system has been put in place for the 2023/24 accounts to shows the underlying transactions and the reports that Grant Thornton have seen support the Council’s financial statements. This has given the External Auditors confidence as the audit process for 2024/25 progresses.

b)  Although testing has not been done on the opening balances, work has been done with the Council’s Finance team to pick out samples and ensure the process is clear, and there have been no issues with extracting transaction breakdowns. Historic issues such as the use pf management override control is still reported in the Audit Opinion. As part of the 2024/25 audit, the External Auditors will need assurance from the Council that those issues have been resolved and that solutions are working effectively. A statutory recommendation was issued in February 2024 and this forms part of the Audit Opinion for 2023/24.

The following points were raised in discussion:

c)  The Committee asked what historical issues were most affecting the audited accounts. The historical issues have been well documented, and Grant Thornton now needs assurance that the appropriate safeguards and controls have been put in place and that the Council is complying with those controls. The report sets out a historical position, but a great deal of improvement work has been done to rectify the issues identified. The Finance Improvement Plan (FIP) is well advanced, which CIPFA have been reviewing and is satisfied that the Council is on track. The Commissioners are also comfortable with the Council’s direction of travel and financial management. The Section 151 Officer is satisfied to sign off the 2023/24 accounts as a true and fair view of the financial position of the Council, in accordance with the CIPFA code of practice and standards.

d)  The Committee asked how many Local Authorities were being issued with disclaimed opinions for 2023/24. The Council’s External Auditors estimated that in the region of 40% of the sector would be receiving disclaimed opinions, and members agreed that the sector needed significant reform. The Executive Member for Finances and Resources provided the Committee with assurance that since issues with management override controls were identified, substantial governance work has been done over every single expenditure recharged to the Housing Revenue Account (HRA). Furthermore, a Spend Control process was implemented during the course of 2023/24 on every transaction.

e)  The Committee discussed the risks identified in respect of the operational management of the Council’s Risk Register (and that the Audit Committee did not always have timely sight of it), risk analysis and how the Council identifies risks that would trigger actions to mitigate them. There was a commitment given from the Council’s Section 151 Officer to bring the Risk Register to Audit Committee meeting for oversight on a more regular basis.

Resolved:

1)  To request that the Committee receives a regular progress report on how the Council is resolving any outstanding External Audit recommendations at least two times per year.

2)  To request that the Risk Register is submitted to Audit Committee meetings for oversight at least two times per year.

3)  To note the findings of the report.