Agenda item

Annual Audit Letter from the Council’s External Auditor (attached)

Audit Progress Report and Sector Update – report from the Council’s External Auditor (attached)

Re-energising Local Public Audit – report from the Council’s External Auditor (attached)

A representative from Grant Thornton presented the report and drew members attention to the Annual Audit Letter which was the public facing summary of the detailed audit work and discussions already held with committee members and presented in the Audit Report at the previous meeting.  He noted this would be the final Annual Audit Letter as it had been replaced henceforth by the Annual Auditors’ Report.  Members noted the areas of recommendation in the letter and that officers would regularly report on the implementation of the recommendations.

The representatives from Grant Thornton presented the Audit Progress Report and Sector Update.  It was noted that the Annual Audit Letter closed the 2019/20 financial year with an unqualified opinion.  Work had been completed on the Teachers’ Pension claim certification, but an extension had been granted for the certification of claims and returns in respect of Housing Benefit claims.  All the audit deliverables for 2019/20 had been received by the council and those for 2020/21 would be brought to the next meeting.

Members attention was drawn to the sector update which included information on the new Value for Money arrangements for 2020/21 which resulted from a review of the Code of Practice by the National Audit Office.  It was noted that the most significant change had been to the criteria underpinning the external auditors’ work which aimed to improve the value of the audit work to the taxpayer and council.  Henceforth, the external auditors would analyse the council’s arrangements for improving the performance of the value for money of the services it provided.  A more holistic report would incorporate matters such as benchmarking and best practice comparisons to form a useful commentary on the council’s arrangements for value for money.  Going forwards the Auditors’ Annual Report would highlight a change in recommendations and would focus on the identification of weaknesses rather than a binary opinion on the accounts and may take the form of general observations for improvement or in the case of a significant weakness, key recommendations on the action to be taken by the council.

Members asked questions on whether the previous criteria were not more active than the new criteria and the impact of the change in reporting approach on the council.  Members noted that committee members had been making their own inquiries into the operation of other authorities’ approaches to the work of their audit committees.

A representative from Grant Thornton further reported on revised International Auditing Standards (ISAs) and in particular the standard for Auditing Accounting Estimates and Related Disclosures which included significant enhancements in respect of the audit risk assessment process for accounting estimates of which the council had a number.  She highlighted the “How can you help” section for the committee which noted that the auditor will be making additional enquires of committee members and management for 2020/21 on the council’s accounting estimates in a similar way to their traditional enquiries on fraud risk assessment procedures and going concern considerations.  An error in the list of material accounting estimates was noted and a query raised on the meaning of level 2 and level 3 investments.  A request for a glossary of terms in reports was made.

A representative from Grant Thornton reported on recommendations from the Redmond Review into local authority financial reporting and external audit.  He explained the historical context to the report for member and noted that the report recognises the importance of the local government audit; sets out a new path for local authorities and their auditors including an annual meeting with the auditor and Full Council; recommends the greater inclusion of independent members on audit committees and appropriate training for audit committee members; comments on the role of the regulator in ensuring that audit quality is meaningful to the user of the accounts; recommends that CIPFA simplifies the current local authority financial reports making them more accessible to readers; recommends the creation of a new audit regulator; expands eligibility for appointment as a local public auditor; recommends the increasing of fees and work content and incorporates an extended deadline for delivering audited financial statements to councils.  He also noted areas in which he felt the review could have gone further including the involvement of the NHS in the proposals.

The Chairman thanked the representatives for their presentation and noted that he and the committee members looked forward to engaging with them further on the review’s proposals.