Agenda item

County Council Audit Findings Report for 2021/22

To consider the Audit Findings Report of the External Auditors for Warwickshire County Council along with the Letter of Representation.

Minutes:

The Committee received a report from the Council’s External Auditors, Grant Thornton which reported on issues arising from the audit of the County Council’s financial statements, before issuing their final opinion.

 

It was noted that this report was in addition to the Annual Audit Letter, also on the agenda for this meeting.  The 2021/22 Audit Findings report was attached as Appendix A to the report.

 

Grant Thornton were represented at the meeting by Avtar Sohal and Jim McLarnon.

 

Avtar Sohal, introduced the report, advised that the audit was substantially complete and signposted Members to the headlines on page 17 of the document pack.  He referred to the outstanding matters detailed and explained that some progress had been made since the report was written.  With regard to the valuation of schools’ assets, he explained that this had progressed to the internal quality control stage within Grant Thornton and, before the opinion was issued, the auditors wanted to ensure the correct checks had taken place internally.

 

Following a query from the Chair, Jim McLarnon advised that Grant Thornton would strive to have the matter concluded in time for the Council papers to be issued, but this may not be possible.  The Chair stressed the desire to keep any incomplete issues to a minimum.

 

Avtar Sohal assured the meeting that the aim was to sign off the audit opinion as soon as possible and advised that the audit had gone smoothly with good cooperation from Council officers.  The value for money work had been completed with no significant weaknesses identified.

 

Jim McLarnon summarised the audit findings and significant risks identified.  Each risk identified was accompanied by a commentary resulting in a conclusion from the auditors, along with any recommendations, if appropriate.  The report highlighted that, in relation to the Collection Fund, the auditors recognised that the County Council was only able to work with the best information available and returns from District and Borough Councils were often late.  This resulted in accounting entries being based on estimates but the auditors were satisfied that this would not result in a material difference.

 

Jim McLarnon outlined the audit adjustments on page 41 of the document pack and stated that the threshold for further detailed work no longer applied to the Council.  He referred to the Value for Money work which was a separate report on the agenda and confirmed Grant Thornton’s fee proposals as laid out.

 

The Chair raised a concern that there was still an outstanding objection to the 2017/18 accounts, made by an elector, which the Committee had been assured in November 2021 would be dealt with and closed off.  Avtar Sohal explained that the responsibility for this sat with Grant Thornton’s previous engagement lead but assured the meeting that he would again urge the engagement lead to close this off as soon as possible. 

 

The Chair stressed his disappointment that the accounts could not be closed off due to internal administrative/quality assurance processes at Grant Thornton.  He also felt that Warwickshire residents would be concerned that there was an outstanding objection five years on.  Avtar Sohal explained that complaints had to progress through various quality controls but agreed to raise this again with the officers concerned.

 

Following queries raised by the Vice Chair, Robert Zara, officers provided clarification on the Financial Statements – Significant Risks and advised that Price Waterhouse Coopers were engaged centrally as a port for auditors and all estimates were in line with their expert opinion.

 

Councillor Kettle raised a concern that the wording in the report, in particular the references to ‘trivial’, may be read negatively by residents and requested if this could be changed.  Avtar Sohal explained that, as discussed last year, these were technical terms used in the accounting standards on an industry-wide basis and so were a correct usage.  In response, Rob Powell (Strategic Director, Resources) proposed that an additional paragraph could be added to future reports explaining the terminology used and its context.

 

Councillor Kettle expressed his concern that the work was incomplete despite the auditors knowing about the meeting dates in advance.  In response, Avtar Sohal reiterated that they were working hard to resolve the outstanding issues but highlighted that the steps involved in the quality control stages could not be changed.  Councillor Kettle was assured that the auditors were not waiting for any outstanding information from the Council.

 

Rob Powell explained that the outstanding issues were not in the control of the local team and reminded those present of the hard work and professionalism of our local audit team.  The Chair acknowledged the concerns raised and expressed his disappointment that some matters remained open.

 

Councillor Feeney acknowledged the explanation provided with regard to the valuation of land and buildings but felt it was unusual because schools were unlikely to be sold as a going concern.  Avtar Sohal explained that any such asset had to have a valuation to support the entry in the accounts. 

 

Councillor Kettle addressed the meeting and referred to the prudent Minimum Revenue Provision and the IT general controls audit risk highlighted in the 2020/21 report.  Andy Felton updated Councillor Kettle on the current position and level of risk.  The Chair suggested that an additional sentence could be added to outline the management response.

 

Following an additional query from Councillor Kettle, Jim McLarnon provided assurance that the two audit adjustments detailed on page 40 of the document pack were immaterial to the results of the Council and its financial position.

 

The Chair signposted Members to the letter of representation detailed in the report and no comments or concerns were raised.

 

Further discussion took place with regard to the outstanding issues within the report and whether some Members were comfortable to agree the recommendations until these had been resolved.  Rob Powell felt that the audit team’s approach was reasonable and no changes were expected, and as such it was reasonable to approve the recommendations.  In addition, Andy Felton explained that with regard to the valuation of schools, the prior year methodology was being questioned, not the figures, and would not result in a material change. 

 

Having received the assurances of officers, the Committee

 

Resolved that

 

1)    the Audit Findings Report of the External Auditors for Warwickshire County Council, attached at Appendix A, is noted; and

2)    the wording of the Letter of Representation, attached at Appendix B, is approved, subject to any changes which may be necessary to the final draft.

Supporting documents: