Agenda item

Andy Felton (Assistant Director – Finance) introduced the report and advised that Grant Thornton were not in a position to complete the audit by the originally agreed date of 30 November 2022.  The Council were required to re-publish the unaudited accounts, with any required amendments, to be accompanied by a statement advising why the accounts did not contain an audit opinion.

This delay was as a result of a nationwide issue relating to the derecognition of parts of infrastructure assets within local authorities and how this could be reported within the accounts. The government was in the process of developing a statutory instrument which would resolve these audit challenges through a statutory override and it was noted that this should be issued by the end of the month and is due to come into force on 25 December 2022.

Andy Felton reiterated that this issue was no-one’s fault and, once the Statutory Instrument came into force, the audit could be signed off in the New Year.

Avtar Sohal (Grant Thornton) addressed members and advised that the audit was progressing well, with the pension audit almost complete. He stated that there were no significant errors to report. He provided an overview of the Statutory Instrument being developed to address the accounting issues raised in relation to infrastructure valuation and reiterated that this was a national problem. He thanked the Council’s Finance Team and all officers involved for their assistance and cooperation with the audit and signposted members to a potential February sign-off at fullCouncil.

Councillor Kettle expressed his unease at another delay with the audit and queried how a local authority could continue to operate and deliver services during the Covid Pandemic but one of the largest auditing firms in the country had been unable to keep to agreed timescales.  He explained that he had trained as an auditor and scepticism and challenge had been a longstanding part of the job.  He commented on the increased fees, which would be covered in the following agenda item, and asked for clarification of the likely impact on next year’s deadlines, following the additional delay.  Councillor Kettle felt that a guarantee should be given to ensure that similar delays were never repeated.

In response, Andy Felton clarified that the original timescales had been agreed by the Committee as a direct result of the resource issues Grant Thornton had been experiencing.  This additional delay was solely due to the need for the statutory override to be implemented and he did not feel that there would be an issue with the report being presented to Council in February 2023.  Andy Felton assured members that the audit work was on track as originally planned and encouraged them not to conflate two different issues.  Councillor Kettle explained that he was not making any criticism of the internal Council team.

Rob Powell (Strategic Director, Resources) addressed the meeting and apologised for being unable to attend in person. He stated that there was a need for balance here and whilst he shared the disappointments being expressed, he restated that this delay arose directly from a national issue which no audit supplier would be able to mitigate in isolation from a national solution being in place. He also felt that Grant Thornton had consistently shown scepticism and challenge in their audit work, and that the introduction of additional regulatory requirements from the Financial Reporting Council would inevitably result in more work and a higher fee being charged.

Avtar Sohal explained that once the Statutory Instrument had gained Royal Assent, it would be in place for future years. Grant Thornton’s officers were in dialogue with CIPFA and there was no basis for future delay in this area. He went on to summarise the delivery timetable which had been agreed previously and provided assurance that there was no delay in the actual audit process, and the associated work was on track. In support, Andy Felton stated that County Council officers were in ongoing dialogue with Grant Thornton and whenever issues were flagged up, they were acted upon immediately.

Councillor Gifford noted the current situation but was mindful that assurances had been given at the last meeting that the audit would be complete by 30 November date. In response, Andy Felton explained those assurances had been given based on the advice received at the time. He also reminded members that the current situation and national changes had led to government officials needing more time than they had originally envisaged.

Councillor Kettle suggested that when and if future directives were received from CIPFA, the accounts should be completed based on the existing and current regulations.  He asked if it was possible to accept the accounts as they stood today with a view to amending them once any directive was implemented.  Andy Felton advised that the override would enable the accounts to remain in their current state because the Council did not hold the historic data needed to amend them.  He stated that waiting for the directive was in the Council’s best interest.  This was supported by Avtar Sohal.

Councillor Cooke addressed members and stated that, having considered the recommendations and the key issues detailed in the report, he supported the officers’ proposal. He acknowledged the current situation and, whilst not ideal, saw the need to wait until the Statutory Instrument was in place. He also recognised the need to consider any potential ‘knock-on’ effect and the requirement to reschedule future Audit and Standards Committee meetings.

In response to a question from Councillor Hammersley, Andy Fenton advised that officers were not aware of any further new recommendations coming forwards.

In summary, the Chair thanked everyone for a robust debate and, subject to a minor amendment within the formal notice, the Committee agreed the recommendations as laid out.

Resolved

That the Committee:

1.   Notes the progress on the audit of the 2021/22 Statement of Accounts and the progress report of the External Auditors, attached at Appendix A;

2.   Notes the proposed wording regarding the reason for the delay to the publication of the accounts with an audit opinion to be used on the Council’s website, attached at Appendix B, which will be finalised by the Strategic Director for Resources in line with statutory requirements; and

3.   Agrees to the timetable of planned meetings of this Committee being changed to meet the revised timetable for the approval and publication of the 20221/22 accounts, when this is known.