This report and appendix reflects the work carried out by Grant Thornton, our external auditors, in respect of the 2019/20 financial year.
Members then raised a number of questions and comments which included:
Fees – Concern was raised at the 50% increase in fees which was considered a substantial increase, and it was asked if this increase was for all unitary authorities. The Officer advised the fee increase was partly increased regulatory factors and partly local factors. The requirement in changes to ISAS required more work to be done for compliance and this increased the trajectory in requirement of what needed to be done, this impacted on costs to the authorities.
The Chief Operating Officer added that the first element of the fee increase outlined the additional requirement put upon the auditors by the Financial Reporting Council (FRC) and this was acknowledged and accepted. Across the sectors, the additional fees were questioned in terms of whether the sums were appropriate and was challenged with the Public Sector Audit Appointments (PSAA) who made some very minor adjustments. The fees for the 2021 level would be discussed in detail in due course.
Concern was raised at the £25,000 increase for a delay as a result of Covid and some of the uplift was as a result of external factors that auditors should be aware of. It was suggested that new practices should be put in place which should mean a reduction going forward.
It was proposed that a letter from the Chair and Opposition Spokesperson regarding fees be sent to the PSAA as the level of increase was not acceptable. It should be pointed out that where there were increases enforced by external factors and new processes should be in place to give clients a reduction.
Journals - clarification was sought whether the findings and conclusions on management override of controls under the heading of significant risk showed that the Council had Complied. The officer said that due to the manual systems in place for general approval it meant that the auditors struggled to evidence that it was operating as designed. The testing identified two journals with classification errors but there was no evidence to suggest that journals were not being approved by the team and the rest of the testing did not identify any other issues.
The Chief Operating Officer added that there was an ambition for an automatic system to be put in place for journals and was working to get that agenda progressed as part of an upgrade of the financial monitoring system.
Value for Money - in response to a comment that, had it not been for the Council’s position as a result of its Ofsted rating, the audit would have resulted in an unqualified sign off, the officer acknowledged that this was the case.
It was also asked if the assumption for 2022/23 of the mid term financial strategy took into consideration world issues, such as interest rates and if this would impact the figures presented. The officer advised that the letter was written prior to some of the world events that had since been experienced. The work being carried out as part of the new code would include the value for money work and the annual auditors report, which replaced this annual auditor’s letter from 2021, would set out some of the key areas including the mid-year financial report that would reflect some of the changes experienced to date.
a) The Committee agreed to note the content of the Annual Audit Letter for 2019/20.
b) The Committee agreed that the Chairman and Opposition Spokesperson send a letter to the PSAA regarding the unacceptable level of fee increase.