Agenda item

This report presents the opinion for the financial statements for 2023-24 and the interim findings of the Council’s External Auditors, Grant Thornton LLP, in their audit of the Council’s arrangements to secure economy, efficiency and effectiveness in the use of resources during 2023-24.

Discussion:

The Chief Operating Officer introduced the report, he highlighted the disclaimer opinion provided by the external auditor which was the same result as in 2021-22 and 2022-23. The opinion means that auditors were unable to complete sufficient work to provide an opinion, as were due to the national issues related to external audit.

The Director, Grant Thornton, reported that the disclaimer opinion in the previous two years meant that auditors could not be sure that the opening balance of the 2023-34 financial year was correct. A decision was taken in September that it was not possible to complete the amount of work required to regain assurance for the 2023-24 audit. There was a clear plan to regain assurance for 2024-25, this would be challenging but achievable and the auditors and the Council were committed to it.

The Senior Audit Manager, Grant Thornton summarised the 2023-24 Audit Findings Report and outlined that the 2024-25 audit plan would be reported to the Committee in March.

The Director, Grant Thornton outlined the Interim Auditors Report for 2023-24 in their review of the Council’s arrangements to secure Value for Money. He highlighted it was an Interim report so would be subject to revision and the auditors and Council were working in partnership to achieve this.

The overall financial stability of the Council remained a weakness and there was a key recommendation to address this. In terms of Governance there had been improvements in the accounts process in 2023-24 compared with the previous year. The Director, Grant Thornton added that if this trajectory continued into the current year the recommendation would be removed.

The following issues were discussed:

Financial Stability of the Council - a Member commented that it was disappointing that the Council’s overall financial stability remained a significant weakness. The Chief Operating Officer replied that the position was accurate given the financial position of the Council, however, in his opinion the report could have provided the wider context of the CIPFA resilience review which had been undertaken and had shown the Council’s unit costs were below the average of the peer group and the financial position did not represent a failure of governance.

Finance and Improvement Plan (FITP) – in response to a question regarding the recommendation that the FIT plan be shared, the Chief Finance Officer stated that progress against the plan was reported to Cabinet on a quarterly basis.

2024-25 Audit – in response to a request for further information regarding plans for the 2024-25 audit, the Chief Finance Officer explained that the proposed budget for 2024-25 included investment in the accountancy team and additional resources to support budget monitoring. The Council’s 2023-24 financial statements were published on time, so she was confident that the audit could be completed within timescale.

The Chief Operating Officer added that the auditors were unable to complete the audit of the last three years but needed to assure themselves of the opening balance for 2024-25 to prevent having to provide another disclaimer opinion. This was an issue nationally and the audit community needed to come to a common view on the way forward.

A Member stated that she was concerned that the audit had not been able to be completed, she asked whether there was a plan for the sector to agree a way forward given how many audits were affected by this. The Chief Operating Officer explained there was a consultation underway by government to seek a resolution, he had provided a response on behalf of the Council which suggested a renewed focus on spending by Council’s on key services.

Value For Money – in response to a question whether the Council could be assured it provided Value for Money; the Chief Finance Officer stated that the CIPFA resilience review demonstrated that the Council provided good value for money for its services.

Sampling – a Member commented that the report highlighted there had been some issues with sampling of evidence and asked what had been put into place to reduce this for the forthcoming audit. The Head of Corporate Accounts acknowledged that there would always be some debate and discussion regarding sampling evidence, however, last year there had been some vacancies in the team which had now been filled.

It was asked whether it was more difficult to complete the necessary work due to staff not being co-located, the Head of Corporate Accounts stated that it would be easier if Council and auditors were reviewing evidence face to face, however, many sources of samples were not co-located with evidence being required from schools which were shut for the holidays etc.

Decision:

The Committee:

a)              Noted the audit findings report 2023-24 and the status of audit testing as detailed at Appendices A and B.

b)              Noted the disclaimer of audit opinion due to backstop 2023-24 as per Appendix C.

c)               Approved the draft management letter of representation 2023- 24 as per Appendix D.

d)              Noted the Interim Auditor’s Report for 2023-24 at Appendix E.