Agenda item

This report presents an update to the plan of Medway Council’s External auditors, Grant Thornton, for the audit of the Council’s Statement of Accounts for the financial year 2024/25.

Discussion:

The Head of Corporate Accounts introduced the report which provided an update on the progress of the external audit for 2024-25 and plans to complete the audit within the statutory deadline.

The following issues were discussed:

Progress of the audit – further information was requested regarding delay in the progress of the audit and how it was proposed to complete the audit by the statutory deadline. The Head of Corporate Accounts explained the delay was partly caused as a consequence of the disclaimer opinion received in the previous year’s audit which meant auditors needed larger samples of transactions to regain assurance. This has been time consuming, not only for finance, but also teams across the Council. Secondly the audit had revealed that further, more detailed information was required in some areas and finance was working with teams within the Council and external partners to provide the necessary information.

The Head of Corporate Accounts acknowledged that some learning was required for the Council in ensuring that the auditors had access to the detailed information that was required. However, he was pleased with the progress that had been made in the last two weeks. To address the current delay the outstanding items at the end of September would be left with the Council to continue to work on and evidence would be provided to auditors in early January to complete their investigations.

The Head of Corporate Accounts added that the Council would receive a disclaimer opinion for 2024/25 because it could not gain assurance over the opening balance. He remained confident that auditors would be able to gain the necessary assurance in relation to transactions that had taken place during the 2024/25 financial year.

The Chief Operating Officer stated that available resources had been affected by staff absence, and the finance function was already lean and had no spare capacity. The Council needed to be better prepared for future audits with the evidence to support transactions being collated more diligently as part of the process of closing the accounts.

Valuation – further information was requested in relation to valuations, the Audit Manager, Grant Thornton stated that Grant Thornton had valuers who would discuss assessments made with counterparts at Council and review the authority’s valuations.

Fees – in response to a question regarding the additional fees to be paid by the Council, the Head of Corporate Accounts stated that the exact level of those fees were not known but were not expected to be significant.

LATCO (Local Authority Treading Company) audits – in response to a question why the LATCOs had different auditors to the Council, the Chief Operating Officer stated that the companies had taken a different view to the Council as to which auditor they had chosen to contract. The Head of Corporate Accounts added that there had been some concern with the accounts of one of the LATCOs in previous years, but the Council was now satisfied that the group accounts were of a good standard.

The Director, Grant Thornton, stated that it was not unusual for subsidiaries to have different auditors and the Council may receive better value for money and a better service from a smaller firm to undertake the accounts than Grant Thornton which was focused on larger projects.

National audit picture – it was asked if there was any update on progress to return to assurance nationally, the Director, Grant Thornton stated that there was a broad agreement that a risk based approach would be undertaken in regaining assurance in the sector, for example, there was limited risk regarding the value of schools so that area could be streamlined. Grant Thornton’s technical team were involved in those discussions at a national level.

The Committee discussed whether the larger sampling size gave a positive foundation to regain assurance for the future. The Director, Grant Thornton stated that the work for the 2024-25 should be completed on time in February 2026, then discussions for the next year could be undertaken.

Decision:

The Committee noted the updated Audit Plan for 2024/25 including the core fees and those proposed for other audit services.