Agenda item

This report provides this Committee an update on the progress in Grant Thornton delivering their responsibilities as the Council’s external auditors.

Discussion:

The Chief Operating Officer introduced the report which provided an update on the Audit Plan for 2025/26 and updated information on developments within the sector.

The Director, Grant Thornton explained to the Committee that planning for the 2025/26 Audit was at an early stage. In relation to developments in the sector, the government was seeking an accelerated approach to authorities regaining assurance, local authorities and auditors had been requested to provide a submission to update the government on progress towards that goal. The Director added that the government had wanted faster progress than had been achieved in the sector so far. A grant to support local authorities to regain assurance had previously been in place, then paused due to low take up. It was expected that this grant would be made available again.

The Director, Grant Thornton, highlighted several changes in the expectations for audits in 2025/26. The principal change being an agreement that non-investment assets such as property would only require valuation every five years, with indices used to estimate the value in the intermediate years. This would reduce and simplify the workload associated with valuation and was positive news, though how those indices would be calculated remained to be seen.

He added that there had been further government announcements to support authorities in relation to SEND related deficit. The position at Medway remained positive and the announcement was welcome.

The following issues were discussed:

One Medway Council Plan – in response to a question how the One Medway Council Plan reflected the national priorities set out by government, the Chief Operating Officer stated that the One Medway Council Plan had been refreshed by Council prior to the announcement of the priorities so they were not explicitly reflected in the One Medway Plan. However, the priorities would be considered in any future update to the One Medway Council Plan.

SEND funding – The Committee welcomed the news regarding SEND funding, the Chief Operating Officer stated that the Council was already in a strong position compared to a number of other authorities, however, the 90% grant funding allowed for a quicker transition to clear the deficit by the end of the 2026/27 financial year and the associated reforms would enable Medway to provide a sustainable service.

Regaining assurance – it was asked if it was still the intention of the Council to regain assurance for external audits prior to Local Government Reform (LGR). The Chief Operating Officer stated that regaining assurance was still the intention of the Council to do this. The Director, Grant Thornton stated that the Council had made progress, Grant Thornton hoped to have made more progress, however, it was possible that the Council could regain assurance prior to LGR.

Valuations – further information was requested regarding the change in requirements regarding the valuation of assets, the Chief Operating Officer stated that the changes would reduce and simplify workloads, with 20% of the Council’s assets base being valued on a yearly basis and the remaining 80% being estimated through indices. This was a return to the previous requirements and was in the view of the Chief Operating Officer a pragmatic approach.

It was asked whether early planning had been undertaken with valuers, given problems with the timeliness of valuations in the previous audits. The Chief Operating Officer stated that he could not provide detail of the work that had been undertaken at this stage, but the significant reduction in valuations that had to be undertaken was helpful and the Council used in house valuers which provided confidence that the work would be completed in a timely manner.

2025/26 Audit Plan – a Member asked whether it was a realistic target to complete the audit by September, given issues in previous years. The Director, Grant Thornton acknowledged this represented an aspirational plan, the changes to valuation and work undertaken by the Council last year was positive in preparing for the 2025/26 audit, however, the auditors intended to complete their work prior to Christmas whether the audit was complete or not, as a disclaimer opinion would be expected for the 2025/26 audit. It was possible in his view to complete the necessary work within the timeframe.

Crisis Resilience Fund – further information was requested regarding the end of the Household Support Fund which would be superseded by the Crisis Resilience Fund. The Chief Operating Officer stated that the Financial Support Service would be strengthened to meet the requirements of the new fund, the service had been very successful in the past with half of all compliments received by the Council being generated by that team at one stage. The new fund gave the Council the flexibility to provide assistance to families in need and grants would still be available to those families that needed emergency support. In terms of free school meals during the holiday periods, the service was looking at what other services already provided and ensuring the monies available was used in the most effective way.

Finance Services – it was asked if any progress had been made in strengthening the finance services as discussed in previous meetings. The Chief Operating Officer stated that the workshop which would consider potential efficiencies was due to take place in the coming week.

Medway Development Company (MDC) – progress on the plan to provide assurance to external auditors regarding MDC cash flow modelling was requested, the Chief Operating Officer stated that he had received the cash flow modelling report, however, he had not reviewed it and he would share this with auditors following review.

Decision:

The Committee noted the content of the Audit Progress Report and Sector Updates at appendix 1 to the report.