Agenda item

To receive an update on progress with the External Audit 2021/22 – “TO FOLLOW”.

Messrs M Hodgson and A Paylor, Associate Partner and Audit Manager respectively of Ernst Young LLP, were in attendance for consideration of this item.

With the aid of a report prepared by the Director of Finance and Corporate Resources (a copy of which is appended in the Minute Book) the Committee were provided with the details to complete the process for finalising and publishing the Council’s Annual Governance Statement and Annual Financial Report for 2021/22.

The Director of Finance and Corporate Resources reported that external audit work was ongoing and handed over to Mr M Hodgson, Associate Partner of Ernst Young LLP to provide an update to the Committee. In doing so, Mr M Hodgson drew the Committee’s attention to three issues, namely the addition of the significant risk pertaining to the new Payroll system, testing undertaken in respect of the fixed asset register and valuation movements and the national issues which existed around pension liability. Mr M Hodgson advised that he anticipated there wouldn’t be any changes or material changes arising as a result of the audit. In terms of materiality, it was confirmed that the level of £1.93 million which had been set at planning stage remained appropriate with performance materiality also unchanged at £1.45 million. He then also made reference to the areas of outstanding audit work as presented within the audit report at the time of publication which were noted as follows:

§  NDR Appeals Provisions;

§  Payroll;

§  Property, Plant and Equipment and Investment Property Valuations;

§  Completion of our Journals testing; and

§  Value for Money procedures.

In respect of valuations, the Director of Finance and Corporate Resources reported that the Council had sought a second opinion from an alternative independent valuer. Mr M Hodgson then reported that no fraud risks had been identified as part of the external audit and that the Value for Money procedure check had also concluded identifying that there were no risks or significant weaknesses within the accounts. To date, the only areas of external audit work outstanding related to valuations in respect of the Council’s car parks and the pension liability. The Committee’s attention was then drawn to the updated Annual Governance Statement (a copy of which is also appended in the Minute Book) and the draft Letter of Representation.

Councillor R J West commented upon the difficulties in completing the external audit each year and questioned the timing of the latest pension Triennial Valuation released on 1st April 2022 and its impact on the pension liability at the Balance Sheet date of 31st March 2022. Mr M Hodgson responded by informing that the latter remained a national issue and one outside of his control but highlighted the importance of ensuring the Council had the right set of accounts which accorded with International Financial Reporting Standards.

In response to a question raised by Councillor J A Gray, Mr M Hodgson expressed the view that he wasn’t anticipating anything significant to arise from the new payroll system, that the pensions issue might lead to a material change in liability and that valuation figures identified in the fixed asset register might result in some additional work being undertaken on the accounts.

In terms of next steps in the process for finalising the 2021/22 accounts, the Committee’s attention was drawn to the four recommendations contained within the report which would provide delegated authority to the relevant individuals to sign off the accounts.

Councillor T D Sanderson then raised a question relating to the Statement of Accounts, specifically the return of £4,268,000 back to central government in respect of Local Restrictions Support Grant. The Director of Finance and Corporate Resources undertook to circulate details around to the Committee outside of the meeting.

Councillor J E Harvey then questioned what impact delays with the completion of the external audit of the 2021/22 accounts would have upon publishing the draft accounts for 2022/23 by 31st May 2023 deadline. The Director of Finance and Corporate Resources responded by informing the Committee that at this present moment in time, she was unaware of the impact on the opening balances for the 2022/23 accounts as a result of the external audit work and was mindful of the tight turnaround. As expected, her team had been focussing on completing the external audit and not the 2022/23 accounts and that it would be a challenge to meet the expected deadline. Whereupon, it was

RESOLVED

(a)  to receive the Auditor’s Results report (as attached at Appendix 1 of the report now submitted);

(b)  to give delegated powers to the Executive Leader and Managing Director to sign the updated Annual Governance Statement on behalf of the District Council;

(c)  to approve the Letter of Representation (as attached at Appendix 2 of the report now submitted) and authorise the Director of Finance and Corporate Resources (as Section 151 Officer) to sign it on behalf of the Council; and

(d)  to give delegated powers to the Chair of the Committee and Director of Finance and Corporate Resources (as Section 151 Officer) to authorise and sign the Annual Financial Report for 2021/22 (as attached at Appendix 3 of the report now submitted) on behalf of the Council, subject to the auditors confirming an unqualified opinion and there being no material adjustments.