Agenda item

Grant Thornton, as the Council’s appointed External Auditors, have produced a report (Appendix A) which provides an update to Audit & Governance Committee on their progress to date in delivering their responsibilities.

The report includes an update on both their 2020/21 and 2021/22 audit work. Key points of note are:

·       Financial Statements Audit 2020/21 – the two issues (relating to infrastructure assets and work undertaken by the auditor of Dorset Pension Fund work) that were causing  delay in completing the 2020/21 audit opinion continue to progress with the aspiration that the audit work will be completed by the end of January 2023.

·       Value for Money 2020/21 – as previously reported, the Auditors Annual Report for 2020/21 was presented to a special meeting of the Audit & Governance Committee on 20 October 2022.

·       Financial Statements Audit 2021/22 – planning and interim work was completed in November 2022. The 2021/22 post-statements audit work has been reluctantly paused due to the resignation of the current Audit Manager. It is not possible to provide an indicative target completion date until a permanent replacement is secured.

·       Value for Money 2021/22 – as previously reported the auditors are proposing to delay the commencement of their review until early 2023 as the 2020/21 VFM Auditors Annual Report was only finalised in September 2022. The 2021/22 Auditor’s Annual Report, which includes VFM, is expected to be published no later than July 2023.

The report also includes a summary of emerging national issues and developments that may be relevant to the Council.

Grant Thornton, as the Council’s appointed External Auditors, presented a report, a copy of which had been circulated to each Member and a copy of which appears as Appendix 'A' to these Minutes in the Minute Book, providing an update for the Committee on progress to date in delivering their responsibilities.

The report included an update on both their 2020/21 and 2021/22 audit work particularly the two substantive issues which had been causing delay in completion of the 2020/21 audit opinion.

In relation to the Financial Statements Audit 2020/21, the Committee was informed that, since the last meeting of the Committee, progress had been made following the formal issue, in November 2022, of a Statutory Instrument that came into effect on 25 December 2022 and which imposed a Statutory Override. It was explained that the implication was to effectively take infrastructure outside the scope of the audit. The new arrangement had been underpinned by CIPFA guidance and training to support implementation and the aspiration was that this part of the audit work could now be completed by the end of January 2023.

In respect of the outstanding issue of the Dorset Pension Fund audit by Dorset Council’s external auditors it was reported that, following eventual receipt in October 2022 of the necessary letter of assurance, an error had been identified which may impact upon the accounts of the BCP Council. The effect of this was being addressed and processed at Officer level through a series of meetings and a clearer way forward was reported to have now been identified.

The Committee was reminded of the presentation of the Auditor’s Annual Report for 2020/21 to a special meeting of the Audit and Governance Committee on 20 October 2022. The Committee was also provided with details of other statutory audits which had been completed and was provided with information about the processing and receipt of public objections to the accounts. Assurance was given that each objection or public communication was carefully considered. Members questioned the Auditor about his approach to issues raised and it was explained that the Auditor’s primary interest and focus was to ensure the proper recording of expenditure within a strictly limited remit and timeframe. Although this remit was extended by the Auditor’s additional Value for Money (‘VfM’) responsibilities, the stated preference was, wherever possible, to resolve issues through a process of consultation between the public and the Council before incurring the costs of additional work at the audit level. Members of the Committee underlined the importance that they considered needed to be placed upon this public element of the audit process and examples of specific concerns being raised were highlighted.

Work on the 2021/22 financial statements audit was reported to have commenced although the Committee was advised that the allocated Audit Manager within Grant Thornton had submitted his resignation and would be leaving the company in January 2023. On this basis, Grant Thornton reported that they had decided to pause work on the 2021/22 audit whilst the complex task of sourcing an appropriately qualified and experienced replacement was undertaken within a difficult market for recruitment. Members of the Committee expressed considerable concern at this development and about the potential impact on BCP Council of the resulting pause and a number of alternative options were discussed.

The Chairman of the Committee advised that, in parallel with discussion at the Committee, meetings at senior Member and Officer level had taken place and gave assurance that there was close involvement in identification of an acceptable and pragmatic way forward. This also aimed to ensure, on behalf of the Committee, that best endeavours were being deployed by Grant Thornton towards sourcing an appropriate individual and to recommencing the audit work as soon as possible. Grant Thornton also confirmed the level of priority that would be given to the BCP Council auditing work once a new employee was in place. The Chairman offered further meetings with the Auditors if necessary and undertook to provide the meetings of the Committee in February and in March with an update as well as keeping Members updated directly if there was any progress in the interim.

The report also included by way of the regular Sector Update a summary of emerging national issues and developments that may be relevant to the Council.

RESOLVED that the Audit and Governance Committee notes the External Auditor’s progress to date in delivering their responsibilities and the sector update provided.

Voting Unanimous