Agenda item

Report to follow.

The Committee received a report from the Council’s External Auditors, Grant Thornton, setting out the findings of the Auditors following their audit of the Council’s statement of accounts for 2020/21. A copy of the Auditor’s full report had been circulated to the Committee prior to the meeting within an Agenda Supplement.

The Auditor reported that his work was now substantially complete and that he expected to be in a position very shortly to issue an unqualified opinion. It was explained that, following identification, adjustment and correction of a number of issues within the revised financial statements, there remained no outstanding issues requiring modification of the audit opinion. Throughout the period of lengthy delay the Committee had been closely involved and kept informed on how matters had progressed. The Committee was therefore already aware that the delay primarily arose from the need to await resolution of a national infrastructure issue for which a statutory override was not in place together with delays in receipt of the Pension Fund auditor’s letter of assurance.

It was accepted that the accounts of the BCP Council were complex as a result of bringing together three legacy Councils which had meant that the accounts were not straightforward and presented a number of challenges. Having said that, a number of areas for improvement had been identified for action as part of the audit and, going forward, new financial systems in the process of implementation were expected to improve the necessary focus.

The External Auditor highlighted particularly the audit approach to materiality and explained that the materiality thresholds for the audit remained at the initially reported levels. The report also set out a schedule of ‘significant risks’ which, in the Auditor’s judgement, required special audit consideration and included an informative commentary against each risk for consideration by Members. Under the heading of ‘Financial Statements – key judgements and estimates’ the report provided audit comments and a summary of the management approach together with a formal audit assessment against each item. There was also assessment of the internal controls in place.

The Committee also received the outcome of the ‘Value for Money’ (‘vfm’) as reported and presented to the Committee in October 2022.

In an Appendix to the report there was set out a detailed breakdown of the External Audit fees and the increased level of fees reflected the additional work required to prepare reports to the Committee on an ‘exception’ basis.

The Chief Finance Officer thanked those involved in the considerable amount of work undertaken to achieve an ‘unqualified’ audit opinion and to comply with the requirements of Local Government accounting. This had taken place during what had been an exceptional year for the community and just the second year of BCP Council. He provided reassurance for the Committee that the statutory requirements were taken very seriously and that the Council was constantly striving to address the issues raised within the audit.

There was also reference to the recently completed budget setting process which had been undertaken in accordance with traditional Local Authority approaches and the External Auditor confirmed that he was content with the reassurances provided by Officers and with further information provided by to him by the new Leader of the Council. The Leader updated the Committee on the process of providing a balanced budget without the need for a ‘capitalisation direction’ and recognising the greater rigour that was required going forward in areas, for example, such as delivery and implementation of the transformation agenda. The Chairman thanked the new Leader for his level of engagement with the Audit and Governance Committee and for his involvement in discussions with the External Auditor.

The External Auditor advised that previously reported issues relating to resources within his Organisation had been resolved so that work on the delayed audit for 2021/22 could recommence in early July 2023 and, immediately thereafter, audit work on the 2022/23 audit would also commence. In parallel, the ‘Value for Money (‘vfm’) audits for 2021/22 and for 2022/23 would take place simultaneously and would be reported to the Committee within a single report during Summer of 2023. In response to questions, the Chief Finance Officer confirmed that resources were in place internally to deliver this programme although this would also need to be done in the context of the simultaneous delivery and implementation of a new financial management system.

The External Auditor and financial Officers responded to a range of detailed questions from Members of the Committee. Responses were also provided to questions about deficits within the Dedicated Schools budget and the ever increasing demands on this particular budget were a concern shared by Councils nationally and this was confirmed by the External Auditor.

Clarity was also provided about the role of the BCP Council Internal Audit team and it was explained that the external audit process cannot place reliance upon Internal Audit testing and findings.

In conclusion, the Chairman thanked Grant Thornton for the way in which they had engaged with him as Chairman of the Audit and Governance Committee and with the wider Committee and Officers of the Council.

RESOLVED that the Audit and Governance Committee

a)    Notes the anticipated audit opinions and findings of the Council’s external auditor included as Appendix 1 in the report to the Audit and Governance Committee, following the audit of accounts 2020/21;

b)    Approves the 2020/21 financial statement included at Appendix 2  in the report to the Audit and Governance Committee;

c)    Approves the signing of the Statement of Responsibilities and the Letter of Representation by the Chair of the Audit and Governance Committee and the Section 151 Officer once the audit work is complete at the end of March.

Voting: Unanimous