Agenda and minutes

To confirm as a correct record the minutes of the meeting of the Audit and Standards Committee held on 22^nd November 2022.

RESOLVED that the minutes of the meeting of the Audit and Standards Committee held on 22^nd November 2022 be approved as a correct record and signed by the Chairman.

Note: Minute 7/AS Clarification of External Auditor Fee Variation Process

A request for a variation to the external auditor’s fees would be submitted to Public Sector Audit Appointments (PSAA) for consideration and the views of the local authority concerned would be sought before the PSAA took a decision on whether to approve the variation.

Members are invited to declare any disclosable pecuniary interests and non pecuniary interests they may have with respect to matters which are to be considered at this meeting.  Members who consider they may have an interest are invited to consult the Monitoring Officer or the Democratic Services Manager prior to the meeting.

There were no declarations of interest.

To receive a verbal update on the progress of the audit of the Council’s 2019/2020 accounts.

The Committee received an update in respect of the progress of work to audit the Council’s financial statements for the 2019/20 financial year.

It was reported that although that Council’s annual accounts for the financial year ending 31^st March 2020 remained unaudited it was not a situation unique to Surrey Heath and there were a significant number of local authorities in England in the same position.  These delays, which had initially originated from a shortage in resources and recruitment difficulties for the external audit firms who serviced local government audits, had been recognised in a recent review by Sir Tony Redmond, for the Department for Levelling Up, Housing and Communities (DLUHC).  The situation had been further exacerbated by the Covid-19 pandemic and the associated Government restrictions which had impacted on the ability of council finance teams to prioritise the annual statements over new burdens for making support payments to residents and businesses, monitoring grant funding, acting as a payment agency for central government and completing a significant number of new government returns whilst still ensuring the probity of public monies.  Similarly the need to work remotely had made the audit processes more time-consuming and impeded effective communication between finance officers and the external audit team.  

The publication of the first draft of the Council’s accounts for 2019/20 had generated a number of audit questions from our external auditors which is not uncommon in the process of moving from draft to final accounts.  With a number of concerns being raised about the accounting treatment for the Jersey-based Property Unit Trust and how it had been presented within the Council’s formal statement of accounts.  Over the past six months, Council finance officers had been in close dialogue with the audit team at BDO and have now agreed the accounting treatment approach with them.  The latest draft Statement of Accounts had now been passed to the external auditor for their review and a copy had been published on the Council’s website.  Officers would be working with BDO to ascertain when the Auditor would have the resources available to complete the audit process so that Council resources could be made available to respond to any questions and queries in a timely manner.

Concerns about the mis-posting of £40million between the publication of the draft accounts and the publication of the latest revised draft accounts were noted.  It was clarified that this mis-posting had originally occurred when, during the production of the original draft accounts, money had been incorrectly categorised as being available in the useable reserves budget.  This mis-posting had been rectified and the money was now correctly assigned to the unusable reserves budget in the latest draft accounts.  It was stressed that the true position of the Council’s reserves balance had always been between £35 and £40million, a sum that was considered sufficient to support the Council’s current budget.

It was clarified that although regular meetings had taken place with the Auditors and a range of officers including the Section 151 Officer,  ...  view the full minutes text for item 13/AS

To consider the proposed work programme for the Council’s Internal Audit function for the 2022/23 financial year.

The Committee considered a report setting out the draft Annual Plan for the Council’s Internal Audit Team for the 2022/23 financial year.

The Committee was informed that the proposed work plan had been based on the draft Internal Audit Three Year Strategic Plan, agreed by the Committee at its meeting on 20^th April 2020.  The proposals consisted of a combination of audit activities carried out on an annual basis, activities conducted on a triannual basis and one off audit projects. It was expected that the activities proposed in the Annual Plan would require approximately 520 working days to be delivered by the Council’s two internal auditors.

It was noted that two new areas, cyber security and climate change, had been included in the audit plans for 2022/23 and following a suggestion by the Committee responsibility for the annual audit of Joint Waste Services, had now been assumed by one of the other local authorities involved in the waste partnership.

In response to concerns that the relatively low number of days assigned to auditing contracts would be insufficient for the scale of the task it was clarified that auditing of contracts would also happen as part of other scheduled audits, for example the proposed leisure centre and payroll audits, in addition a number of contingency days had been built into the plan in the event that work over ran.

The Internal Audit function of councils was subject to a peer review every five years and the Council had partnered with Elmbridge and Spelthorne Councils’ Internal Audit Teams to peer review each other’s services and identify areas of best practice and areas for improvement.

The Committee was informed that recharge of the cost of the audit of community services was incorporated was absorbed into the overheads line of the Community Services budget.

The Committee commended the work of the Audit Team.

RESOLVED that the Annual Audit Plan for 2022/23 be approved.

The next scheduled meeting of the Audit and Standards Committee will take place on Monday 25^th July 2022 at 7pm.

It was noted that the next scheduled meeting of the Audit and Standards Committee would take place on Monday 25^th July 2022 at 7pm.