To receive a verbal update on the progress of the external audit of the 2019/20 accounts.
Minutes:
The Committee received an update on the progress being made by BDO, the Council’s External Auditors, to complete their audit of the Council’s accounts for the 2019/20 financial year.
The Committee was informed that the auditors had spent the majority of May, June and July working on NHS audits to ensure that nationally set Government deadlines were met. Consequently there had been limited opportunities for BDO to review the Council’s revised accounts since their submission to BDO at the end of April. Notwithstanding this, officers had been in regular contact with BDO to seek assurances that the accounts would be reviewed as soon as possible after the completion of the NHS audits. At the current time, it was expected that the audit report would be ready in time for the Committee’s meeting in September.
It was acknowledged that these delays would have implications for the audits of the 2020/21 and 2021/22 accounts and consequently to minimise disruption and expedite subsequent audit work, officers were preparing both sets of accounts for audit using the balances from the unaudited 2019/20 accounts as a baseline.
The Committee reiterated the frustrations that it had previously expressed in relation to this situation. The Committee was reminded that the Council was not in a unique position and nationally there were currently 57 local authorities waiting for the outcomes of the audits of their 2019/20 accounts and 212 local authorities were awaiting the outcomes of the audits of their 2020/21 accounts and to date only 4% of 2021/22 accounts had been submitted by the deadline.
The suggestion that the Council seek new auditors was acknowledged however it was stressed that the number of firms with the knowledge and experience of completing public sector audits was limited and there was a shortage of auditors nationally. Furthermore, the situation had recently been exacerbated by Government changes which had made auditors personally liable if there were errors in an audit, a situation which had resulted in a significant number of experienced auditors leaving the profession.
Local authorities had been intensively lobbying both representative bodies and the Government directly, through the Treasury and the Department of Levelling Up, Housing and Communities, with their concerns not only with the capacity of the audit industry but also the impact that recent changes to the way that local government audits were to be carried out were having on the process. These concerns were now being examined by a Government Select Committee however the situation was not expected to change imminently.
The Committee expressed concern that they had not been provided with progress updates following an agreement to provide these on a monthly basis at the Committee’s last meeting. Whilst it was acknowledged that no progress had been made in the interim, it was stressed that regular monthly updates of officer’s communications with BDO and the status of the Audit should be provided to the committee, even if it was to report that no progress had been made.
The Committee requested that a full breakdown setting out when and where delays had occurred during the audit process be provided alongside the completed audit report. It was agreed that a briefing would be provided for members of the Committee to take them through the audited accounts and the audit report in detail before it was brought to the Committee proper.
The Committee was reminded that the Council would not be subject to any form of penalty, beyond reputational damage, as a consequence of the lateness of the audit and there would be no impact on the Council’s ability to raise funds either.
The Committee noted the update.