Agenda item

In accordance with Minute No. 6 of the previous meeting, Gareth Mills, Grant Thornton, presented the External Audit progress report highlighting the following 2 areas:-

Audit Fee

-        Since the award of external audit contracts in 2017, there had been a number of developments within the accounting and audit profession.  The Financial Reporting Council (FRC) had set out its expectation of improved financial reporting from organisations, the need for auditors to demonstrate increased scepticism and challenge and to undertake additional and more robust testing

-        The 2020-21 Code had introduced a revised approach to Value for Money (VFM) work

-        The ongoing impact of the additional work required on significant risk areas of the audit together with the new VFM Code and the requirements of the revised ISAs, resulted in a proposed audit fee for 2020-21 of £183,938 (2019-20 £148,438)

-        Both the Redmond Review and MHCLG recognised the need to increase audit fees.  MHCLG had made £15M available to local authorities to support the expected uplift in fees in 2020-21

Delivery of the Audit

-        The MHCLG had set an indicative date of 30^th September for audited local authority accounts (2 months earlier than last year).  This date Grant Thornton felt was unrealistic although very supportive of the date in a “normal” year

-        The impact of Covid working, the need to prioritise its Housing Benefit delivery in the early part of 2021 and the NHS given an earlier audit deadline of June, 2021, had meant that the company was behind in its local authority planning and interim work compared to its normal timings and profile of delivery

-        Grant Thornton had also been selected by the Regulator for a full review of Rotherham’s external audit which had commenced in February.  The final report had now been received

-        It was proposed to complete the audit testing by the end of October with a view to completion and sign off in November.  This would then give a relatively clean start to the work process for 2022 in order to meet the September deadline

-        Where audits remained ongoing after the statutory date, a short statement would be included on the Council’s website stating that the audit remained ongoing and that the Council was continuing to engage with the external auditors to complete their audit.  This would adhere to the Accounts and Audit Regulations

Discussion ensued with the following issues raised/clarified:-

·        Grant Thornton needed to ensure it concluded the majority of the 2021 audits by the end of the calendar year thus allowing them to go into the start of 2022 with a clean slate; they had not been in that position at the start of 2021

·        Nationally there was an expectation that very few audits would hit the 30^th September 2021 sign off due to the backlogs

·        The situation was not helped by the national lack of public sector auditors.  It was hoped that the uplift in the audit fee would provide the ability to address some of the challenges and retain/attract staff by way of offering more attractive salaries/benefits

·        There were only 3 companies that delivered local government audits

·        Appreciation of the impact on the Council’s Finance Team

·        Grant Thornton would not be taking up any grant certification work to enable focus on audit work

Resolved:-  That the update be noted.