Agenda item

Closure of Accounts 2022-23


Consideration was given to a report presented by Rob Mahon, Head of Service, on the closure of the accounts 2022/23.


The Council had successfully met the 2018/19 timeframes in closing its accounts after the decision to bring forward the timetable for the publication of local authorities’ financial statements.  However, due to the unprecedented circumstances, the closure of accounts deadlines had been extended for 2019/20, 2020/21 and 2021/22.


The Accounts and Audit (Amendment Regulations 2022) came into force on 22nd July, 2022 and extended the deadline for the publication of final audited accounts to 30th November for 2021/22 accounts and then 30th September for 2022/23 accounts and the following 5 years.  Therefore, the deadline for publishing unaudited accounts had reverted back to the 31st May for the 2022/23 accounts.


The Local Audit and Accountability Act 2014, confers on local electors the right to inspect the accounting records, books, deeds, vouchers, contracts, bills and other documentation relating to the financial year in question.  It also gave them the right to question the auditor about the accounting records or make a formal objection on a matter of public interest or because they thought an item of account may be unlawful.  Under the Accounts and Audit Regulations 2015, local electors could only exercise their rights of inspection and to question the auditor or make formal objections for a single period of 30 working days commencing the day after the unaudited accounts had been published.  In order for the inspection period to commence, the Annual Governance Statement and Narrative Report (introduced by the Accounts and Audit Regulations 2015) would need to be published alongside the Council’s unaudited financial statements on the Council’s website. The timetable for preparing the Annual Governance Statement and Narrative Report was, therefore, being co-ordinated with the publication of the draft unaudited Statement of Accounts to meet this requirement.


A decision had been made to further delay the implementation of IFRS16 within Local Authorities until 2024/25.  This disclosure would see the removal of operational leases, with lessees expected to recognise all leases on their balance sheet as a right of use asset and a liability to make the lease payments.  Although implementation of the standard has been delayed until 2024/25, there would be the need for an assessment of the impact of the new standard as part of the 2023/24 accounting process.


Major changes to service delivery that had taken place in 2022/23 would also have a bearing on the financial statements including the continuing effect of schools converting to academies.


The Council’s Statement of Accounting Policies (Appendix B) was reviewed and updated where necessary.


There was a national issue with Local Authority treatment for infrastructure assets.  This related to the way components of infrastructure expenditure were derecognised when new expenditure was incurred.  A statutory override had come into effect in December, 2022, allowing local authorities to assume that the carrying amount to derecognise was zero enabling external  auditors to give an unqualified audit opinion on the Council’s accounts.  This override was in force until 31st March, 2025 and the Council would utilise this override again for the 2022/23 accounts.  The Council was working to assess the processes that needed to be put in place to ensure the treatment of infrastructure assets was compliant when the statutory override expired.


Gareth Mills, Grant Thornton, informed the Committee that a guarantee could not be provided that the external audit work would start by the end of September as a result of the issues previously raised in the external audit market in the public sector.  A significant number of 2021-22 local government audits were still ongoing.  This had been impacted by the decision to continue the Clinical Commissioning Groups until 30th June, 2023, resulting in approximately 100 part-year accounts for the NHS and 42 part-year accounts for Integrated Care Boards needing to be undertaken by the same auditors who carried out local government audits.


He would be confident of concluding Rotherham’s external audit work by the end of November as had happened in the previous 3 years.  There were discussions ongoing nationally around how achievable the 30th September date was for 2023 and could possibly be some movement on the date.


There should be no significant impact on the Council by this delay.  If the September deadline remained, the Account and Audit Regulations required the Council to post on its website proof of the accounts with a statement to the effect that the audit was ongoing and expected to conclude by the end of November due to resource expectations of the external auditor. 


Resolved:-    (1)  That the key accounting issues and main changes to the accounts in 2022/23, as listed in Appendix A submitted, be noted.


(2)  That the Council’s revised Account Policies, attached at Appendix B submitted, be noted.


(3)  That Grant Thornton submit a progress report to the next meeting of this Committee setting out the planned timetable from June to November, 2023.

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