Issue - meetings

To receive and consider the Indicative External Audit Plans (including the Pension Fund) for the year ending 31 March 2025.

As additional background, members are also being asked to note the External Audit progress and assurance report along with relevant sector updates which has also been attached for consideration.

(Agenda republished to include the External Audit Progress and Sector Update Report on 15 June 2026)

Sophia Brown (Key Audit Partner, Grant Thornton) introduced the External Audit Progress update for the Council including the External Audit Plan for both the Council and Pension Fund for year ending 31 March 2026.  In presenting the report the following key points were highlighted:

·            The significant risks identified for the 2025–26 audit were standard risks for local authorities, with no Brent-specific risks this year; the fraud risk relating to income recognition had been fully rebutted, with audit work focused on the risk relating to cut-off of non-pay expenditure.

·            A change to the accounting code meant land and buildings would, in intervening years between five-yearly valuations, be revalued using an appropriate index (or desktop valuation where no suitable index existed) for the first time in 2025–26 as a change applying to all local authorities with the audit team working closely with finance officers on the processes and controls supporting this and the fixed asset register.

·            Regarding the audit fee, which was set via Public Sector Audit Appointments (PSAA), this was noted to be £560,502. Planning materiality for the Council had been set at £23.2 million (subject to revision once gross expenditure for the year was confirmed), with a “clearly trivial” threshold of £1.16 million and a specific, lower materiality of £20,000 applied to senior officer remuneration and termination benefits, given the public sensitivity of this information.

·            Two significant weaknesses had been raised in relation to 2024–25: one concerning financial sustainability (medium-term financial planning and the development of a pipeline of recurrent savings and income generation) and one on the “economy, efficiency and effectiveness” area, relating to the Council's self-referral to the Regulator of Social Housing. Improvement recommendations had also been raised regarding the property strategy, reflecting the Dedicated Schools Grant deficit and Housing Revenue Account planning within the Medium-Term Financial Plan, and strengthening capacity and capability within the finance team to meet statutory reporting deadlines.

·            As an update on progress, the draft 2025–26 financial statements were confirmed to have been received from the finance team, representing welcome progress. Whilst the statutory deadline for completing the 2025–26 audit remained the end of January 2027, Grant Thornton were aiming to have substantially complete their work by mid-September 2026 with the findings reported to the Committee in September, a considerably shorter timeframe than in recent years, supported by early interim audit work already undertaken.

·            An independence consideration was noted: Sophia Brown had previously been part of the audit team prior to becoming Key Audit Partner for the Council, representing a potential familiarity threat; a two-year extension to the standard five-year engagement period had been approved by Grant Thornton's ethics function and by PSAA, with agreed safeguards set out in the plan.

Having thanked Sophia Brown for the plan, the Chair invited questions, with the following issues raised:

·            In seeking further clarification relating to the independence disclosures, officers assured members that the specific point regarding the standard cap on non-audit work did not apply to housing benefits work, which formed the majority of the other  ...  view the full minutes text for item 11

For the Committee to receive and consider the Indicative External Audit Plan (including Pension Fund) for the year ending 31 March 2025.

Sophia Brown (Key Audit Partner - Grant Thronton) introduced a report providing the Committee with an update on progress with completion of the initial planning for the 2024-25 audit of the Council’s financial statements and Brent Pension Fund. 

In presenting the indicative audit plan for the London Borough of Brent report the Committee noted:

• The key developments identified as impacting on the current audit approach which included the proposals for reform of the local audit system, the wider national context in relation to the economic, social and health challenges impacting on local government alongside the local context in relation to the financial position in Brent and impact arising from the new accounting standards and reporting developments including IFRS16.
• The backstop arrangements for the publication of audited financial statements for the year ended 31 March 2025 had been set as 27 February 2026.
• The scope of the audit process and outline of significant risks to be considered which had included management of override controls, valuation of land and buildings as well as council dwellings, IFRS16 leases implementation and risk of fraud in revenue and expenditure recognition.
• The planning financial statement materiality had been determined as £22.624m (PY £16.1m) for the Group and £22.524m (PY£16.1m) for the Council, which equated to approximately 2% of the prior year gross operating costs.  In addition, members were advised the External Auditors were required to report uncorrected omissions or misstatements other than those which were ‘clearly trivial’ to those charged with governance. Clearly trivial had been set at £1.131m (PY £0.830m) for the Group and £1.126m (PY £0.805m) for the Council and with a specific lower materiality of £20,000 per individual, for senior officer remuneration and termination benefits.
• At the time of preparing the report it was reported that Grant Thornton had not concluded the detailed VFM planning and risk assessment procedures with a  further update to be provided for the Committee on the outcome of the planning procedures, resulting risk assessment and planned responses to identified risks of significant weaknesses (including those relating to the Council’s financial resilience) at the next Audit & Standards Advisory Committee meeting in July 2025.  The Committee was advised this would also include consideration of the Council’s self-referral to the Regulator of Social Housing as a potential additional significant weakness under the VFM work.
• The update provided on progress against prior year audit recommendations including the management actions identified in response on which a final update would be included as part of the External Audit Annual Report due to be presented to the Committee in September 2025 as well as scope of the IT audit strategy.
• The initial outline of audit logistics and timescales as detailed on page 41 of the report with the initial planning and risk assessment audit visit having taken place in April 2025 and final visits scheduled from July to September 2025.

The Chair thanked Sophie Brown for the update prior to seeking comments from the Committee with the following issues highlighted:

• Further details were sought on  ...  view the full minutes text for item 13