Agenda item

To receive an update on the completion of the Council’s Annual Statement of Accounts 2021-22.

At the suggestion of the Chair, members agreed that Agenda Item 10 Brent Council Statement of Accounts 2021-22) and Agenda Item 11 (LB Brent Findings Report 2021-22) would be considered together.

As further context the Chair advised that since the accounts had initially been presented to Committee in September and December 2022, further guidance had now been issued by the Chartered Institute of Public Finance and Accountancy (CIPFA) providing a temporary solution nationally for the accounting of infrastructure assets.  Brent had subsequently updated its Statement of Accounts to comply with the accounting requirement with final sign off now subject to completion of the External Audit process.

The Chair then invited Ben Ainsworth, Head of Finance to provide a further update, with clarification provided that Grant Thornton (External Auditors) were nearing completion on the audit of the final Statement of Accounts, pending further minor revisions as detailed in the accompanying Audit Findings report. These had arisen as a result of an additional review of the Statement of Accounts undertaken by Grant Thornton (as External Auditors).  Members were, however, advised that whilst some further adjustments had been required to the Statement of Accounts as a result, none of these had significantly impacted on the anticipated outcome of the audit or medium term financial position of the Council with the result still expected to be an unqualified audit opinion being issued. It was also highlighted. that although taking longer than previously advised, Brent were in a good position in terms of their accounts sign off both now and historically when compared with other London boroughs, as illustrated in paragraph 3.4 of the report.

The Chair then welcomed Ciaran McLaughlin, Key Audit Partner, Grant Thornton, who was invited to provide an update on progress with completion of the external audit relating to the Statement of Accounts and the updates to the Audit Findings report. The Committee were provided with the following update:

·             The extended sign off process for the Statement of Accounts had been as a result of the accounts being selected for a “hot review”. This involved further review of the accounts by the technical team within Grant Thornton, with any issues identified as a result needing to be addressed prior to final sign-off and completion of the audit process.

·             As a result of the additional review two further recommendations had been identified within the Action Plan included within Appendix A of the Audit Findings report, on which Management responses had been provided, with the audit findings adjusted accordingly but no material impact on the overall audit opinion.  Confirmation was also provided that the changes identified did not impact upon Brent’s medium term financial plans.

·             Grant Thornton recognised the inconvenience as a result of the additional time taken to complete the audit of the Statement of Accounts however it was highlighted that the thorough process added a further layer of assurance in Brent’s compliance with the code and financial reporting requirements.

The Chair thanked Ben Ainsworth and Ciaran McLaughlin for presenting the updates before inviting Committee members to ask any questions or points of clarity they had on the information heard. The following points were discussed:

·             Although the Committee acknowledged the thorough process undertaken to finalise the Statement of Accounts, concerns were expressed that the delays created as a result had not been reflected in terms of adjustments made to the timeline for the completion of the audit process. This prompted the Committee to query when the accounts would be ready for final sign off and if an audit scope could be provided for the process in future financial years in order to support realistic expectations of the expected deadlines for completion of the Statement of Accounts. Ciaran McLaughlin recognised the concerns expressed and extended apologies on behalf of Grant Thornton for the length of time taken to complete the audit process. In doing so however, he also re-reiterated that the level of regulatory review was necessary to ensure compliance. It was confirmed that the aim was for the audit and accounts to be authorised for sign off by the end of the month, however this was dependant on the final approval of the technical team performing the additional review.

·             In relation to the concerns highlighted about the delay in being able to sign off the final Statement of Accounts and the impact on the work programme for the Committee during the year, members were reassured that the duration of time taken to finalise the accounts this year had been unusual and it was anticipated the process would return to a more normal timescale in future years.

·             The Committee required clarity as to whether the two new recommendations identified as a result of the hot review (as detailed on page 188 of the agenda pack) required any substantial attention from the Committee. In response, the Committee were reassured that the medium rated recommendations were not high level concerns with the auditors satisfied that the management responses provided had adequately addressed the issues raised.

·             The Committee acknowledged the knock-on effect which the delay in completing the sign off process on the 2021-22 Statement of Accounts had had on the Finance Team and ongoing impact in relation to the 2022-23 accounts.  The Committee took the opportunity to thank Minesh Patel, Corporate Director of Finance & Resources and his team for their resilience and hard work in managing an increased workload as a result of the delays and extended review.

·             The Committee queried if additional time would be factored into future timescales in respect of hot reviews taking place every two years. In response the Committee were advised that additional time to account for hot reviews would be written into future audit scopes to support appropriate expectations and planning.

·             The Committee questioned why issues that had been picked up from earlier accounts had not been identified previously and whether this was indicative of the hot review process changing from previous years. In response the Committee were advised that the hot review process had not changed however the individuals undertaking the reviews had been different with a general increase in the level of testing required year on year. The Committee heard that to avoid any discrepancies being overlooked engagement leads were rotated to support an appropriate level of review from a fresh perspective.

·             The Committee requested that if in future Statement of Accounts needed to be repeatedly brought back to the Committee that any amendments or changes recommended in the Audit Findings report (from previous versions provided) should be made clear with colour coding, which would be included for reference within the Committee’s Action Log.

As there were no further questions from the Committee, the Chair took the opportunity to thank all officers and auditors involved for their efforts in supporting completion of the audit process to enable final sign off for the Statement of Accounts to be progressed.

Having considered both reports the Committee RESOLVED to –

(1)        Note the updated version of Grant Thornton’s Audit Findings Report for Brent  along including the two additional recommendations and management responses provided within the Action included as Appendix A

(2)        To note the Audit Adjustments detailed within Appendix C of the Audit Findings Report, on which it was confirmed no further changes or approvals were required to the Statement of Accounts.

(3)        Given the further delay in completion of the External Audit process enabling formal sign off on the Statement of Accounts the Audit & Standards Advisory Committee seek to reconfirm the original delegation provided for the Chair of Audit & Standards Committee to sign off the finalised accounts.  It was therefore AGREED to refer the following recommendation to the Audit & Standards Committee:

“On the basis of the discussion and comments made at the Audit and Standards Advisory Committee that the Audit and Standards Committee reconfirm the original delegation provided authorising the Chair of the Audit and Standards Committee to sign the final Letter of Representation and Statement of Accounts, subject to a written assurance being provided that all outstanding matters and adjustments contained in the Audit Findings report had been made.  If there were any material adjustments required as a result of the final Audit Findings report being issued, these would be reported back to the next committee and also sent to the Chair of the Audit and Standards Advisory Committee and the Independent Advisor to the Committee”.