Agenda item

This report details the response provided by the Council to the external auditors Enquiries of Management in order to meet expectations of the Financial Reporting Council (FRC).

Ben Ainsworth (Head of Finance) introduced a report providing the Audit & Standards Advisory Committee with the opportunity to review the responses provided by management to the External Auditors Enquiries of Management 2023-24, in order to comply with the expectations of the Financial Reporting Council (FRC).  Members were advised that the Enquiries of Management related to those charged with governance for both the Council and also Council’s Pension Fund with the management responses detailed in Appendix 1 (Brent Council Enquiries of Management) and Appendix 2 (Pensions Fund Enquiries of Management).

The Committee noted the following key points:

·             Confirmation was provided that the key issues identified as having a significant impact on the financial statements for 2023-24 had included the cost-of-living crisis, inflation, increase in demand for temporary accommodation, Dedicated Schools Grant High Needs Block deficit and pressures on the Housing Revenue Account.

·             The confirmation provided in relation to the ongoing appropriateness of the accounting policies adopted by the Council which, subject to a minor technical change identified in relation to the treatment of cash in transit, remained in accordance with the CIPFA Code of Practice.

·             The response had also identified no change in circumstances that would lead to any impairment in relation to non-current assets with all financial investments (covered under the accounting standards) also confirmed as being subject to an Expected Credit Loss review  under IFRS9.

·             The outcome of the fraud risk assessment, with no concerns or issues having been identified within the response in respect of fraud that may result in a material misstatement to the financial statements and assurance provided that all know material risks had been considered as part of the Council’s Internal Audit planning process and key financial system/control programme of work.  Reference was also included to the work of the Counter Fraud Team in seeking to prevent, detect and prosecute fraud and role of the Audit & Standards Advisory Committee in monitoring this activity.

·             The response also provided assurance in relation to the Council’s compliance with relevant laws and regulations highlighting the range of management controls in place to support the process including the recruitment and training of staff, robust policy and procedure framework and effective management oversight and control.  These controls were supported by the inclusion of legal and financial considerations in all reports for decision alongside the independent and objective assurance provided through the Internal Audit function and Internal Audit Plan, with activity focussed around the highest risk areas for the Council and the scope for each audit review including compliance with policy, plans, law and regulations.  In terms of the impact of any litigations and claims these were also subject to a detailed review process involving legal with any likely to impact on the financial statements disclosed as part of the Statement of Accounts as either provisions or contingent liabilities.

·             The outline included as part of the response in relation to the arrangements for disclosure of related party transactions and related procurement policy as well as the audit approach adopted in relation to going concern and matters relating to the accounting estimates.

·             The key questions asked in the Enquiries of Management were standard as they set a baseline for auditors to be able to focus in on certain areas as required.

Having introduced the report the Committee was then invited to raise any comments/questions, which are summarised below:

·             Further details were sought on the use of the responses provided by the External Auditors, with Samantha Morgan (Grant Thornton) advised that these formed an important part of the external audit risk assessment process and in supporting the development of a constructive working relationship with those charged with governance in preparing for the audit process and identifying any areas on which further assurance may be required.

·             Having noted that some questions still required responses to be provided, members were advised that the returns were in the process of being finalised for submission, with clarification provided around the presentational structure of the responses under each section.  Members were encouraged, as part of the process in finalising each response, to submit any further comments they may have on the Enquiries of Management via James Kinsella (Governance & Scrutiny Manager) in order for the returns to be finalised prior to the next Committee (June 2024) for approval and submission.

·             In response to a request for further clarification on the inclusion of any external bodies as part of the Enquiries of Management, confirmation was provided that the responses would only include those issues impacting directly on the Council’s financial statements.

As there were no further issues raised, the Chair thanked Ben Ainsworth for the update provided and it was RESOLVED to note the current update and status of the responses included within the Brent Council Enquiries of Management (as detailed within Appendix A of the report) and Pension Fund Enquiries of Management (as detailed within Appendix 2 of the report, subject to members having the opportunity to submit any final comments/feedback via James Kinsella (Governance & Scrutiny Manager) prior to submission of the final reports to the next Committee for formal approval in June 2024.