Agenda item

This report provides the Committee with progress update from Grant Thornton on the delivery and responsibilities they are conducting as the Council’s external auditors. The report also provides sector updates and further details on matters relating to audit progress.

Sophia Brown (Key Audit Partner, Grant Thornton) introduced the report, updating the Committee on Grant Thornton's progress in fulfilling its responsibilities as the Council’s external auditor.

In presenting the report, Sophia Brown advised that work to complete the audit on the Council’s 2023-24 financial statements remained in progress with the aim to now include detailed findings (subject to the process having been completed) in the 2023-24 Audit Findings Report scheduled to be presented to the Committee the additional meeting scheduled on 31 October 2024.

The Committee was advised that work to date had been affected by delays in obtaining final evidence for several sections of the financial statements and whilst the original target had been to finalise their work by the end of September 2024 delays in obtaining the required data and the quality of some supporting evidence had meant Grant Thornton were unable to finish their work and had needed to allocate additional time to complete the audit.  The information on which further details were awaited included PPE reconciliation and valuations with work ongoing to complete and review data provided in relation to journal testing, valuation on land and building enquiries, group audit procedures and grants testing.  An emerging pensions issue across the local government sector was also stated to have affected deadlines, requiring an assessment from the Council's actuary.

As a result, an additional two weeks of audit resource had ben allocated in an effort to complete the outstanding work in advance of the revised timescale for the end of October 24, although this would also require submission of the necessary data from the Council and also be subject to management review of the audit findings, which may further delay progress in being able to complete the audit process.  The Committee were advised that if not possible to achieve the October 24 deadline this was likely to mean the final outcome of the audit process being delayed until February 2025, with the aim to avoid (if possible) falling within any backstop arrangements.

In terms of the Annual Auditors Value for Money Report, the Committee were advised that under the Code of Audit Practice there was a requirement for the Annual Report to be issued no later than 30 September or, where that was not possible, to issue an audit letter advising for the reasons for any delay.  As the audit work on the Council’s value for money arrangements was still in the process of being completed Sophia Brown advised that she had formally written to Councillor Chan (as Chair of the Audit & Standards Committee) advising that due to the ongoing challenges in relation to meeting the necessary regulatory and other requirements it had not been possible to complete that work within the usual timescale.  As a result, it was now planned to publish and issue the full 2023-24 Auditors Annual Report in December 2024.  Under changes to the Code, should the VFM work not be completed in time for the audit opinion on the Council’s 2023-24 financial statements being issued Sophia Brown advised that the External Auditor would write to the Chief Executive to summarise their VFM findings at that date and confirm the intention to issue their final report in December 2024.

Having thanked Sophia Brown for the update provided the Chair then invited comments from the Committee with the following issues raised:

·             The focus of both the Chair and Vice Chair in seeking support and achieve (as far as  was possible) the revised deadline for completion of the audit process on the Council’s financial Statement of Accounts by 31 October 24

·             In seeking further clarification on the reasons for the delay in completion of the audit process, members were advised this reflected not only capacity issues that had needed to be addressed within the Council’s finance team in relation to staffing levels but also the revised accounting deadlines and more complex nature of queries on which information or responses had needed to be provided for example involving additional valuations and reconciliation.  Confirmation was provided that in terms of staffing capacity these issues were now in the process of being addressed with work also ongoing to review the processes moving forward in terms of additional training and benchmarking relating to the exchange of data recognising the more challenging nature of the audit process.

Asad Khan (Grant Thornton) provided the Committee with a current update on the status of information identified as outstanding in relation to audits on both the Council’s financial statements and Pension Fund with data now having been provided in a number of areas on which further testing was now underway or management responses were awaited.

·             In response to clarification being sought on any potential increase in audit fees as a result of the additional resources being made available to complete the audit process, members were advised this was expected to impact on the fee with an initial assessment being approx. £20k.  It was, however, noted that any increase in fee would need to be reported to and agreed by the Chair of the Audit & Standards Committee for formal approval with the initial focus, however, remaining on the work required to complete the audit process.

Following on Sophia Brown ended by informing the Committee of the need to advise of an additional audit fee that had been incurred in relation to the work undertaken to resolve a general sector wide objection on the previous audit relating to bus lane CCTV enforcement. To this effect, Grant Thornton had advised that the additional audit fee had totalled £2,500.

In response to a request by the Chair, Sophia Brown also took the opportunity to advise the Committee on the newly emerging IFRIC-14 pensions accounting consideration, with work underway to address the new requirement with the Council Pension Fund Actuary.

With no further issues raised the Committee RESOLVED to note the Brent Council & Pension Fund Audit Progress and Sector Update along with the update provided in relation to the additional external audit fee incurred, provisional deadline for focus of activity to complete audit activity and sign off 2023-24 Statement of Accounts as 31 October 24 and rescheduling of the External Audit Annual Report for Committee in December 24.