Agenda item

To receive a report from Grant Thornton (as the Council’s External Auditor) providing external audit progress and sector updates.

The Chair then invited Sheena Phillips (Senior Audit Manager, Grant Thornton) to introduce a report providing an update on progress being made by Grant Thornton in delivering their responsibilities as the Council’s External Auditors along with various sector updates.  The following key updates were highlighted:

·             Having issued the audit opinion for 2023-24 the planning and risk assessment work for the 2024-25 audit of the Statement of Accounts and Value for Money review was now underway with the External Audit Plan due to be presented to the Committee in June 2025.  Detailed audit work was due to commence in July 25 and was currently scheduled to be completed by September 2025.

·             In terms of sector updates, these had included an update on the process involving the devolution and reorganisation of local government across the country, local audit reform as well as changes being consulted upon in relation to the future of local government financial reporting and accounts and the standards regime.

Having thanked Sheena Phillips for the update the Chair then invited comments from the Committee with the following issues highlighted:

·             Referring to reference within the previous report to the establishment of a cross Council working group, reporting to the Corporate Director of Finance and Resources, set up to work collaboratively to address the challenges experienced with the audit of the 2023-24 accounts including accuracy of the Fixed Asset Register and valuation of assets, members were keen to explore how this process could be developed to address wider issues relating to audit activity.  In response, members were advised that similar processes had been established previously (where identified as necessary) and achieved positive outcomes, with this process designed to provide early engagement with all relevant departments and senior management to ensure the clear allocation of responsibilities and accuracy of data required in preparation for the 2024-25 accounts as well as the Council’s valuers.  Feedback and engagement was reported as positive to date with work ongoing to prepare the draft accounts within the required deadline.  From an External Audit perspective Sheena Phillips advised no hot reviews were anticipated for the 2025-26 audit process reducing the likelihood of unforeseen delays.

·             Recognising the impact which the adoption of IFRS 16 would have on preparation of the 2024-25 financial statements, members sought details on the work also being undertaken to prepare for the implementation of these changes including the data sets that would be required.  In response, members were advised that the new standard would require changes for most leases to be recognised on the balance sheet impacting both assets and liabilities. The finance team had therefore been planning (working through the cross council working group) for the change to enable a smooth transition (including completeness of the required data sets) and would be engaging early with the auditors on the updates as part of the 2024-25 audit.

·             Members concerns to ensure that the level of external audit fees and any additional charges incurred, or further increase in fees as part of the work due to be undertaken as part of the 2024-25 audit process continued to be kept under review.  Whilst recognising the concerns expressed, the Chair felt it was important to recognise that the initial scale of fees had been set through the PSAA as part of the national procurement process with the External Audit contract having been retendered in 2023 leading to Grant Thornton being reappointed as Brent’s auditor.  Sheena Phillips also highlighted how the scale of fees had been developed to reflect the current basis of costs incurred in resourcing and undertaking the necessary standard of audit work which also reflected the introduction of enhanced accounting and auditing standards and with any variation in fee determined by PSAA in accordance with set procedures.  In recognising the concerns expressed Minesh Patel (Corporate Director Finance & Resources)  reassured members of the work undertaken with Grant Thornton to support the audit process and minimise any additional work required outside of the scope of the initial audit fee, but in recognising the concerns raised advised that officers would continue to ensure that the level of fees and any additional charges or increases were kept under ongoing review.

As no further issues were raised the Chair thanked Sheena Phillips for the update and the Committee RESOLVED to note the report.