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.

(Agenda republished to include this item on 24 September 2025)

Sheena Phillips (Grant Thornton – External Auditor) was invited to introduce the London Borough of Brent and Pension Fund Audit Progress Report and Sector Update, which provided a progress update on the audit process as of September 2025. Since receipt of the draft statement of accounts, substantial progress had been made, and the accounts were generally in good order. However, issues remained in relation to Property, Plant and Equipment (PPE). Specifically, the reconciliation between the valuation report and the fixed asset register had not yet been resolved. This issue had also been identified during the previous year’s audit. It was confirmed that discussions were ongoing with the finance team, who were preparing a working paper to demonstrate that no material misstatement existed between the valuation report and the fixed asset register. Due to the unresolved reconciliation, the audit of Property, Plant and Equipment (PPE) had not yet commenced, as the valuation report was a prerequisite for this work. A dedicated resource was due to begin in early October 2025, and it was hoped that the necessary working papers would be provided by management to enable commencement.

In terms of issues identified, these included the need to complete the valuation of assets totalling £15m with any subsequent adjustment to be reflected in the Annual Financial Report.  Additionally, a misclassification of assets held for sale had been noted and would be corrected. It was stated that the recommendation made in the previous year regarding reconciliation had not yet been fully addressed, as the valuation report remained outstanding. Updates were also provided on other significant risk areas. Work on pension liability was nearing completion, pending finalisation of the Pension Fund Report. In relation to management override of controls, journal transactions had been selected and forwarded to the finance team for review. Progress had also been made on the implementation of IFRS 16, which was of particular importance given that 2024-25 was the first year of adoption. Two completeness tests had been completed alongside balance testing, although evidence was still awaited for certain items.  Management had been informed that all outstanding evidence, excluding that related to Property, Plant and Equipment (PPE), would be required to facilitate completion of the audit. In concluding the presentation, Sheena Phillips reported that good progress had been made under the circumstances.

Having thanked Sheena Phillips for introducing the report, the Chair then moved on to invite questions and comments from the Committee, with the following comments and issues discussed:

• The Chair enquired about the likelihood of completion of the Audit Findings Report in time for the Committee’s meeting on 3 December 2025. In response, Sophia Brown (Grant Thornton – External Auditor) confirmed that progress on the majority of audit work was satisfactory. Provided that the outstanding information was received when the team concluded its current phase, most testing would be completed. It was noted that resources were available to address any remaining areas, including a dedicated resource for Property, Plant and Equipment (PPE). Subject to receipt of the required information, the audit remained on track for completion by the December meeting.

• Independent members referred to the prior period adjustments (PPAs) and queried the restatement of infrastructure assets totalling £63 million. It was questioned how this had been identified, particularly in light of previous issues with infrastructure assets, and whether the assets had been written out or reclassified. A follow-up question was raised regarding the adequacy of information available to support reclassification of the assets. In response, Rav Jassar (Deputy Director Corporate and Financial Planning) acknowledged the specificity of the question and advised that it would be best addressed by Ben Ainsworth (Head of Finance). A response would be obtained and circulated to Members following the meeting.

• Independent members questioned whether, aside from the revaluation of the £15 million in previously unvalued assets, there were any indications that the notes on Property, Plant and Equipment (PPE) might materially differ from those in the draft accounts. In response, Rav Jassar (Deputy Director Corporate and Financial Planning) confirmed that he was not aware of any changes to the Property, Plant and Equipment (PPE) notes compared to the draft accounts.

• Independent members referred to a previous meeting at which the impact of materiality on the areas of scope and sample sizes had been discussed and sought confirmation as to whether materiality had affected the areas selected for testing or the extent of testing required. In response, Sophia Brown (Grant Thornton – External Auditor) stated that the areas identified for testing in the current year were broadly consistent with those selected in the previous year. The change in materiality had not resulted in any significant areas being excluded from scope. It was further noted that sample sizes had been reduced slightly, but this had not materially affected the audit approach. Other issues under consideration continued to require attention and were being addressed accordingly.

• Members enquired when the misclassification of assets had been discovered, how it had been identified, and the level of confidence that no further misclassifications remained. In response, Amanda Healy (Deputy Director Investment and Infrastructure) confirmed that the challenges relating to asset classification had been identified during the audit process for the financial year 2024-25. Members heard that significant progress had been made across multiple teams, and a dedicated internal workstream had been established to address and improve asset management for the current financial year. It was reported that the work remained ongoing and involved several strands, including efforts to ensure the completeness of asset records. Measures had been implemented to strengthen governance and introduce processes to identify and address such issues earlier in the financial cycle. Confidence was expressed that these improvements would support early detection and resolution of any future misclassifications.

• Members observed that issues relating to Property, Plant and Equipment (PPE) and fixed assets had also arisen in the previous year and questioned how the Council’s position had improved since then and whether the audit team was sufficiently resourced to meet deadlines once sample data was received. In response, Sophia Brown (Grant Thornton – External Auditor) highlighted that improvements had been observed compared to the previous year. Specifically, reconciliation issues that had previously hindered progress had been resolved, resulting in a smoother process. It was noted that the proximity between audit cycles had also contributed to improved evidence quality and timeliness. In relation to resourcing, it was confirmed that the audit team had been allocated until the end of September 2025 and was prepared to process all provided. Members were further advised that a dedicated resource had been assigned to PPE and that an experienced auditor, familiar with the Council’s processes and history, would remain on the audit until December 2025. This auditor was well-equipped to address any outstanding matters once the audit team had moved on.

• In querying the status of the pension valuation, independent members questioned whether it was in progress, completed, or causing any delays. In response, Sophia Brown (Grant Thornton – External Auditor) confirmed that the pension fund audit was being held pending completion of the Council’s audit. The IAS 19 letter was ready to be issued which was required for pension liability work. It was noted that, had the Council’s audit been finalised, the pension fund audit would have been in a position for sign off. The Chair added that the draft pension accounts had already been reviewed by both the Pension Sub-Committee and the Pension Board. Progress on the pension side was therefore well advanced.

• As a final issue raised, the Chair acknowledged the resources made available and noted that confidence was growing in the likelihood of the Audit Findings Report being completed in time for the meeting scheduled on 3 December 2025. However, it was recognised that several matters remained unresolved. The Chair requested that any updates or changes to the anticipated timeline be communicated to the Committee promptly to ensure clarity.

In seeking to bring consideration of the item to a close, the Chair thanked officers and members for their contributions and in welcoming the ongoing support from Grant Thornton (as External Auditors) and efforts of officers within the Council the Committee AGREED to note the update provided, with the following specific action identified;

(1)    That a written response be provided for the Committee addressing how the restatement of infrastructure assets totalling £63 million had been identified, particularly in light of previous issues associated with infrastructure assets, and whether the assets had been written out or reclassified. A response was also to be circulated to members following the meeting, providing clarification on the adequacy of information available to support the reclassification of the assets.