Agenda item

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The Committee received a report from Ernst & Young, External Auditor.

The report outlined the external auditors risk assessment, audit approach and scope of the audit for 2023/24. The report specified reporting criteria as part of the audit plan as, financial sustainability, governance and improving economy, efficiency, and effectiveness.

The Chair thanked officers for their report and invited questions and comments from the Committee as summarised below:

Councillor Devulapalli asked for clarification and referred to page 24 of the report.

The External Auditor clarified the Council’s capital transactions were required to go through the fixed assets register and the last reconciliation was for year 2019/20. He added that due to the complexities of these transactions, it provided a further risk going from year 2019/20 to year 2023/2024 reconciliation of the statement of accounts.

The Assistant Director clarified further that there was a back log and work was still being carried out on historical financial statements. From the 2019/20 audit, she explained that the finance team are working on the corrections and amendments as they needed to be carried through to 2023/2024 statement of accounts.

Councillor Coates referred to page 7 of the report and sought clarification on definition of assurance within the report and it’s context.

In response to Councillor Coates, the External Auditor defined assurance as the capacity and experience of the finance team to deal with the statement of accounts. He stated assurance came from internal audit reports on financial systems and providing accurate information. Lastly, he clarified assurance was a true and fair reflection of the accounts being provided and the audit committee having assurance in the finance team and their processes.

Following on Councillor Coates asked the External Auditor if the constitution had been looked at regarding what the Audit Committee did.

The External Auditor responded that the constitution had been looked at and what was in place was what was expected. He noted CIPFA produces a good practice document which would be useful support for the committee if needed.

The Chair asked for elaboration on value of money in terms of audit. In which the External Auditor clarified the criteria that was defined by national audit office which was governance, improving economic efficiency and financial sustainability. These criteria would identify procedures and arrangement in place rather than the outcome.

In response to further questions from the Chair, the External Auditor confirmed that it was expected to have back stop dates where the audit stops once enough work had been done to give an opinion. This would come from DLUHC and regulations would allow the audit to be reset and a disclaimer opinion given.

The Chair thank the officer for clarification.

Councillor Dark commented the strength of an external audit was the element of independence. However, this also is a potential weakness due to a lack of knowledge of the Council. He raised concerns that as the audit would be carried out with the Section 151 Officer and Finance Team there was no advance or engagement method for the Committee to be able to identify discretionary arears to be audited. Councillor Dark highlighted the frustration of the delay in the report to Councillors.

The External Auditor advised as part of the external audit, previous minutes of the Audit Committee and other Council meetings would be read to identify issues and encouraged the Committee to work with the Assistant Director for assurance as risks would change throughout the audit plan.

The Assistant Director added further that if Councillors had concerns, they could also go directly to Ernst and Young instead of Officers.

The Chair invited the Portfolio Holder for Financeto address the Committee. Councillor Morley supported the comments of the Assistant Director and referred the Committee to the Internal Audit.

Councillor Bearshaw asked if the External Auditor would be meeting with the Chief Executive Team to highlight their areas of concern.

The External Auditor confirmed contact with management would be maintained throughout the audit plan. He added there were procedures in place to discuss risks as per the audit standards.

Councillor Devulapalli sought clarification on chain of command should the executive  have concerns. In response, the External Auditor advise they would go to Section 151 Officer and then to Ernst and Young.

RESOLVED: The Committee noted the update.