Agenda item

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The External Auditor from Ernst and Young presented to the Committee the Local Audit Reset which was the action to tackle the local audit backlog in England. He referred to the letter received from the Minister of State which outlined the actions to be taken.

He explained the proposals were paused as the parliamentary election were called in July 2024 and the new administration adopted the original proposals. He added the letter confirms the proposals were being continued.

He advised the letter included backstop dates which were set out below.

The External Auditor explained to the Committee the financial statements for 2020/21, 2021/22 and 2022/23 will be completed by 13^th December 2024 with a disclaimed opinion and disclaimed based on statutory override not limitations within the Council’s own arrangements.

The regulations then set backstop dates for financial year 2023/24 to 2027/28.

The External Auditor raised to the Committee of the importance of understanding the modification of a disclaimed opinion takes several years to unwind to get back to a clean position for the periods which had not been audited and influenced the opening balance. He added work was required over these years to get assurance back and ensured movements and key pointed would be audited to provide assurance.

The Chair thanked the External Auditor and invited questions and comments from the Committee.

The Chair, Councillor Ryves asked the consequences of a disclaimer being published on the accounts.

The External Auditor advised it would depend on the disclaimer and the implications could include the escalation process which involved value for money report, and public interest reporting.  He provided an example of the disclaimer being related to other concerns such as the transactions and bank reconciliation however provided assurance to the Committee the Borough Council was not near this position as the backstop dates were going to be met.

The Chair, Councillor Ryves sought further clarification and referred to the letter in which stated a sustainable solution to the wider/broken local audit system and asked what that would mean for the Committee.

The External Auditor re-iterated the two stages of the reset, and the recovery part would be more difficult as there could be changes to the financial reporting framework and auditor responsibilities. He added further guidance was to be expected later in the year.

Councillor de Winton asked the External Auditor if there were any sanctions the Council could be subject to if the backstop dates were not met.

The External Auditor advised that names of Local Authorities and Auditors being published if the backstop dates were not met. He added if the backstop date was not met, there was a statutory requirement to publish on the Borough Council’s website the reasons as to why this was not met and a further requirement of the accounts to be published and signed off as soon as possible.

RESOLVED: The Committee noted the information on the Local Audit Rest.