Agenda item

To consider report FIN/679 submitted by Ernst and Young.

RECOMMENDATION

That the Completion Report for those Charged with Governance for year ended 31 March 2023 be noted.

The Committee considered report FIN/679 which had been submitted by Ernst and Young (EY), the Council’s External Auditors.  The report provided the Committee with a detailed complete report covering EY’s approach and outcome of the 2022/23 audit and identified that EY anticipated issuing a disclaimed audit opinion.  The Committee noted that the rationale for the disclaimer, and the scope of the audit, were contained within the report.  It was highlighted that the necessity for a disclaimed opinion was due to no fault of the Council but due to resourcing pressures in the market and within EY internally.  It was noted that the Council had produced its Statement of Accounts (“the Accounts”) by the required deadline, along with the supporting papers for those Statements.   EY’s report stated that it had found no areas of weakness in its audit.

The Committee considered the report and in response to queries raised, the Committee:

·        Noted that EY would also be issuing a disclaimed audit opinion for 2023/24.  The Financial Reporting Council had produced guidance on how audits would be impacted over the coming years, with a view to building assurance over the next 3 years.  It was anticipated that 2026/27 could be the first year where EY would be in a position to produce an unqualified audit report.

·        Was informed that EY had taken the decision to build assurance for key areas for most of the authorities/bodies it audits for 2022/23 and, although EY had undertaken a few unqualified audit opinions for 2022/23, that had been due to specific factors and EY would be issuing a disclaimed audit opinion for the vast majority of its audits for that period.

·        Was provided with further information on the key audit areas EY would undertake whilst full audits could not be completed, this included all value for money work and an audit of the draft Financial Statements.

·        Was informed that EY had followed the procedures and checks set by the International Standards for Auditing when conducting this type of audit.

·        Was provided clarification on the limited procedures EY had undertaken on the issues identified in the audit regarding controls.

·        Was assured that there were minimal high-level risks associated with EY not completing a full audit, as the ‘reset’ for Local Government audits was occurring nationally and was based on Local Government legislation.  It was reminded that the internal quality control checks within the Council remained in place and those checks underpinned the financial robustness of the Council.

·        Was reminded that the fees associated with the external audit funding would ultimately be determined by the Public Sector Audit Association (PSAA).  The PSAA was currently working up a framework and officers would have the opportunity to challenge the fee once it was issued by the PSAA.

·        Was assured that the opening balance for the 2022/23 Accounts (before the Committee at this meeting) had been amended to reflect the adjustments identified by EY in its audit of the 2021/22 Accounts.

·        Received confirmation that EY reviewed internal audit reports as part of their general audit, the Audit Committee minutes, and the Annual Governance Statement, and it would take action if it deemed it necessary to do so.

RESOLVED

That the Completion Report for those Charged with Governance for year ended 31 March 2023 be noted receive the report and note progress to date, as at 31 July 2024.