Agenda item

Reports attached include:

Statement of Accounts

Audit Completion Report

Value for Money Report

Audited Statement of Accounts

Annual Governance Statement

 

It was reported that in accordance with the Accounts and Audit Regulations 2015 (as amended) the 2023/24 Draft Unaudited Statement of Accounts were signed by the Interim Deputy Chief Finance Officer (acting S151 Officer) on 31 May 2024 by the deadline and published on the Councils website. However, the Annual Governance Statement was not available by the 31 May 2024 deadline, therefore the Council had been unable to commence the 30-working day period for the Exercise of Public Rights and a delay notice was published on the Council website.

 

To achieve the statutory backstop date of the 28 February 2025, the Council had been required to commence the 30-working day period for the Exercise of Public Rights, no later than 16 January 2025. Following the 3 December 2024 Audit Committee meeting both the 2023/24 Draft Unaudited Statement of Accounts and Annual Governance Statement were published on the Council website and the Period for the Exercise of Public Rights ran from Monday 16 December 2024 and concluded on Friday 31 January 2025.

 

The Accounts and Audit (Amendment) Regulations 2024 came into force on the 30 September 2024, this legislated the statutory backstop dates, including the 2023/24 Statement of Accounts of 28 February 2025. To comply with the backstop date legislation the Council had to publish accountability statements on the website by this backstop date, accountability statements needed to include:

 

·         The Statement of Accounts together with the Audit Opinion and any certificate.

·         The Annual Governance Statement.

·         The Narrative Statement (the Council includes this within the Statement of Accounts)

 

The Accounts and Audit (Amendment) Regulations 2024 require those charged with governance to approve the final audited accountability statements prior to publication. Therefore, Audit Committee are asked to approve the 2023/24 Statement of Accounts (Appendix 3) and Annual Governance Statement (Appendix 4) and delegate authority to the Chair of the Audit Committee and the Director of Finance, to sign-off the 2023/24 Statement of Accounts and the Leader and Chief Executive to sign-off the 2023/24 Annual Governance Statement.

 

The Engagement Partner, Forvis Mazars  presented the Audit Strategy Completion Report – year ended 31 March 2024 and confirmed that they would be providing a disclaimer opinion on the 2023/24 accounts in line with the backstop arrangements following the disclaimer opinions provided previously for 2022/23 and 2023/24.

 

The purpose of the document is to summarise the audit and to explain how the statutory backstop arrangements introduced by the Accounts and Audit (Amendment) Regulations 2024, have affected the completion of the work and the reporting consequences.

 

It was explained that the external auditors consider two-way communication with the Council to be key to a successful audit and particularly important in the context of the backstop arrangements as it facilitates:

 

• reaching a mutual understanding of the scope of the audit and the responsibilities of each of the external auditors and the council;

 

• sharing information to assist the external auditors and the council to fulfil their respective responsibilities; and

 

• providing the council with constructive observations arising from the audit process even though this has been curtailed by the backstopped arrangements.

 

The Engagement Partner, Forvis Mazars  explained that Forvis Mazars would usually report the outcome of their  planning work, including the significant risks identified and their planned procedures, in the Audit Strategy Memorandum. The results of their audit, including significant matters identified would usually be reported to you in the Audit Completion Report.

 

As a result of the backstop arrangements, it has been determined that the most appropriate way to communicate each of the matters required under auditing standards, is in a single document, the Audit Strategy and Completion Report.

 

As it is a fundamental requirement that an auditor is, and is seen to be, independent of audited bodies, section 8 of the document summarises their considerations and conclusions on their independence as auditors.

 

It was stated that Forvis Mazars will continue to work closely with the Audit Committee and management to take the necessary steps to rebuild assurance over future accounting periods. And will report further details to the Committee on the rebuilding process in the coming months. In line with the guidance issued by the National Audit Office, as endorsed by the Financial Reporting Council, the External Auditors hope to return to a standard audit cycle where they are able to obtain sufficient, appropriate evidence in order to issue an unmodified audit opinion in as short a period as practicable.

 

The significant findings were set out in the report.

 

The Value for Money arrangements were presented the Committee. It was explained that the external auditors are required to form a view as to whether the Council has made proper arrangements for securing economy, efficiency and effectiveness in its use of resources. The National Audit Office issues guidance to auditors that underpins the work the external auditors are required to carry out in order to form their view and sets out the overall criterion and sub-criteria that we are required to consider.

 

2023/24 is the fourth audit year undertaking the value for money (VFM) work under the 2020 Code of Audit Practice (the Code). The responsibility remains to be satisfied that the Council has proper arrangements in place and to report in the audit report and/or the audit completion certificate where significant weaknesses in arrangements are identified. Separately the external auditors provide a commentary on the Council’s arrangements in the Auditor’s Annual Report. The introduction of the backstop arrangements does not alter the responsibilities in relation to Value for Money arrangements work. 

 

The Code requires external auditors to report under three specified criteria:

 

1.    Financial sustainability – how the Council plans and manages its resources to ensure it can continue to deliver its services;

 

2.   Governance – how the Council ensures that it makes informed decisions and properly manages its risks; and

 

3.   Improving economy, efficiency and effectiveness – how the Council uses information about its costs and performance to improve the way it manages and delivers its services

 

Previously identified significant weaknesses and the progress made against those were set out in the report;

 

·         Ofsted Inspection: Children’s Services

·         Weaknesses in Internal Control

·         Financial Sustainability

 

The Engagement Partner, Forvis Mazars  referred to the progress made in relation to Information Governance and stated that the criticism made in this area had been “overly harsh” and she would make sure that this was properly reflected going forward.

 

The following questions were raised:

 

·         Councillor Bernstein referred to the External Audit Costs which were set out at 31 in the Audited Statement of Accounts noted that there had been such a significant rise in the fees. He asked whether the fees would increase again.

 

The Engagement Partner, Forvis Mazars  explained that the contract had ended in 2022/2023 and had been re-procured by PSAA in 2023/2024 who had published the fee scale following consultation

 

PSAA  were appointed for the period of 2023/2024 to 2027/2028 and would look at fees during this period.

 

·         Councillor Hayes referred to the six delivery boards that had been established and asked whether they would be successful and sufficient in addressing the issues.

 

The Engagement Partner, Forvis Mazars stated that it was too early to comment on this as they had only recently been established.

 

The Director of Finance explained that the terms of reference had been drafted and agreed, the dates of the boards had been set and the Audit Committee will receive an update report at its meeting in April.

 

·         Councillor Hook referred to the RAAC surveys and asked if there were any updates.

 

The Director of Finance reported that the surveys had been completed and no RAAC had been identified. The outcome of the surveys will be brought together on a register.

 

·         Councillor Moss referred to the statement at page 10 of the VFM arrangements report relating to RAAC being present in council buildings and that the risk had not been added to the Council’s risk register until December 2023 which was after the RAAC in the market hall had been identified. Councillor Moss stated that the risk was on the Council Register in October 2023.

 

·         Councillor Moss referred to the issues relating to internal audit recommendations not being actioned in a timely manner and the recognised “Sprint” that was required in relation to this.

 

·         Councillor Moss also referred to page 10 of VFM report that it quoted the job title of the Acting Head of Internal Audit which is incorrect and Karen Murray agreed to check and amend.

 

The Director of Finance reported that all managers had attended a meeting in January 2025 where they had been instructed to review and action the recommendations as quickly as possible to either remove them from the list or attach a realistic timeframe to them.

 

·         Councillor Moss referred to the finance team restructure that had been undertaken in 2022/2023 and the concerns raised around the loss of team members and expertise during the process and asked whether lessons had been learnt to inform the forthcoming restructure. 

 

The Director of Finance explained that any structural weaknesses and gaps resulting from the previous restructure had been identified and initially filled by interim arrangements and was reflected in the proposed future structure to be consulted on.

 

·         David Webster, Independent Member asked Karen Murray when she anticipated that the 23/24 and 24/25 accounts work would be completed.

 

The Engagement Partner, Forvis Mazars reported that guidance was currently being prepared by the Ministry of Housing, Communities and Local Government but the intention was to complete as quickly as possible.

 

·         Ben Thomas, Independent Member asked when the MHCLG guidance was expected.

 

The Engagement Partner, Forvis Mazars   stated that they were aware of the urgency and that when it was released it would be under the badge of the National Audit Office.

 

It was agreed:

 

That the Audit Committee

 

1.    Note the 2023/24 Management Representation Letter.

 

2.    Note the 2023/24 External Audit Strategy and Completion Report.

 

3.    Note the 2023/24 External Audit Value for Money (VFM) Report.

 

4.    Approve the 2023/24 Statement of Accounts and Annual Governance Statement.

 

5.    Delegate authority to the Director of Finance (S151 Officer) to sign the 2023/24 Management Representation Letter. 2.6 Delegate authority to the Chair of the Audit Committee and Director of Finance (S151 Officer) to sign-off the 2023/24 Statement of Accounts and Leader and Chief Executive to sign-off the 2023/24 Annual Governance Statement.