Issue - meetings

The External Auditor has not completed the audit 2018/19 at the time of this agenda publication.  Therefore, the Committee will need to agree a date for a special meeting to consider the Statement of Accounts and other related reports which are included on the Forward Plan scheduled for 29 January meeting. (For discussion).

The Committee received an oral update from the Head of Finance on the delayed external audit by Ernst & Young (EY) of the accounts 2018/19 and the knock-on delay for all the associated reports listed for 29 January committee which had also not been included on the agenda.

In response to the oral update Councillors questions and comments were:

Ensure that the city council was managing the delay with EY;

Noted that local authority auditing was variable across the country;

Was the Council tied-in to a contract with EY;

What if EY don’t make the new date of completion;

What was the resource impact of the delay on the city council;

Clarify what the legal deadline is.

The Head of Finance said the following in response to Members’ questions:

The issue with auditing of local authority accounts was widespread although EY appeared to be in the most difficult position of the audit companies.  The audit industry is making a case to central Government that the deadlines set are no longer achievable.  There is a review (the Redmond review) of auditing practice and the Public Sector Auditing Appointments (PSAA) is lobbying to make deadlines more achievable.

The Council is in year 1 of 5 with EY, which is a contract arrangement done through the PSAA.  The Council and other affected public bodies who have EY as the external auditor are working with PSAA on service delivery.  The Council alone cannot end the contract.

The legal requirement is that the Council publishes its accounts by 31 July. It is not a requirement that they are fully audited. The Council therefore published in July with the qualification that they were unaudited. EY had sought its own legal advice on the requirement, as it impacted on a number of its audits.

EY met with Heads of Finance to discuss the audit of 2019/20 and is proposing that these are reported in autumn 2020 (ie. not July).

EY is meeting Chairs of Audit Committees in February to discuss the issues raised by its delays.  As of early January eight audits were still outstanding

The resource impact for the Council has been that officers who would have been working on the budget were working on the audit and this will be the same for 2020 if the audit is reported in the autumn (which is what EY is proposing).  The Head of Finance was of the view that this may be a pragmatic approach taking into account a new finance team will be in place.

The Committee agreed to hold a special meeting on Wednesday 11 March to consider the agenda items listed on the Forward Plan for the 29 January which had not been reported.