Issue - meetings

The Committee received a report in relation to the External Audit Plan 2023/24.

The report was introduced by Mark Hodgson, Partner Ernst&Young (EY).

Prior to the General Election there was a backlog to the external audits that needed to be completed. Although there had been a change in government the proposals that were being consulted on had been given cross party support and there was no reason to suggest the proposals would change. This included support for legislation and a backstop date for the 2022/23 audits to be complete, it was unlikely that the original date of end of September would be met, but there was still an assumption that the legislation would be passed in due course.

With regards to the audit plan this was to set out the risks the external auditors saw that would potentially have an impact on the audit opinion. In terms of materiality levels, the external auditors were working to a figure of £3.39 million, this meant anything above this could have an impact on the audit opinion. In addition any auditing difference of over £169,500 would be reported on in the audit results report. The Committee were made aware that the pension fund was for this accounting period an asset rather than a liability, which was generally the case for the Council and similarly for other local authorities. There was also a new risk added around the Housing Revenue Account (HRA) following earlier issues around the rent regulations and the Council had a liability as at 31 March.

In terms of the future timeline it was hoped that the audit report would be ready by the end of November this year, however this would be held ready until the legislative processes had been completed following the change in government. Finally, this was the first year of five with regards to the new audit fee to which the Council had opted into.

Members of the Committee commented on the report which included:

i.               In terms of the pensions asset this was recorded on the balance sheet. This was then contained within a reserves fund but could be seen as a liability or asset on any given year.

ii.             The audit fees had increased and took into account the extra responsibilities that external auditors now had. There were still issues with resourcing for carrying out audits, both externally and within local authorities, this was an ongoing issue. It was important to note that there were additional issues that created the backlog, for example the pandemic and being able to work closely with Council officers and the issue around infrastructure assets which had only been recently resolved.

iii.            With regards to making progress with the Council audits the team was now fully resourced and in a position to carry out audits as necessary. As a whole EY were successful in recruiting a number of graduates into the profession, with the aim of making the role more attractive to work in.

iv.           The audit fee itself was set nationally.

v.             The only new standard of accounting that was coming in was IFS16 which was an identify for future reference.

vi.           In terms of any comments around why the accounts were being audited late these needed to be fed back to officers to be able to respond adequately.

vii.          The pension asset was an audit risk due to the calculation that was used to create the position of the pensions being an asset, especially in terms of moving from a significant deficit to an asset.

The Committee agreed to resolve (Unanimous) that the contents of the EY Audit Plan 2023/24 are noted