Agenda item

The committee received a report from the Head of Finance regarding the external audit conclusions and approval of the statement of accounts.

In response to members’ questions the Chief Finance Officer, Head of Finance and a Director from EY said the following:

i.      The National Audit Office (NAO) indicative target date for an Unqualified Opinion was 2026/27, however this may extend to 2028/29. The NAO timetable was based on a Council whose assurance buildback began in 2023/24, but audit work actually began a year later, so the Council had always been a year behind. The Council was committed to do everything possible in working with auditors to achieve the unqualified opinion in 2027/28.

ii.    Addressing concerns about the impact of Local Government Reorganisation (LGR) on the team’s workload, the Chief Finance Officer confirmed that £2.5million had been allocated to LGR costs in the draft budget which would be taken to Full Council on 26 February 2026 and that a proportion of this would be used to bring in resource to focus on LGR or to backfill for permanent staff.

iii.   Controls were in place over the journals to allow the accounts to be produced, but it had been difficult to submit evidence on sample transactions in the format required by the auditors within the required timeframes.

iv.  Statutory recommendations under Schedule 7 had been considered, but the Council was on a journey of improvement and the increasing strength of the finance team could lead to the removal of consideration of recommendations in future.

v.    The Head of Finance would investigate a query regarding the number of houses listed on page 100 of the report and would get back to members.

vi.  Information relating to the buying out of leaseholders would be shown within the narrative report under the relevant portfolio holder.

vii. With regard to comparisons with other authorities, EY plan to produce a report once analysis of sets of audits had taken place, however delays did start around Covid-19 and they exist on both sides of the audit spectrum. Cambridge City Council was not alone in this journey.

viii.                 Officers confirmed sector-wide issues around audit backlog and that EY had rated preparation of accounts and quality of accounts as green, however acknowledged that some of the audit readiness was not where officers would like it to be.

ix.  The WGA assurance statement would be submitted to the NAO; however the NAO could request additional procedures to be performed on the consolidation schedule, which is why the audit could not be formally closed.

x.    The ‘right of use’ assets related to situations where the Council had leased assets over a period of more than 12 months, therefore a valuation of the assets must be included on the balance sheet. This was the first year of inclusion of this accounting standard.

xi.  The report is considered by Civic Affairs and Audit Committee before Cabinet as it is the responsible committee for governance of the audit process. Acknowledged tight timeframes to get this report to Committee in time to meet backstop date. In future, officers could provide more regular updates throughout the year and keep the Committee informed on the process.

xii. Officers acknowledged that it would be preferable for all authorities to achieve Unqualified Opinion status in advance of local government reorganisation and confirmed that a Finance workstream exists as part of the LGR process.

Resolved (unanimously) to:

i.      Note the contents of the EY Audit Results Report 2024/25.

ii.    Approve the Statement of Accounts for the year ended 31 March 2025, subject to any remaining amendments per recommendation.

iii.   Delegate authority to the Chief Finance Officer to approve any amendments to the Statement of Accounts arising from the remaining audit procedures, provided that these do not have a material impact on the Council’s usable reserves or result in any changes to the auditor’s opinion.

iv.  Authorise the Chair of the meeting to sign the Letter of Representation and the Statement of Accounts for the financial year ended 31 March 2025 on behalf of the Council.