Agenda item

A report of the External Auditors.

A report of the External Auditor was submitted summarising the audit conclusions during the External Auditor’s audit of the Council’s financial statements for the year ended 31 March 2021 (item 7 on the agenda filed with these minutes).

Mark Surridge representing the External Auditors, the Strategic Director, the Head of Strategic Support and the Head of Financial Services, attended the meeting to assist with the consideration of the item.

The Committee was advised that:

·         The External Auditors were prepared to sign and close the statements as there were no concerns.  However, the Audit Certificate could not yet be issued as this was formally linked to a statute on closing the audit and the required information on the whole of government accounts, had not been received.  This was an issue for all local authorities and not just Charnwood Borough Council.

·         Regarding the Executive Summary on Audit Opinion and Value for Money, accounts were concluded to be fair, and this was an unqualified opinion without modification.  The structure of the Value for Money assessment had changed in 2021 through the Code of Audit Practice.  No significant weaknesses were found in arrangements.

·         The authority’s arrangements for financial sustainability, informed decision making and improving economy efficiency and effectiveness were deemed adequate, which was the best outcome possible.

·         Regarding the work on the Financial Statements, accounts were deemed to be true and fair.

·         Risk assessment was found to be in line with other local authorities.  The risks identified were not unusual or out of the ordinary.  All procedures had been carried out and concluded on.

·         A small number of minor matters were identified regarding internal control recommendations.  Officers would be worked with to close these out in the 2021/22 audit and none of these were a cause for concern.

·         Differences in the Statement above the £55,000 threshold were reported upon and an item that extrapolated to £271,000 was identified in the report.  It was suggested that this was due to the way the 52-week cycle was adjusted to match the financial year and it was requested that the Committee noted the acceptance of this.

·         Work was not complete on the approach to Value for Money until the new-style annual auditors report was issued.  However, no significant weaknesses had been identified.  The code required the report to be issued within three months of signing the Audit Opinion, as such this was a matter of timing rather than unidentified risk.

·         No adjusted material misstatements had been identified for 2020/21.  The accounts submitted for audit was of good quality and the external auditors had been given the full support of officers.

Councillor Snartt thanked the Officers involved for their efforts in ensuring a good result for the authority.

The Chair remarked that it was good to see the full cooperation of management and to see progress made.

The Committee were advised in response to questions that:

·         An issue was identified with rental receipts from commercial properties being accounted for on a cash rather than accruals basis. This was not deemed to be a material issue by the auditors but the issue would be revisited by them in subsequent years. The Committee were further informed that such issues had been identified in other authorities.  The Head of Financial Services added that the issue might be explained by this being the first year of commercialisation of leases since as part of the year-end procedures it was important to ensure the statements were shown across four quarters.  The added that this would be take forward to ensure that there would be no significant changes.  The Committee were assured that if an error was found in a sample, it was applied across the accounts and as such there was no impact in terms of the General Fund.  All work was complete on the issue and there were no further adjustments to the report.

·         It was clarified that there was a difference in focus between external and internal audit and the two worked independently.  It was further clarified that internal audit carried out full-systems audits based on recommendations.  It was explained that external audit looked at whether accounts were true and fair whereas internal audit looked at reconciliations.  External audit reflected on the work of the internal audit but did not rely on it.

·         The external auditors did not sign off on the Leicestershire Local Government pension fund as it was audited by Grant Thornton.  However, it was a materially accurate estimate.  The Strategic Director added that the fund looked at underlying assets and that the fund accounts were basically correct.  The Head of Financial Services added that three separate valuations on the pension fund had been taken into consideration.

The Chair drew the attention of the Committee to training slides that had been distributed to them that clarified the focusses of internal and external audit.

RESOLVED That the Committee noted the report including the acceptance of the difference in the statement of £271,000 as detailed above.

Reason

To acknowledge the Committee’s consideration of this item and to note the reasons for the difference in the statement of £271,000.

The Audit Manager left the meeting during the consideration of this item.