Audit & Standards Committee
Agenda Item 23
Subject: Audited Statement of Accounts 2021-22
Date of meeting: 29 November 2022
Report of: Chief Finance Officer
Contact Officer: Name: Jess Laing
Email: jess.laing@brighton-hove.gov.uk
Ward(s) affected: All
Note: Reasons for urgency
The special circumstances for non-compliance with Council Procedure Rule 3, Access to Information Procedure Rule 5 and Section 100B(4) of the Local Government Act 1972 (as amended), (items not considered unless the agenda is open to inspection at least five days in advance of the meeting) were that were that there were a small number of queries in relation to the external audit of the accounts requiring resolution before the audit could be concluded and the findings finalised.
1.1 This report provides information about the audit of the council’s 2021/22 Statement of Accounts and recommends approval of the 2021/22 audited accounts and the Letter of Representation on behalf of the council. The accounts should be viewed alongside the council’s Annual Governance Statement (AGS) which is also approved by the Audit & Standards Committee.
1.2 Under the Accounts and Audit Regulations 2015, the council’s accounts for 2021/22 must normally be approved by Members by the 31 July. However, the statutory publication deadline for this year only has been moved to 30 November 2022. Under the council’s constitution, the Audit & Standards Committee is charged with the responsibility of the approval of the accounts following which they can be published.
1.3 The council’s external auditors for 2021/22 are Grant Thornton who are required to give assurance that the accounts are free from material misstatement and to report significant matters arising from the audit. Grant Thornton will be presenting their findings to this Committee through their Audit Findings Report elsewhere on this agenda, after which they will normally be able to issue their audit opinion.
1.4 This report presents the updated 2021/22 accounts following the outcome of the audit process. It outlines any amendments made to the accounts and provides assurances in relation to the preparation of the accounts. It also informs the committee of the outcome of the public inspection of the accounts. Copies of the final accounts are available on-line and are provided at Appendix 3.
That the Audit & Standards Committee:
2.1 Notes the results of the public inspection of the accounts (paragraph 5).
2.2 Approves the Letter of Representation on behalf of the council (Appendix 1).
2.3 Approves the audited Statement of Accounts 2021/22 (Appendix 3) for publication.
2.4 Delegates authority to the Chief Finance Officer for any final wording and/or immaterial adjustments to the accounts prior to publication.
3.1 The main legislative requirements relating to the preparation, publication and audit of the council’s accounts are contained in the Local Audit and Accountability Act 2014 and the Accounts and Audit Regulations 2015 (as amended).
3.2 It is a requirement that the annual accounts be prepared as soon as practicable after the end of the financial year and considered and approved by a resolution of the committee charged with governance or the Full Council by the specified statutory deadline. Therefore, the accounts must be published and signed off by the external auditor as soon as reasonably possible after the conclusion of the audit. The statutory deadline was 31 July but (as for the 2020/21 financial year) the deadline for 2021/22 is 30 November.
Format of the Accounts
3.3 Clearly, local authority accounts are not viewed from a commercial perspective, for example, in terms of an authority’s attractiveness for possible merger or acquisition. However, local authorities are viewed in terms of their financial resilience, effective financial management and general viability (going concern). The purpose of the accounts therefore is to provide information to a wide range of stakeholders and the general public about the financial position, financial performance and cash flows of the council and to provide answers to basic questions such as:
3.4 In accordance with the Accounts and Audit Regulations, the accounts include:
3.5 The narrative report aims to offer interested parties a more readable guide to the most significant matters reported in the accounts. A brief commentary on the key aspects of the 2021/22 accounts is included in Appendix 2 to this report.
3.6 The statements would normally comprise both “Single Entity Accounts”, which are in respect of wholly council controlled activities, and “Group Accounts” in respect of activities where the council has a significant interest or share in a subsidiary, associate or joint venture entity. The requirement for the preparation of Group Accounts in 2021/22 has been considered for the Housing Joint Venture collaborative arrangement with Hyde Housing and it was concluded that there were no material transactions in the 2021/22 financial year that would have required Group Accounts. The preparation of Group Accounts in 2022/23 is likely to be required.
3.7 Grant Thornton have substantially completed their work on the audit of the accounts and will be reporting their findings separately to this Committee through the Audit Findings Report (AFR). Following this report and resolution of any outstanding audit matters, Grant Thornton will normally be able to issue their audit opinion and certification of the accounts.
Preparation of the Accounts
3.8 The council is required to prepare its accounts on an International Financial Reporting Standards (IFRS) basis in accordance with the Code of Practice on Local Authority Accounting in the United Kingdom (the Code), issued by the Chartered Institute of Public Finance and Accountancy (CIPFA); the 2021/22 accounts cover the period 1 April 2021 to 31 March 2022. There has been no deviation from the requirements of the Code and all accounting policies adopted by the council for the 2021/22 accounts are in line with the requirements of the Code. For 2021/22 there were no significant changes in reporting requirements under the Code of Practice.
3.9 The accounts are prepared by appropriately qualified and trained officers who have undertaken appropriate training on the requirements for preparing local government accounts. Finance officers involved in the preparation of the accounts attend regular training and/or workshops to ensure an up-to- date knowledge, including latest accounting code changes. Officers have made reference to CIPFA’s practitioner’s guidance notes, disclosure checklists and other technical guidance in preparing the accounts to ensure compliance with all statutory and other regulatory requirements. Officers have also liaised closely, during the preparation of the accounts, with Grant Thornton over the application of the Code to the 2021/22 accounts.
3.10 In preparing the accounts, the council makes a number of critical judgements, accounting estimates and assumptions; the details are disclosed in Note 3 Critical Judgements and Assumptions Made of the accounts. As part of the accounts preparation process, a full review of the financial statements, notes and critical accounting transactions was undertaken by senior officers within Finance. Following this review, the accounts were then approved by the Chief Finance Officer to be issued for public inspection and audit. Evidence of this review formed part of the working papers produced for Grant Thornton.
3.11 During the accounts audit process, officers liaised closely with Grant Thornton in respect of audit queries and worked closely to ensure successful resolution of these queries as expediently as possible. During the audit of the 2021/22 accounts, there have been no disputes between council officers and Grant Thornton in relation to the required amendments to the accounts.
Audit of the Accounts
3.12 The external auditor has completed the audit of the council’s accounts and reported their findings and recommendations in the Audit Findings Report which forms a separate item of this committee agenda. The external auditor is responsible for forming an opinion on the financial statements and forming a conclusion on the arrangements that the Authority has in place to secure economy, efficiency and effectiveness in its use of resources (completing a Value for Money review).
3.13 Compilation of the financial statements relies on data extracted from the financial systems, including those systems which interface into the financial system. It is therefore important for Grant Thornton to be satisfied that these systems have adequate controls in place so that assurance can be given on the integrity of the information held within them. As confirmed in the Audit Findings Report the council’s financial statements are free of material misstatements and omissions.
3.14 Grant Thornton’s 2021/22 audit findings report states that an unqualified audit opinion is expected to be issued and that the Value for Money work is not yet completed but Grant Thornton would normally expect to issue the relevant report by 31 December 2022.
3.15 It is a requirement that the council’s Annual Governance Statement is approved annually either before or alongside approval of the financial statements. This was approved at the June 2022 meeting of the Audit & Standards Committee.
4.1 Under the Accounts and Audit Regulations 2015, as amended, the council’s 2021/22 accounts are to be approved by the Chief Finance Officer no later than 31 July and following the audit process are to be approved by Members no later than 30 November. Under Brighton & Hove City Council’s constitution, the Audit & Standards Committee is charged with this responsibility.
4.2 After the accounts have been made available for public inspection, alterations to the accounts may only be made with the consent of the external auditor, Grant Thornton. The alterations in this case have received their consent
5.1 Members of the public, in accordance with the Accounts and Audit Regulations 2015, are granted access for a period of 30 working days to the council’s unaudited accounts and are invited to enquire on any aspect of these accounts. If a member of the public is not satisfied with the response received, they are able to lodge a formal objection to the accounts with Grant Thornton. The unaudited accounts were completed before the statutory deadline and therefore an extended period of public inspection was possible. The accounts were made available on the council’s web site from 1 August to 12 September 2022. The council received one enquiry as part of the public inspection process.
6.1 Grant Thornton have carried out their audit of the 2021/22 accounts and have reported their findings and recommendations arising from the audit of the accounts as a separate item on this agenda. The main changes resulting from the audit are included in the Audit Findings Report to ensure members are aware of the changes to the accounts agreed with Grant Thornton prior to their approval
7.1 The financial implications are included in the body of this report.
Finance officer consulted: James Hengeveld Date consulted: 22/11/2022
8.1 The legal framework for approving the council’s statement of accounts is provided by regulation 9 of the Accounts and Audit Regulations 2015 (statutory instrument 2015/234), as amended by the Accounts and Audit (Amendment) Regulations 2021 (statutory instrument 2021/263). The regulations permit either full council or a committee of the council to approve the statement of accounts. At Brighton & Hove City Council, the Audit & Standards Committee is the designated committee for this purpose.
Name of lawyer consulted: Liz Woodley Date consulted: 22/11/2022
9.1 No direct implications.
10.1 No direct implications.
Supporting Documentation
1. Letter of representation
2. Brief Commentary on the 2021/22 Statement of Accounts
3. Brighton & Hove City Council 2021/22 Statement of Accounts
1. Audited Brighton & Hove City Council 2021/22 Statement of Accounts and associated working papers.