Subject:
External Audit - Audit Findings Report 2022/23
Date of meeting: 26 September
2023
Report
of:
External Auditor (Grant Thornton)
Contact Officer: Name: Darren
Wells (Grant Thornton)
Email: Darren.J.Wells@gt.uk.com
Ward(s) affected: All
For general release
1.1
The audit findings report sets
out the findings of the 2022/23 audit by the council’s
appointed external auditor, Grant Thornton. It includes the key
messages arising from the audit of the financial statements and the
results of work undertaken to assess the Authority’s
arrangements to secure value for money in its use of its resources.
The latter is covered in more detail in the external
auditor’s full annual report which is available elsewhere on
this agenda.
1.2
It should be noted that the
completion of the audit is subject to the completion of the
triennial valuation work undertaken on the East Sussex Pension Fund
(which impacts the council’s 2021/22 audit as well), along
with additional work related to guidance which requires external
auditors to assess whether the requirements of the IAS 19 standard
(Employee Benefits) have been considered when the council reports,
very unusually, a net surplus for its Pension Liability, as is the
case for 2022/23.
1.3
The report indicates the
external auditor’s anticipated opinion on the council’s
financial statements and advises the committee of any outstanding
audit queries.
2
Recommendations
2.1
That the committee note the
findings set out in the 2022/23 Audit Findings Report and asks
questions of the auditor as necessary and raises any other matters
relevant to the audit of the 2022/23 financial
statements.
3
Context and background
information
3.1
The council’s 2022/23
Statement of Accounts is required under statute and regulation to
be published in draft by 31 May and is now in near final audited
version by the deadline of 30 September 2023.
3.2
However, in common with many
local authorities, the council was not able to publish its accounts
by the deadline of 31 May 2023 but did publish an advisory notice
on 31 May and finally published the accounts on 26 June 2023 with
an appropriately extended public inspection period. The government,
at very late notice, elected to revert the financial statements
timetable to a tighter, pre-pandemic deadline following 3 years of
a more deliverable longer deadline with unaudited publication
extended to the end July and final audited accounts due at the end
of November. This reversion, to 31 May for unaudited accounts and
30 September for approval of final audited statements, was against
advice from all quarters across the sector and against a backdrop
of only 9% of audits being completed on time in 2021/22 despite an
extended deadline. Unsurprisingly, the sector has seen widespread
failure to meet the tighter deadline.
3.3
Publishing a full set of
accounts for a large and complex organisation in line with recently
increased reporting standards within two months of the year-end and
in final audited form within six months of the financial year end
is a challenge to both councils and auditors, particularly given
straitened resources in councils and recruitment challenges across
the audit sector. It’s noted that this is not a timetable
that is applied to often less complex private sector companies who
have a total of nine calendar months to finalise their
accounts.
3.4
A major overhaul of Local
Government external audit is underway including consideration by
government of a mechanism to enable incomplete accounts across the
country to be approved ‘at risk’ with appropriate
qualifications to clear the current substantial backlogs and
attempt to reset the system. Similarly, the re-procured national
contract for Local Government audit will see an increase in core
fees of 151%, recognizing the challenges in the sector.
3.5
Committee consideration of the
audit findings and the near final 2022/23 Statement of Accounts
(subject to conclusion of final audit queries) are part of meeting
the legal requirements prior to final publication.
4.1
The committee is the committee
with responsibility for approval of the council’s Statement
of Accounts and as such is duty-bound to consider the findings and
recommendations of the external auditor in considering its approval
of the statements.
5
Community engagement and
consultation
5.1
The draft 2022/23 Statement of
Accounts were published/made available on the council’s
website on 26 June 2023 with an appropriately extended public
inspection period (30 working days).
6
Conclusion
6.1
The external audit feedback on
the council’s 2022/23 Statement of Accounts is set out in
Grant Thornton’s audit findings report at Appendix 1.
In addition, Grant Thornton has also provided a summary for the
council and a more general sector update report at Appendix
2.
7
Financial
implications
7.1
The Audit Findings Report at
Appendix 1 sets out the financial implications of the
auditor’s findings and confirms the audit fees for the
year.
Finance officer consulted: Nigel
Manvell Date consulted:
18/09/23
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
129 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 Council, the Audit & Standards Committee is the designated
committee for this purpose. Consideration of the auditor’s
findings as set out in their report at Appendix 1 is commensurate
with this duty.
Name of lawyer consulted: Elizabeth
Culbert Date consulted: 18/09/23
9.1
None directly applicable to
this report.
10.1
None directly applicable to
this report.
11
Other Implications
11.1
Not applicable.
Supporting Documentation
Appendices
Appendix 1: Grant Thornton Brighton & Hove City Council
2022/23 Audit Update and Sector Progress Report
Appendix 2: Audit Progress and Sector Update
Background documents
Working Papers in support of the audit which were available
during the publicised Public Inspection period.