Agenda item

Report from Alex Walling of Grant Thornton

Alex Walling (AW) of Grant Thornton presented her progress report, highlighting the following:

-       the initial planning for the financial statements audit was complete, and the final accounts audit would commence once the draft statement of accounts was ready – expected at the end of the month;

-       the Department of Levelling Up, Housing and Communities had now officially extended the deadline for auditing accounts to the end of November, and Grant Thornton were working to this deadline;

-       CBC had a material amount of infrastructure assets, which CIPFA described as a complex and serious issue.  This held up the audit of accounts for 2020-21 for a number of large authorities, and Grant Thornton were awaiting the outcome of the consultation document;

-       the first value-for-money commentary was done last year, and work was about commence on the same for this year, as well as certification on a number of claims and returns for the council;

-       the key deliverables which Grant Thornton was required to produce under the code of audit practice had not changed since last time, and were set out in the report, together with an update on anything outstanding from 2021.  The key thing here was the certificate that closed down the audit for a particular year, after which it couldn’t be reopened.  Grant Thornton were awaiting instruction from central government, with certificates held up across the country;

-       regarding audit fees, as reported previously, discussions were taking place at national level with the PSAA who regulated contracts and oversaw fees as to what was reasonable.  The proposed fees for 2021-22 were set out, similar to previous years, and taking the scale put together by PSAA and adding in areas which took longer, due to changes in auditing standards, new requirements, value-for-money work and so on.

Member questions

The following issues arose from Members’ questions:

-       infrastructure assets had not been mentioned or registered prior to the recent consultation document, and were more a concern for county/unitary councils, focussing on highways, roads, streetlighting etc.  AW confirmed that in Cheltenham, it related to cycle paths, for example and said the issue with infrastructure assets was that although a road didn’t depreciate in value, it needed updating and maintenance over the years – but as this didn’t actually increase its value, the amount of infrastructure assets on the balance sheet increased over the years but the value of the roads wasn’t equal to what showed on the balance sheet. It was a hugely complicated area.  A Member agreed, saying that the value of a road was not only its material value but its contribution to the economic livelihood of the area, which is difficult to quantify.  The Executive Director for Finance and Assets confirmed that Cheltenham’s biggest infrastructure asset was the Honeybourne Line and the road at the cemetery is the newest, which is part of the business plan so we know its cost and value over the years.  The Head of Finance and Assets and her team would be working closely with Grant Thornton to ensure CBC remains compliant and future-proof;

-       regarding the extension of the deadline for the financial statement audit, AW confirmed that this had been moved forward from December to 31 July prior to Covid but, for a number of reasons – fewer public sector auditors, more complicated accounts, more risk – no one was hitting this or the subsequent 30 September deadline.  The deadline had therefore been moved back to 30 November.  She added that Grant Thornton would probably be able to give an opinion on CBC before that;

-       the difference between the gross book value of infrastructure assets (£14m) and the net book value (£10m) was due to depreciation.  This was not an issue, being a material figure from Grant Thornton’s perspective which they will focus on as part of the audit;

-       regarding the value-for-money commentary, this was included for the first time last year, and the work this year gave a year-on-year comparison, showing whether this had improved or not.  It was important the follow the recommendations made last year, to show the current picture and see if these had been implemented.  A Member felt that the agenda items didn’t make it clear whether CBC was getting better as an organisation – there was no sense of momentum.

The Chair confirmed that Members noted the contents of the report.