Audit Progress and Sector Update Report
- Meeting of Audit, Compliance and Governance Committee, Tuesday, 27th September, 2022 6.00 pm (Item 5.)
The paper was taken as read, with Alex Walling (AW) of Grant Thornton reminding Members that, as discussed at the previous meeting, the final accounts audit would be presented at an extraordinary meeting in November. She confirmed that:
- good progress had been made on the accounts audit, with a number of queries back with the council and waiting for group accounts. Once received, work on the final papers can commence;
- value-for-money work had commenced – this was not done until late in the year – and the Chair would receive papers explaining the delay in the next few days. There were delays in this area right across the sector, and discussion about the state of local audit regime in the whole country;
- an audit opinion on the accounts would be presented at the meeting at the end of November, subject to assurance from the pension fund auditor (herself) and also to finding out what was happening around infrastructure assets - Grant Thornton hoped the government will come up with statutory override on this;
- the report set out the 2021-22 audit, although the 2021 audit was not yet closed down – the annual report gave an opinion on the accounts but closure of the audit cannot be certified because the material infrastructure issue, in common with other councils.
In response to Members’ questions, AW confirmed the following points:
- there is a clear distinction between audit and advice, and the auditors’ role is very clear – they cannot give financial advice or provide consultancy work to the council’s finance team, regardless of the financial market’s current turmoil. They are, however, in regular conversation with the finance team, and can update them with information from other local government audits, national information and so on, such as the likelihood of more councils issuing Section 114notices because of financial pressures;
- Grant Thornton does not have direct discussions with ArlingClose, the council’s financial adviser, but as ArlingClose provides advice to a number of local authorities, they are involved in some national discussions together. Grant Thornton have their own experts, who give advice around and verify the information ArlingClose gives to local authorities;
- in response to the recent consultation from the Department of Levelling Up, Housing and Communities, she was as surprised as the Chair to learn that audit committees were not compulsory for local authorities. While aware that some authorities already included independent members on their committees, she understood that there were some tensions between elected and independent members – how they were elected, by whom, how they fitted in, how useful they were etc. With so much else going on, she did not imagine that bringing this change forward would be a priority at the moment;
- through Grant Thornton’s work with local authorities and NHS bodies, she was aware that internal audit work was often squeezed, with potential tensions around fees and number of hours, but Grant Thornton was not required to review internal audit work in detail, and she was not aware of any issues around capacity and ability to deliver.
The Executive Director for Finance, Assets and Regeneration confirmed that CBC has never requested a reduction in audit fees or days – the sums saved would be very small, and self-defeating. Unless directed by Council or Cabinet, he was committed as statutory officer to continue with the current arrangement.
In response to one further question regarding the difference between audit and risk assurance committees, AW confirmed that most of Grant Thornton’s have an audit committee, with some also including governance, risk and other areas. ARAC (audit and risk assurance committee) is a term used quite often in central government, which is why the term is used in the guidance from the National Audit Office, but the principles are generally the same.
The Chair confirmed that no vote was required, and that the contents of the report were noted.