Issue - meetings

REPORT OF THE SERVICE DIRECTOR – RESOURCES

To provide an update of the External Audit Backlog and to provide a detail schedule for this to be resolved.

RESOLVED: That the Finance, Audit and Risk Committee noted the report including the implications on the approval of the Statement of Accounts for 2022-23 onwards.

Audio recording 5 minutes 14 seconds

The Service Director – Resources presented the report entitled ‘Clearing the External Audit Backlog’ and highlighted that:

·       There was known backlog of external audits for Local Government. North Herts District Council had a backlog of one year.

·       On the 8 February 2024 the Department for Housing, Levelling Up and Communities (DHLUC) launched a consultation to address the audit backlog as stated in paragraph 8.1 of the report.

·       The consultation proposed that there would be a three phased action plan; Reset, Recovery and Reform.

·       There would be a back stop date of the 30 September 2024 to approve any 2022-23 accounts as part of the reset phase.

·       In the recovery phase the back stop date for audits to be approved would slowly move backwards towards Ultimately being November each year.

·       North Herts District Council were currently audited by Ernst & Young however, form the current year 2023-24 the Council had moved to KPMG.

·       A backstop date of 30 September 2024 had been set for the sign off of the 2022-23 external audit, the audit may not be fully completed but would have a disclaimed opinion and signed off on that basis.

·       The 2023-24 audit would therefore have had no audit of the opening balance and a catch up would commence.

·       A limited scope opinion was not a bad thing but was a necessity.

·       This was not an individual Council issue but a general Local Government issue.

·       There were concerns regarding the proposed backstop deadline of 31 May 2025 for the 2023-24 accounts which had been highlighted through the consultation process.

·       The backstop date for the Finance, Audit and Risk (FAR) Committee to sign off the 2023-24 account was noted as the 31 May 2025, there were concerns that this would be a big responsibility for a newly formed FAR Committee and close to Annual Council.

Debbie Hanson, Ernst & Young stated that:

·       The 2021-22 Audit and opinion was completed in September 2023. This was behind their ideal schedule for a normal year.

·       In July 2023 after the announcement of ministers to review the local audit system they took a decision to align a strategy to the announcements and a focus was placed on completing audits that were substantially complete including the 2021-22 North Herts audit.

·       A further focus was placed on updating and completing value for money (VFM) and auditing pension funds.

·       The 2022-23 value for money audit was substantially complete with the intention to present this to the next FAR Committee meeting as an interim report. This would be an interim report as the audit can not be fully concluded until the issue of an opinion.

·       Ernst & Young had taken the decision to issue a disclaim opinion to be completed by the backstop date, this would be reviewed again once the consultation was reviewed.

·       Normally a disclaim opinion would be issued when there was insufficient evidence to enable an audit opinion to be issued and may have a negative effect on a Council, this would not  ...  view the full minutes text for item 35