Agenda item

Subject to the required notice being given, Members of the Council can ask questions of the Chairman of the Council, the Leader of the Council, Portfolio Holders or Chairmen of Committees.

The time allocated for receiving and disposing of questions shall be a maximum of 30 minutes. Any question not disposed of at the end of this time shall be the subject of a written response, copied to all Members the following working day unless withdrawn by the questioner.

One such question has been submitted for this meeting of the full Council.

Subject to the required notice being given, Members of the Council could ask questions of the Chairman of the Council, the Leader of the Council, Portfolio Holders or Chairmen of Committees.

One question on notice had been submitted by Members on this occasion as set out below:-

Question

Councillor Ann Oxley asked Councillor Geeta Sudra, the Chairman of the Audit Committee:-

Preamble:

I have been made aware that there is a significant and worrying position with large audit businesses not completing external audits of Council accounts going back several years.  As I understand it only 27% of local government 2020/21 External Audits have been completed. 

Question wording:

Can the Chairman of the Audit Committee confirm what the position is for this Council and what is being done to resolve the mess these audit businesses have created?”

The Chairman of the Audit Committee replied as follows:-

“The Monitoring Officer’s Section 5 report, that Council has just considered in this agenda set out a number of useful points around the background to the external audit delays and what the Government are proposing to do about it.

The level of frustration at the position Local Authorities have found themselves in due to issues outside of their control cannot be overstated.

In terms of our own position, not only have our External Auditors been unable to sign off the accounts for 2020/21 and 2021/22 yet, we have not received their very important and independent view on the Council’s use of resources and how we deliver value for money. This opinion is more important than ever given the financial environment we are faced with.

Although the Government’s response was clearly welcomed, the ‘backstop’ statutory deadlines that they have proposed do not necessarily incentivise External Auditors to get on with the job in hand and bring a more timely close to the delays we are experiencing. I know some of you have made the Government aware of your own views on this.

Although the intention of avoiding qualified opinions being issued is acknowledged, I feel it would have been better to bring forward the ‘backstop’ dates, especially as we do not necessarily have the confidence that our current External Auditors will adequately  resolve their capacity issues anytime soon. I believe it would have been much more beneficial for our External Auditors to start work on the 2022/23 Accounts sooner rather than later, which I don’t think the current ‘backstop’ dates necessarily incentivise.

We could find ourselves in the situation where our External Auditors undertake work on earlier years but still find themselves having to issue a qualified opinion as they may not have completed enough work by the ‘backstop’ deadlines to give the necessary assurances. This would be the worst of both worlds, as we would still have to pay them for what would effectively be ‘abortive’ work that they undertook.

I did hear that someone asked the Government what is special about these new statutory ‘backstop’ deadlines, given the external auditors were already working to statutory deadlines that they missed – a very good point. I understand that the Financial Reporting Council will be issuing guidance to ensure auditors meet these new statutory deadlines and that they will also explore the use of their enforcement powers.

The Financial Reporting Council will also be using its broader supervisory role to ensure commitment from audit firms to implement the policy measures and the steps that are being taken to meet the timetables for concluding historical audits.

If you have watched the live recording of our Audit Committee meeting in July, then I hope you would agree that our external auditor was robustly challenged by members on the ongoing audit delays.

The Audit Committee will be making further enquiries with our external auditor - we will be asking them to update the Committee in light of the Government’s response to the on-going delays, along with their own plans to fully meet these new requirements, which hopefully sees them focus on the 2022/23 Statement of Accounts as soon as possible.

I hope that the commitments made by the Government and the Financial Reporting Council not only help us successfully deal with the current backlog of audits, but also get us back on a more timely reporting cycle in the longer term.”