Report of the Director of Finance and Assurance
An Officer introduced the report and requested that Members note the Audit CompletionReport 2021/22.The purposeof thereport wasto Communicate toMembers thecompletion ofthe auditof theCouncil’s statementof accounts for the year ending 31 March 2022, highlighting remaining outstanding areas as set out in Section 02 (Status of the audit) of the report.
The Officerstated thatthe draftaccounts werepublished before31 July2022, however the deadline for the audit accounts, 30 November 2022, was notmet. This was not met as the auditors experienced delays in finalising the audit work on the valuation of property, plant and equipment and investment property and there was a national issue in relation to accounting for infrastructure assets which impacted every local authority with material infrastructure balances.
Furtherwork wasneeded onthe subsequent- Actuarialreport dueto the Audit not having completed on time.
The Officer explained that that the Audit was paused in November 2022, howeverwork commencedagain inMarch 2023and significantprogress was made since then.
TheOfficer thenset outto Membersthe outstandingareas ofthe audit:
· Auditopinion: Subjectto resolutionof thematters outlinedin the report, the auditors anticipate issuing an unqualified opinion, without modification, on the financial statements.
· Value for Money (VFM): The auditors have yet to complete their work on VFM and are currently discussing some risks of significantweaknesses inarrangements thatthe Authorityhas in place to secure economy, efficiency and effectiveness in its use of resources.
· Whole of Government Accounts (WGA): The auditors have not yetto receivefrom theNational AuditOffice theirlist ofsampled components for WGA. They are unable to discharge our full responsibilities until such instructions have been received.
· Wider powers: The 2014 Act requires auditors to give an elector, or any representative of the elector, the opportunity to question us about the accounting records of the Authority and to consider anyobjection madeto theaccounts. Whilstthere hadbeen some correspondence, there have been no objections made for 2021/22.
The Officerstated thatthe significantfindings ofthe auditwere setout in section 4 of the report.
The Officer explained that a new national issue has arisen in relation to the Council’sreporting ofits assetsand liabilitiesassociated toits membershipof the HarrowPension Fundand highlightedthat thiswill impactupon thetiming of the completion of the audit.
The Officer then went onto explain the risks highlighted by the External auditorsin thereport andupdated Memberson theCouncil’s responseto these risks.
Members werethen giventhe opportunityto askquestions andwere informed that:
- Harrowwas notthe onlyLocal Authorityexperiencing adelay inthe completion of the 2021/2022 external audit, and this was an issue faced by many other Council’s as a result of the national issues explained in the report.
- TheCouncil didnot haveto payany penaltycharge asa resultof the delay.
The external auditors from Mazars were invited to present Appendix 1 audit completion report.The lead partner from Mazars clarified that the majority of the 2021/ 2022 audits across the UK had not yet been completed.The external auditorexplained thatone ofthe keyrisks identifiedwas surrounding the valuation of the property, plant and equipment.It was confirmed that this has been an increasing area of scrutiny for all external auditors.
Members ofthe Committeewere thengiven theopportunity toask questions of the external auditors and were informed that:
- The lead audit partner from Mazars stated that he hoped that the 2021/2022audit wouldbe completedbefore 31July. Thiswas however dependenton theMazars findingsbased onthe recentguidance issued by CIPFA and The National Audit Office which was received after the report was published.
- Itwas confirmedthat thework onthe property,plant andequipment was now at a more progressed stage than in comparison to the previous GARMS meeting.
- Theexternal auditorsconfirmed thateach yearthey arerequired tolook at different areas of the audit and introduce an element of randomness as required to do so by the auditing standards.
- It was confirmed that an updated version of the 2021/2022 audit completionreport wouldcome tothe nextGARMS meetingin July.
In light of questions asked and the information seen in the reports, the external auditors have been requested to review their management letter points in the below areas: Valuation of Property, Plant and Equipment (PPE) and Investment Property (IP), Valuation of intangible assets,Valuation ofInventory, IT Logical Security andNet definedbenefit liabilityvaluation. In the VFM management points, it was pointed out that Risk 3 – effectiveness and coverage of Controls was inconsistent with the extensive list of audit coverage areas listed in the reports for this meeting, external auditors to review their comments.
TheCommittee requestedthat theAudit beas nearas possibleto completion by the 5 July 2023 GARMS Meeting. The Committee also requested a follow up timetable and planning for the audit for 2022/2023.
TheCommittee notedthat theExternal Auditorsshould planahead andnotify what it expects from the Council in terms of IFRS 16 Accounting a reporting requirements before its adoption in 2025 , which will include restating comparatives, so that there is not a similar bottle neck to completing the 2021/2022 Audit.
RESOLVED: That the 2021/2022 audit completion report be noted.