Agenda item

The Key Audit Partner, Grant Thornton introduced the Interim Audit Findings report. The Audit had been planned to start in June 2021, but Grant Thornton were unable to progress this as the draft accounts were not fully available. Work was restarted again in October but they had still experienced significant challenges. There was still work outstanding on a large number of areas and they were not in a position to conclude the audit at this time.

He explained that the work on the Value for Money arrangements had not yet commenced and that some further areas of potential significant weakness had been identified.

He expressed his disappointment at the level of professional conduct they had had experience with some officers. This had led to some significant delays in undertaking the audit and resulted in having to escalate issues to the senior management team and the Chief Executive. He acknowledged that appropriate actions had since been taken.

The Manager, Grant Thornton then proceeded to highlight further key areas of the report, some of which included;

·         Materiality thresholds were very similar to previous periods.

·         Findings from the work on significant risks, scoping of the group audit and Covid grants.

·         Challenges on some minimum revenue provision (MRP) calculations

·         Under other responsibilities, queries with the Annual Governance Statement (AGS) and why there was no reference to the investigation of a previous Director.

·         No significant findings on independence and ethics

·         SSDC requested in January that all the Housing benefit claim work be undertaken by Grant Thornton and so the fee and resource planning had needed to be revisited. This work was about to commence.

·         The Action Plan had identified 5 different control recommendations

·         There had been only partial implementation of the previous period’ recommended actions.

·         Details of audit adjustments that had been identified were explained.

The Key Audit Partner, Grant Thornton acknowledged the finance team had been dealing with conflicting priorities, (both budget preparation and LGR work), and that mitigating actions to improve capacity within the team had been put into place to allow the audit to move forward. He explained that there would be a significant increase in the planned fees as a result of the additional work, and they would be seeking a meeting with Public Sector Audit Appointments (PSAA)  to discuss the scale of the fee changes.

During discussion, all members expressed their disappointment and concern about the issues raised in the report regarding the audit process. In response to questions raised, the Key Audit Partner, Grant Thornton gave some of the following responses;

·         There had been significant capacity constraints and changes within the finance team. The Council had taken action to bring in temporary recourse to backfill losses to the team but he felt this perhaps could have been done sooner.

·         Regulators of the Auditors expected the highest quality of audit and the greater scrutiny of the auditors may not have been something that officers had been familiar with. This may have impacted on the relationship between auditors and officers.

·         The Chief Executive and Monitoring Officer fully supported Grant Thornton when issues were escalated and improvements have been made.

·         The auditor acknowledged that he had not made the Chair or Vice Chair of the Audit Committee aware of the situation and that a progress report could have been brought to the Audit Committee earlier, but stated that correct escalation procedures had been followed with senior management and appropriate action taken.

·         There were deficiencies in the quality of the records being kept, but no evidence of any deliberate manipulation or fraudulent attempts to manipulate the accounts were found.

The Chief Executive informed members that she had apologised to the Key Audit Partner, Manager and the wider team of Grant Thornton for the behaviour of a small number of officers. This had been disappointing and regretful. Steps had been taken to ensure this did not happen again in the future.

The Chief Finance Officer (CFO) explained that she would be setting out a communications and working relationship protocol for all officers across the organisation involved in providing information to the external auditors. There would also be mandatory standards established for working papers that are produced and given to the auditors. She reassured the committee that there was now a full team in place and that, due to interim arrangements having been put into place, the core finance team were protected from the need to undertake work on the LGR programme at the same time as preparing the 2021/22 statement of accounts

The Chair of the Audit Committee requested that a management report be submitted to the next meeting of Audit Committee, to provide a detailed response to members about the issues and difficulties experienced during the audit process raised in the Interim Audit Findings Report. The Chief Finance Officer confirmed that a report to the next meeting was achievable.

At the end of discussion the majority of members noted the report.