Agenda item

The Lead Specialist (Finance) introduced the report which presented the external auditor’s (Grant Thornton UK LLP) Interim Audit Findings Report for 2021/22.

The Manager (Grant Thornton) and explained that it was originally planned that the 2021/22 work would be completed by March, however there were a number of key reasons why it had not been possible to complete and these were set out in within the headline sections of the report. She explained they had experienced some similar difficulties following on from last year’s audit including:

·        Valuation of the group PPE (Property, Plant and Equipment) and receiving reports from an external provider in a timely manner

·        Some issues similar to the previous period relating to loss of corporate knowledge due to staff leaving the authority, or slow responses to specific queries where there have been capacity restraints. It was acknowledged that this has been largely down to the Local Government Reorganisation process.

·        Appreciate staff are doing what they can in order to respond in a timely manner.

The Manager (Grant Thornton) highlighted key elements of the report, some of the points included:

·        Materiality for the financial statements – important to note this had remained the same as reported in the audit plan.

·        Work on the audit undertaken to date on the significant risk areas of the audit – work is ongoing for all the areas but some are better progressed than others.

·        Pension fund audit. – salary assumption had been challenged and updated.

·        An amendment being required in relation to the presentation of grant income – regarding treatment of COVID grants - agent or principal.

·        Minimum Revenue Position (MRP) - work currently in progress as difference of opinion between Auditors and SSDC financial staff in relation to capital loans to third parties. Need to consider the cumulative impact on reserves and this was also reported as part of last year’s audit.

·        Regarding going concern – when the audit opinion is provided it will include an emphasis of matter paragraph which will make clear that SSDC has demised and that all assets and functions have transferred to the new authority, Somerset Council.

·        Appendix B - Follow up of prior year recommendations – a number of recommendations had either only been partially actioned or not been actioned yet – reminder that its’s important to action as many recommendations as possible prior to preparation of the 2022/23 financial statements which will be commencing shortly.

·        Appendix D - Proposed fees are to be confirmed.

In response to some of the points made, the Director (Support, Strategy & Environment Services) reassured members that the team were fully committed to completing the audit in a timely manner and would endeavour to get it completed as quickly as possible. She highlighted there were a number of reasons for the delays and multiple teams were involved in addition to finance. There had also been discussions as a Somerset Council on the issues with MRP and responses had gone back to queries that the auditors had raised and discussions were ongoing.

During a short discussion, the Director (Support, Strategy & Environment Services), Lead Specialist (Finance), and Key Audit Partner (Grant Thornton) responded to points of detail and provided some more information regarding:

·        Costs of the MRP, the impact if it is undercharged, and a brief explanation as to why SSDC wouldn’t make the adjustment.

·        Valuation of PPE

·        How exposed the Council was compared to other authorities.

·        Pensions and revaluation

At the conclusion of discussion members were content to note the report.