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Agenda item

External Auditors Annual report 2023/24

Purpose

To update the Committee on the findings of the financial statement and Value for Money (VFM) external audit of the 2023/24 financial year.

 

External Audit expect to sign the accounts on the w/c 3 February 2025 following the completion of a small number of outstanding points and after the committee have had the opportunity to review the findings of their audit work.

 

Recommendation

That the Audit and Governance Committee resolves to:

  1. Note the Audit Completion Report (Annex A) and revised 2023/24 Statement of Accounts (Annex C)
  2. Delegate authority to the Deputy Chief Executive and S151 Officer, in consultation with the Chair of the Audit and Governance Committee, to approve the 2023/24 Statement of Accounts upon receipt of advice for any outstanding issues from the External Auditor.
  3. Recommend that the Chair of the Audit and Governance Committee and Deputy Chief Executive and Section 151 Officer sign the Letter of Representation (Annex D)

 

Minutes:

The purpose of the item was to update the Committee on the findings of the financial statement and Value for Money (VFM) external audit of the 2023/24 financial year.

 

The External Auditor was expected to sign the accounts in the week commencing 3 February 2025, following the resolution of a few outstanding points. Signing would take place after the Committee had had the opportunity to review the findings of the audit work.

 

  1. The Deputy Chief Executive & Section 151 Officer explained to Councillors that there were two additional papers related to the item: the Bishop Fleming audit completion report with annexes which addressed the findings from the Council’s financial statements audit, including the updated annual statement of accounts for the financial year 2023-24.
  2. the Bishop Flemming auditor's annual report focused on the value-for-money conclusion.

 

It was emphasised that this was not the final version, as some changes were still required to reflect the Council’s budget position for 2024-25 and certain aspects of the Publica review narrative.

 

Alex Walling, Key Audit Partner from Bishop Fleming, presented the audit completion report, outlining key risks and compliance with auditing standards. This was Bishop Fleming’s first year auditing The Council’s local government accounts, and processes were still being refined. Despite delays in receiving working papers, the audit was largely smooth, with no significant issues identified.

 

In response to a question, it was confirmed that risks related to revenue and expenditure recognition were common, and local government-specific risks included property valuation, investment properties, and pension fund net liability. The audit was ongoing, with outstanding work noted on p.15 and amendments on p.23. Minor audit adjustments were mostly presentational, with one unadjusted misstatement of £90,000 related to the Gloucestershire pension fund, deemed immaterial.

 

The Deputy Chief Executive highlighted competing priorities affecting audit readiness. Efforts would be made to bring forward VFM work to avoid last-minute tasks. The audit opinion deadline was set for 28 February 2025, with the audit certificate to be delivered by the National Audit Office (NAO)

It was noted that some meeting papers were received late. The Deputy Chief Executive acknowledged this, citing draft reports received the prior week and unexpected delays. He apologised and committed to reviewing processes for timely document delivery.

 

The Committee questioned the pension fund undervaluation, which was linked to a wider Gloucestershire fund undervaluation of £3m. The 2022 valuation stood at 90% funded, with the next expected to show improvement.

 

The Committee questioned the additional audit cost of £2,500 plus VAT. The Deputy Chief Executive attributed this to Bishop Fleming redeploying resources due to delays. The auditor emphasised the importance of adhering to agreed deadlines. Submission deadlines were confirmed as 27 February 2026, 31 January 2027, and 30 November 2027 moving forward. The backlog of 1,000 plus public sector audits was decreasing, but recruitment challenges in external audit firms remained. The audit fee increased by 151% to £131,000 under the new PSAA contract.

 

Members of the Committee stressed the need for adequate finance team resources. The Deputy Chief Executive agreed but highlighted the challenge of balancing costs and securing qualified staff. Options for additional hiring or interim staffing would be considered, with ongoing review due to increasing pressures from devolution.

 

The Deputy Chief Executive agreed that more resources were needed but acknowledged the balance between extra costs and the challenge of finding qualified finance staff for a niche role supporting financial statements.

There was a commitment to discussing the resources required with the chief accountant and the chief executive .

 

The Committee inquired about a £12,000 fee on p.27, which covered additional work under the new ISA 315 standard. More stringent value-for-money assessments had also increased audit workload and costs. Corrections were needed in the Annual Governance Statement (e.g. land charges search rate to 90%). The draft auditor’s annual report replaced the previous audit letter, focusing on financial sustainability, governance, and efficiency.

 

No significant weaknesses were identified, though some recommendations for improvement were made.

 

Public health was highlighted as a key area for future monitoring.

The final report would be completed after the auditor's opinion was issued.

 

The finance team was recognized for strong performance, and no major concerns were raised. Members thanked the finance team for all their hard work.

 

The Chair recapped next steps:

  • Completion and final issuance of work by 28 February 2025.
  • Signing of two management letters (p.31 of audit papers, p.153 of financial statements).
  • Amendments to be issued separately, avoiding full report reissuance.
  • Completion expected within weeks, well before the deadline.
  • Member feedback would be welcomed and incorporated.

 

The recommendations in the report, having been proposed and seconded, were put to a vote and agreed by the Committee.

 

Resolved: The Audit and Governance Committee:

  1. Noted the Audit Completion Report (Annex A) and revised 2023/24 Statement of Accounts (Annex C)
  2. Delegated authority to the Deputy Chief Executive and S151 Officer, in consultation with the Chair of the Audit and Governance Committee, to approve the 2023/24 Statement of Accounts upon receipt of advice for any outstanding issues from the External Auditor.
  3. Agreed that the Chair of the Audit and Governance Committee and Deputy Chief Executive and Section 151 Officer would sign the Letter of Representation (Annex D).

 

Supporting documents:

 

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