Agenda item

The Committee received an update report on the 2020/21 Statement of Accounts along with an update on subsequent years’ statements of accounts. The report also detailed Department of Levelling Up Housing and Communities (DLUHC) proposals to clear the audit backlog and the impact of these proposals and the provisional timeline for the Council. Councillor Tim Butcher, Deputy Cabinet Member for Accessible Housing and Resources and Mr Mark Stocks, Audit Partner, Grant Thornton, External Auditor were in attendance for this item. Mr David Skinner, Section 151 Officer introduced the update.

Key points raised during the update and throughout the discussion included:

·       DLUHC had issued a consultation and cross-system statement on proposals to clear the backlog of local audits in England and this was open until 7 March 2024. The three phases of the wider package of measures were set out in the report, in summary they were ‘Reset’, which included the statutory backstop date of 30 September 2024 for clearing the backlog up to and including 2022/23, ‘Recovery’, to ensure non-recurrence of the backlog, and ‘Reform’, which was to address systemic challenges in the local audit system.

·       The national picture was that as at the end of December 2023, circa 80 local authorities had accounts outstanding from prior to and including 2020/21. This increased to around 140 local authorities for outstanding 2021/22 accounts and 200 for outstanding 2022/23 accounts.

·       Clarification was provided that the proposed backstops still required parliamentary legislation. The Committee heard that the national picture had meant that these proposals were imperative and there was confidence that the legislation would progress in a timely way, although it was noted that uncertainty around the general election date in 2024 and the impact any potential new Government may have on proposals was unknown.

·       The two major areas which required further work on the 2020/21 Statement of Accounts were in relation to journal testing and other land and building valuation. In relation to the journal testing, this was being held up by a technical issue with the external auditors being unable to download the journals for testing. An alternative method was now being worked on with a view to resolving this as soon as possible.

·       The non-material errors around other land, buildings and infrastructure were highly complex with several technical areas to address which had to meet auditing and accounting standards. This meant that it was not as straight forward as consultants valuing all properties as this would involve significant cost and time implications and with valuations dating back to 2016/17. Options were currently being explored to conclude the issue in a reasonable and efficient way, which the Committee was keen to see done as soon as feasible. The issue related to assets being undervalued by around £30m. This issue did not impact on the general fund balance or usable reserves.

·       It was noted that officers had responded very positively to the external auditor’s requests for information and were committed to working with the external auditors in pulling the 2021/22 and 2022/23 accounts together in a timely manner with the aim for the external audit work to start on the 2023/24 accounts in July 2024, in preparation for them to be completed by the 2024-year end. There had been a significant number of hours put in to the 2020/21 accounts, both from officers and external auditors. The finance and accounts team were described as a strong team and there was confidence that the processes were in place to produce a good set of accounts for 2023/24 that should stand up to scrutiny. The budget approved by Full Council approved growth in the team to reflect the complexities and additional work the team was expected to handle.

·       The Committee heard that there would be some kind of limited or disclaimed opinion on the 2021/22 and 2022/23 accounts, however there was commitment from all sides to do all the necessary associated work to move on to the 2023/24 accounts in a timely manner. Assurance was given that resources were available to hit the 31 December 2024 target for all catch up work to have been completed.

·       Assurance was given that any special meeting of the Committee to approve the 2020/21 Statement of Accounts would be arranged in good time. At the conclusion of the 2020/21 accounts a lesson learned paper would be presented to the Committee outlining the issues that had been encountered and how they had been addressed. The improvements would then be evidenced in the production and quality of the working papers for the subsequent years’ accounts.

RESOLVED:

1.      That the progress on the 2020/21 Audit of Accounts be noted.

2.      That the Department of Levelling Up Housing and Communities (DLUHC) proposals to clear the audit backlog be noted.

3.      That the impact and provisional timeline to clear the backlog for the Council be noted.

Note 1: Councillor M Dormer joined the meeting at 10.10 a.m.

Note 2: Councillor A Collingwood left the meeting at 10.30 a.m.