To consider a report on the above.

Member noted a report that set out Grant Thornton’s opinion on the Council’s Statement of Accounts for 2022/23.  Liam Royle Audit Manager for Grant Thornton informed Members that on 5 September 2024 the government published the draft Accounts and Audit (Amendment) Regulations 2024. These Regulations, which were approved on 30 September 2024, set a publication date for financial statements up to and including 2022/23 of 13 December 2024. The new National Audit Office Code, which was approved on 14 November 2024, also required that auditors should issue their audit report in time for the relevant authority to publish its accounts by the specified date in those Regulations. Where audit work was not concluded, this would result in either a qualification or disclaimer of opinion.  As discussed with the Director of Finance, and for reasons set out in more detail below, it was not possible for Grant Thornton to complete the audits for 2022/23 by the statutory backstop date. Therefore, it was proposed a disclaimer of Grant Thornton’s audit opinion would be issued.

Members were advised that the main reason for the application of the backstop was that the completion of the 2021/22 audit was delayed and only signed on 2 September 2024.  Grant Thornton had agreed with the Council that the audit of the financial statements for the year ended 31 March 2023 would not commence until the previous audit was concluded. This meant there was no realistic prospect of the audit of the Council’s financial statements for 2022/23 being completed in advance of the December 2024 backstop deadline. In addition, as noted in Grant Thornton’s Audit Report, management had also alerted Grant Thornton to various misstatements in the draft Statement of Accounts, which were likely to be material individually and/or collectively. Management was unable to identify the full extent of these misstatements and quantify their impact prior to the backstop date. The effects of those errors, identified or unidentified, could also therefore be both material and pervasive.  As a result, the limitations of scope imposed by the backstop are pervasive and therefore Grant Thornton had been unable to form an opinion on the financial statements by the due date. Therefore, a disclaimer of the audit opinion would be issued.

Members were provided with an update on the audit of the 2023/24 accounts with the government directing that auditors should work with local authorities to begin the process of recovery, it was agreed that Grant Thornton would commence work on the financial statement audit for 2023/24 at the earliest opportunity.  The audit commenced in September 2024, following receipt of the Council’s draft accounts on 2 August 2024, 9 weeks after the required publication deadline.  To date there had been challenges which had hindered the progress of the audit.  Timely and comprehensive supporting working papers had been requested and not been fully responded to by the time the audit began.  Over the initial weeks of the audit there were a significant number of audit queries with some remaining outstanding for more than two weeks.  Furthermore, initial work by Grant Thornton had identified a number of reconciliation differences between the Council’s accounting records, the final accounts trial balance and the draft financial statements affecting both the 2023/24 reported results and also the opening balances relating to the 2022/23 comparative period.

Members were advised that in order to address these issues, the Council had brought in additional resource with a new version of the draft statements having been produced with the intention of completing the audit ahead of the 28 February 2025 backstop date, allowing the Council to return to a regular audit cycle.