Agenda item

The Engagement Lead for Grant Thornton presented the Grant Thornton External Audit Progress Report and Sector Update and in doing so the following was highlighted for Members’ attention:

·       The Audit was still ongoing and the outstanding work in respect of the Asset Register was still being finalised by Officers. It was clarified that once this piece of work had been completed Grant Thornton would be in a position to be able to provide their Audit Opinion for 2019-20. This delay to the completion of the 2019-20 Audit had impacted on the preparation of the Audit Plan for 2020-2021 and the timetable for the 2020-2021 Audit and consideration of associated reports would need to be amended prior to consideration by the Committee.

·       Grant Thornton carried out two additional pieces of work for the Council which were confirmed as the Annual Housing Benefit Subsidy Claim on behalf of the Department for Work and Pensions (DWP) and the Pooling of Housing and Capital Receipts return on behalf of Ministry of Housing, Communities and Local Government (MHLGC). Members were informed that the Pooling of Housing and Capital Receipts had been returned in accordance with the MHLGC timetable. However, officers had negotiated an extension until the end of April 2021 with the DWP in respect of the Housing Benefit Subsidy Claim.

·       Officers from the Finance team attended the Annual Financial Reporting workshop delivered by Grant Thornton which provided updates regarding the Financial Reporting requirements ready for the account close down for 2020-2021.

·       Any proposed variations to the Audit Fees would be discussed with the Executive Director for Resources and presented to Members through Audit Plans at a future meeting of the Committee.

·       The approach to Value for Money was dictated by the National Audit Office and Members were informed that a new Code had been introduced for the financial year 2020-2021. This new Code meant that an Audit Opinion would no longer be offered. Instead, a commentary would be provided on arrangements in place at the Council. This would be presented in an Auditors’ Annual Report. It was highlighted to Members that the planning that had been undertaken prior to previous Audits in order to identify areas of significant risks would not take place this year and that all areas would be in scope. As a result of this, Grant Thornton were no longer able to undertake discreet pieces of work in specific significant risk areas.

The Chair invited the Executive Director of Resources to provide further information in this area and he explained that the report confirmed the priorities for both him and the Head of Finance and Customer Services going forward particularly the completion of the 2019-2020 Audit. He also stated that he would be interested to see what the future looked like given the changes to the Value for Money work undertaken by auditors.

Members were interested when the final Audit Opinion would be issued for 2019-2020. The Engagement Lead from Grant Thornton explained that it was hoped that the opinion would be issued within a few weeks once the outstanding information had been received from officers.

Some Members were concerned with the continued delay in the delivery of the Audit for 2019-2020 and that this delay may cause considerable problems resulting in potential financial implications for the Council. The Executive Director of Resources explained that it was important to ensure that the working papers and supporting data provided to Grant Thornton were of a high quality in order to get the 2019-2020 Audit signed off. In addition to this, that a priority going forward was to agree a realistic and deliverable timetable for the next municipal year. He added that this may result in a delayed Audit for 2020-2021 but would help ensure that the information provided to Grant Thornton was accurate and robust. It was clarified for Members that some of the delay for the Audit during 2019-2020 was inevitably caused by the impact of Covid-19, through the redeployment of officer time and resource, working from home and the significant increase of work administering grant funding and managing rent arrears. That being said it was noted by Members that delays with audits historically had been experienced at the Council pre-Covid. Members were informed that delays in the completion of final accounts had been experienced across much of Local Government and Members were informed that less than half of the sector had completed audited accounts by the required deadline.

During detailed debate Members queried whether, along with the Asset Register risk which had been identified, whether there were any other areas of risk that were of concern to the Council in the municipal year 2020-2021. The Executive Director of Resources explained that Assets were a priority along with Covid-19 grants and ensuring that the process of administering those grants in accordance with the guidance. Members were informed of the process undertaken during the valuation of assets and how these valuations were audited.

In respect of the Sector Update provided by Grant Thornton, Members were keen to further understand the new approach to Value for Money within the Sector and consideration of Financial Sustainability, Governance and improving economy, efficiency and effectiveness would make up the new Auditors’ Annual Report in future years. It was explained that there would be crossover in each area and that each new area could not be considered in isolation. It was noted that it was unlikely that further resources would be needed in order to address the extra work going forward, however the wider Finance team was being considered to ensure that the capacity and capability was as it should be in order to carry out their work in future years.

It was explained to the Committee that large amount of grants and support packages had been distributed during the Covid-19 pandemic which had inevitably taken up a large amount of officer time. It was uncertain as to whether there would be any further allocation of monies but that a key area of priority was to consider the impact on the Council’s financial planning and on the accounting of the grants. The Head of Finance and Customer Service clarified to Members that there had been significant variances in the way the funding was allocated. He explained that Redditch Borough Council did not depend on large amounts of commercial funding streams and therefore had not received as much allocated grant funding as other Local Authorities had. It was also reported that it was still unclear as to what the impact of the funding on Local Authorities would be and that whilst the pandemic was still ongoing it was also difficult to predict any deficit in funding.

The Chair took the opportunity to thank Grant Thornton and officers for all of their hard work in extraordinary circumstances.

RESOLVED that

the Grant Thornton External Audit Progress Report and Sector Update be noted.