To report the progress of external audit in delivering its responsibilities to the council.

The Director of Grant Thornton (DGT) introduced the audit progress report and sector update setting out the position against both the 2023 and 2024 audits. The following points were highlighted:

1.     Members were reminded of Grant Thornton’s (GT) responsibilities to give an opinion on the council’s financial statements and issue a value for money judgment and conclusion.

2.     GT signed off the councils 2023 draft accounts issuing an unqualified opinion in October 2023 which was one of the earlier sign offs in the country.

3.     The value for money work (agenda item 9) has now concluded and enables the DGT to issue a certificate confirming completion of the audit for 2023.

4.     The DGT explained that due to rotation requirements he would be rotating off the Herefordshire audit with effect from 2023/24 and a new external auditor would be liaising with the committee from March.

5.     Given the timely completion of prior year audits, GT will look to prioritise the 2023/24 Herefordshire Council audit.

6.     The following deadlines were highlighted: Herefordshire’s finance team have until the end of May 2024 to produce the draft accounts and GT have until the end of September 2024 to sign them off. 

In response to committee questions, it was noted:

               I.         An explanation of the differences between internal and external audit was provided.

              II.         The DGT explained that the external auditors work is predominantly retrospective and is conducted at the end of the financial year to which they are required to confirm based on testing that the accounts reflect accurately the income, expenditure and the transactions of the council. The DGT highlighted that Herefordshire has a good record as a council for producing complete, accurate and timely accounts.

            III.         With regards to a question raised around the national delays in the production of external audit reports it was explained that the quantum of work external auditors needed to do to discharge their role had increased exponentially over the last five years and necessitated firms including GT to recruit more individuals which had proved very challenging and inevitably resulted in a delay across a large number of councils in their accounts being signed off. To clear the backlog of historical accounts and ‘reset’ the system, the government had introduced a “backstop date” of 30 September 2024 by which point auditors would issue a disclaimer saying that the work was incomplete and would move on to 2023/24 audits.

Resolved:

That:

a)    The committee reviewed the external auditor’s report, noted the progress in 2022/23 and considered the emerging national issues.