The Director of Finance and Business Improvement introduced his report providing an update on progress with the audit of the 2020/21 financial statements.  It was noted that although Grant Thornton, the External Auditor, had consistently stated that there were no issues that would prevent them issuing an unqualified opinion, the audit was still not complete.  Grant Thornton had indicated that they had further queries that they needed to discuss with the Finance team.  The Council was content to accept Grant Thornton’s position on what seemed to be the key issue which was around the accounting treatment for the Brunswick Street and Union Street housing projects, so there was no argument between the Council and Grant Thornton.  The Officers would continue to work with Grant Thornton to try and resolve the issues and hoped that it would be possible to bring a signed audit report to the September meeting of the Committee.

In response to questions, the Director of Finance and Business Improvement advised the Committee that:

·  He did think that the 2020/21 accounts would be signed off in time for the September meeting of the Committee.  Mr Paul Dossett of Grant Thornton would be invited to attend the meeting to provide an explanation if an audit opinion had not been issued by then.  The Council would make sure that Grant Thornton had the information available to undertake the 2021/22 audit.  Members of their team were scheduled to work on the audit in August so in principle they should be ready to sign off the audit in time.

·  He thought that the issue for the delay was that Grant Thornton did not address all the questions that they should have done at the time of the original audit (for example in relation to the accounting treatment for the Brunswick Street and Union Street housing projects).  If the work had been done on time, it would have been less time consuming for everyone.

·  The Council did not appoint the External Auditor directly having opted into an outsourced procurement arrangement with Public Sector Audit Appointments, a subsidiary of the Local Government Association.

·  Delays in signing off local authority audits was a common problem.  As of April 2022, 40% of English local authorities had not had their 2020/21 accounts signed off.  The Council could not be penalised for the delay, but it did bring the whole external audit process into disrepute.  A set of accounts that was over a year late had much less credibility.

·  Part of the issue had been that for the current series of audits, firms like Grant Thornton had underbid for the work and were struggling to provide the resource to deliver the audits.  2022/23 was the final year of the existing external audit contract and it was likely that bids for future years would be much more than quoted last time around.  Audit firms were struggling to recruit staff across the sector as a whole.

·  The Kent Finance Officers (S151 Officers at the Kent Authorities) were very concerned about the situation regarding the auditing of local authority accounts and had written to the PSAA.  A response was awaited, and he would follow this up.

During the discussion, it was suggested and agreed that the Council should lobby the Local Government Association to seek a solution to the delays being experienced in relation to the delivery of local authority audits.

RESOLVED:

1.  That the report be noted.

2.  That the Council should lobby the Local Government Association to seek a solution to the delays being experienced in relation to the delivery of local authority audits.