Agenda item

The Director of Finance, Resources and Business Improvement introduced the report setting out the Narrative Statement and audited Statement of Accounts, the External Auditor’s Audit Findings Report and the Letter of Representation for 2022/23.  It was noted that:

·  Grant Thornton, the External Auditor, had completed the audit and had set out in their Audit Findings Report that they would be giving a clean opinion on the accounts.

·  It had been reported this week that only 20% of local authorities in England had completed and had audited their accounts for the year 2022/23.

·  There was an update to the report in that recommendation 2 had been amended as there were updated figures in the External Auditor’s Audit Findings Report to reflect the accounting treatment of grants received in advance.

The Director of Finance, Resources and Business Improvement took the opportunity to thank the Council’s Finance team and Grant Thornton for their work in bringing the audited Statement of Accounts 2022/23 to the Committee for approval.

Ms Sophia Brown of Grant Thornton advised the Committee that:

·  She was pleased to say that Grant Thornton had completed their work on the 2022/23 financial statements and their value for money work covering both 2021/22 and 2022/23.  It was her intention to issue an unqualified opinion for the financial statements and it would be issued once the period of public inspection had expired.

·  With regard to the financial statements audit for 2022/23, audit materiality remained at the level set in the Audit Plan presented to the Committee in January.  Grant Thornton had completed all of their planned work against the significant risks identified in the Plan.  The impact of the overrunning 2021/22 audit could not be understated.  There were issues that Grant Thornton had identified in the prior year that impacted 2022/23.  There might not have been time to implement recommendations arising from the 2021/22 audit for the 2022/23 financial statements as they were drafted in July and the 2021/22 audit was signed off in November.  As set out in the report and update report, there were some adjusted and unadjusted misstatements and some misclassification and disclosure changes.

·  The timing of the audit coincided with a period when the Finance team had a lot of competing priorities and demands, and she wished to thank them for committing to and delivering the audit within the first three months of 2024.

·  Further matters to highlight included the engagement with the Council’s External Valuer, three errors identified in the accounting of asset revaluations, a prior period adjustment that had been made to the financial statements in relation to Maidstone Museum and the componentised accounting of that asset, issues relating to property, plant and equipment valuations, the need to obtain an updated IAS19 report for 2022/23, and some of the challenges relating to the journal work undertaken and some other areas of the audit.

·  She had already discussed with the Director of Finance, Resources and Business Improvement the possibility of having an audit debrief after the opinion was signed to work on improving the audit process for 2023/24.  Planning and risk assessment work on the 2023/24 audit was substantially complete.  The draft Audit Plan would be shared with management in May and the Audit Plan would be presented to the next meeting of the Committee.

In response to questions, Ms Brown advised the Committee that:

·  It was anticipated that the 2023/24 audit would go much more smoothly.  The problems experienced with the 2022/23 audit related to issues overrunning from the previous year.  The audit was signed off so much later that there was no time to rectify issues identified.  That should not be the case for 2023/24.  In addition, 2023/24 was not a year in which there was much change in relation to the financial statements.

·  The current indication was that the backstop date for the 2023/24 audit would be the end of May 2025.  The plan was to have the audit finished by the end of this calendar year with a view to submitting a report to the Audit, Governance and Standards Committee in January 2025, well in advance of the backstop date.

Members wished to emphasise that they had attended a briefing about the accounts with Officers and a representative of Grant Thornton in advance of the meeting.

RESOLVED:

1.  That the audited Narrative Statement and Statement of Accounts for 2022/23 be approved.

2.  That the External Auditor’s revised Audit Findings Report be noted.

3.  That the External Auditor’s Letter of Representation be noted.

4.  That the Finance team and Grant Thornton be thanked for their work on the preparation of the Council’s financial statements for the year ended 31 March 2023 and the audit of those statements.