Agenda item

The report was presented to the Committee by Stephen Reid, EY. Stephen Reid is the Audit Engagement Partner and was taking over from Maria Grindley for the 2023/24 audits.

The report summarised the 2023 intended report for the 2023/24 audit of the Council and had been prepared from prior knowledge of the organisation, together with completed planning procedures and discussions with management.

The following points were highlighted to the Committee:

·       EY were still awaiting on the outcome of the consultation exercise of the backlog and the impacts on the audit strategy.

·       EY were also expecting the NAO and FRC to issue guidance, both on the reset and on the recovery, both of which may impact the 2023/24 audit.

·       The Value for Money (VfM) work was still ongoing and could be reported to the Committee at a future meeting.

·       EY would probably be seeking additional fees for the additional work as a result of the risk assessments.

The Committee made the following comments:

·       The Auditors were looking into IFRS and were informed that the Council had been prepared for IFRS for the last two years, so that should not be an issue for auditors.

·       The Committee was concerned about having a disclaimer opinion on 2022/23 accounts as a result of EY not being able to carry out the audits in time. Was it possible to know what the disclaimer would read as the authority had received many years of clean opinion and this was now not going to be the case due to no fault of its own and there was going to be an extra cost as it could not be validated.

·       There was currently no additional information on the disclaimer as no information or guidance had been issued by the FRC or the NAO. With respect to the government decision to reset the system, this was a system-wide issue for the 2017/18, 2018/19 accounts and the review that contributed to the current position which the whole system finds itself in now. There were still around 640 opinions outstanding across local government in England but this was an improvement from the last count, when there was 900+ opinions outstanding. The backstop date of the end of September 2024 for the 2022/23 accounts, it was anticipated that a large number of disclaimers would be completed.

·       The Value of Money reporting would continue for all years.

·       The frustration of the Committee was recognised by EY, Stephen Reid explained to the Committee that he had issued two letters to all audit clients clearly focussing on the transparency decisions to meet the objectives. The Minister's letter of July 2023 which identified to seek to maximise assurance for the system and for auditors to get onto the most recent financial year, EY clarified that these would identify all audits that were almost completed and complete those, identify all Pension Fund audits and the resources required, focus on Value for Money reporting and finally allocate resources to the 2023/24 audits with a view to support the recovery of the system and ensure that no contagion effect fell on the NHS and education.

·       The ICB would respond initially within 10 working days for all audit enquiries. This was the same too for Hampshire and the south. Hampshire did not need responses in a non-critical way.

RESOLVED: that the Committee noted the report.

Adrian Balmer, Senior Management, EY, provided the Committee with a verbal update on the VfM arrangements for 2023/24. The VfM work was currently being concluded and had progressed very well. A formal report would be presented to the Committee at the July 2024 meeting.