Agenda item

To receive the report from the Head of Finance.

The committee received the local audit updated, presented by the head of finance. He emphasised to the committee that the delay in the local audit signoff was a long-term issue for many local authorities and that the under-secretary of state for local government and building safety had put out a statement with the goal of starting the process of clearing the backlog.

The under-secretary of state proposed two methods of doing so. The first was through a number of statutory deadlines, although it was acknowledged that the auditors may only be able to give a certain level of assurance to all councils if issued with certain deadlines. The second was through longer-term changes to the auditing process. The head of finance noted that district councils were required to produce significantly more in their statement of accounts than other body of the same size. He also clarified the timescales for these changes and noted that the government had planned to implement them by December 2023, but the council had not received any update since their last report in July. The council was therefore waiting for more information before any concrete steps could be taken to plan for the proposed changes.

On the council’s statement of accounts, the head of finance confirmed that they had been audited up to and including the 2020/21 and would look to sign the 2021/22 accounts at the extra Joint Audit and Governance Committee meeting on the 30 October 2023.

Members asked about the new external auditor, Bishop Fleming, which would be auditing the council’s 2023/24 accounts and the head of finance informed members that they were procured on the council’s behalf as they signed up to the national purchasing agreement for external auditors. Although they were new to the market, the head of finance informed the committee that he was confident in the appointment system and that the firm had worked elsewhere in the public sector, but that there was recourse if the councils were unsatisfied with their performance.

In addition, when asked about if the change may result in the current auditor, EY, taking longer to audit their accounts, the head of finance assured members that he had worked with EY for a number of years and was confident they would continue to work to the required standard on the audit.

On questions about why the accounts were so large and taking so long to be audited, the head of finance clarified to the committee that local authority requirements on the accounts were very large and growing each year as the standards were becoming more rigorous given the number of local authority failures. He also provided the example that South Oxfordshire and Vale of White Horse District Councils were required to submit the same detail in their accounts as Birmingham City Council, the largest local authority in Europe and that some reasons for the delay were also noted as being the pension deficit valuation. In addition, when asked about what the council could do to accelerate the signoff for the accounts, the head of finance believed that the councils should wait for the next stage of the central government’s proposals as this could potentially have a significant impact on the auditing timescales and requirements.

Members agreed that they would like to see a smaller, less detailed, statement of accounts for smaller local authorities as they believed this would still be effective for auditing purposes whilst best using public money and time and that this would also make the accounts more accessible and understandable. Although the head of finance agreed with the committee’s suggestion, he noted that the accounts were continuing to get larger each year and if that was not solved there would still be delays.

The committee thanked the head of finance for the update, and he confirmed that he would report back to the committee when more information about the suggested audit changes was made available by central government.