External Audit - Audit Progress Report and Sector Update 2020/21
Decision status: Recommendations Approved
Is Key decision?: No
Paul Dossett, Partner, Grant Thornton presented the External Audit Progress Report and Sector Update 2020/21.
The report outlined the new arrangements for reporting value for money. Previously this had been based on reporting risks as necessary. The new National Audit Office code required more positive assurance, requiring a detailed review of financial sustainability and governance arrangements. The final area would look at how the council achieves economy, efficiency and effectiveness, through benchmarking against other councils and how best value had been achieved in procurement. It would be a separate report providing a commentary on the key areas rather than a conclusion. Statutory recommendations would be included if poor practice was identified.
Revised auditing standards would require enhanced assurance with regard to estimates, prior to the preparation of the accounts. This would primarily impact pension liability and valuation of assets. Management would be required to provide a report to this committee regarding the council's approach to estimates.
These revisions, plus new standards regarding going concern and fraud would result in more auditing work. This reflects work by the Financial Reporting Standards to improve standards in the wake of private sector failure.
In response to a question it was clarified that currently Grant Thornton utilised their own valuer to challenge the council's methodology and assumptions when making valuations. There was potential for a requirement for further challenge required depending on the variation in valuations. A lack of data and evidence in other councils' valuations had resulted in audits not being signed off. This had become a high profile issue requiring further scrutiny. The additional work now required had been recognised by the Public Sector Audit Appointments body, who published the fee scale for audits. Central Government had committed to provide an additional £15 million funding to local authorities in 2021 for the 2020/21 audit to support the additional cost.
Resolved: That the External Audit Progress Report and Sector Update 2020/21 as of January 2021, as presented, be noted.
Date of decision: 25/01/2021
Decided at meeting: 25/01/2021 - Audit, Risk and Governance Committee