Agenda item

Auditors from Forvis Mazars were present at the meeting to provide a progress update in respect of the 2023/24 Audit.

With regards to the Council accounts 2023/24, the auditors raised the following points:

·        As a result of the legislative backstop arrangements introduced by the amendments to the Accounts and Audit Regulations 2015, the auditors indicated that completion of the audit, as originally planned, in advance of the backstop date of 28 February 2025, would not be achievable.  Consequently, it was anticipated that a disclaimed opinion would be issued for the 2023/24 accounts.

·        When an opinion was disclaimed the auditor did not express an opinion on the financial statements and, consequently, no assurance was provided on the financial statements.

·        Amendments were currently being made to the accounts for 2023/24.  Once the accounts had been completed and the signed forms received, subsequent work to close the accounts would be undertaken.

·        The auditors would continue to work closely with officers to take the necessary steps to rebuild assurance over future accounting periods.

With regards to the Teesside Pension Fund accounts 2023/24, the auditors explained that, because of the change to the backstop arrangements and the amount of work required within a condensed period, despite their best efforts to obtain evidence for a safe and modified opinion, this could not be achieved.  In their view, the effects of the resulting lack of assurance was both pervasive and material to the financial statements as a whole.  As a result, the auditors intended to issue a disclaimer of opinion on the Pension Fund’s financial statements.  The auditors were keen to notify the Audit Committee of the position to ensure that Members were made fully aware of the situation.

A Member expressed disappointment with this update, but acknowledged that the auditors were on a particularly difficult timescale with this task.  In response to a query regarding the assistance received from Council officers, it was explained that officers had been tested in highly unusual circumstances, with effectively three separate audits being completed together.  The support provided by officers had been well received.

A Member commented on the potential impact of this situation on other organisations and employers in the pension scheme, such as Cleveland Fire Brigade.  In response, this point was acknowledged; it was indicated that work was taking place to design procedures to help mitigate the impact. 

A Member referred to resources and queried whether the Council had enough staff to undertake the required work for the auditors.  In response, it was explained that in an ordinary year, yes – there was sufficient staff.  However, the work required this year had presented significant challenge, with several audits taking place with two different audit providers.  The timescales had conflicted and this had presented issues.  Going forward, proposals for additional staff had been made as part of the Council’s budget setting process, which full Council would be considering on 19 February 2025.  However, it was explained that should the proposals be approved, further challenges of recruiting appropriately qualified personnel may be experienced.

A Member referred to dangerous cladding and the national audit report and queried the Council’s current position in relation to this.  Although not a matter for the Audit Committee, reference was made to a report that would be taken to full Council.  Further information would be obtained and forwarded to the Member.

A Member expressed disappointment with this update and queried whether there were any other Local Authorities with pension funds in a similar situation.  In response, it was anticipated that others would also receive disclaimed opinions.

A Member queried the backstop date for the 2024/25 accounts.  In response, the Committee was advised that this would be 27 February 2026.

The Chair thanked the auditors for their attendance and contributions to the meeting.

AGREED that:

1.     A response to the cladding query would be obtained and forwarded to the respective Member.

2.     The information, as presented, was noted.