Agenda item

 The Committee received the External Audit Completion Report presented by the Council’s external auditors. 

Members were advised that the report set out the outcome of the audit of the Statement of Accounts for the year ended 31 March 2025, including key findings, identified risks, control deficiencies, amendments to the accounts, audit fees, and value for money arrangements.

It was noted that the audit had been undertaken in the context of statutory backstop arrangements, and that the auditors intended to issue a disclaimed opinion due to their inability to obtain sufficient appropriate audit evidence in several areas prior to the backstop date. 

The Committee was informed that the audit remained incomplete, with outstanding work in relation to elements of the financial statements, including property, plant and equipment, pensions and other balance sheet areas. 

Members noted that the auditors had identified deficiencies in internal control, including weaknesses in IT controls relating to user access, privileged access and password management.  It was further noted that, due to the stage reached in the audit, the findings reported may not represent a complete record of all deficiencies.

The Committee considered the summary of amendments to the financial statements processed by management, together with several unadjusted misstatements, which had been assessed as not material, individually or aggregate.  Members also noted several disclosure amendments, which were reflected in the updated draft financial statements. 

In response to questions, Members received clarification on the status of the audit, including what work had been completed and what remained outstanding, and the reasons why sufficient audit evidence had not been obtained in certain areas prior to the backstop date.

Members discussed the significant findings, including matters relating to capital finance arrangements and the absence of a permanent Chief Accountant during the period, and were advised that the management had taken steps to address these issues.

The Committee also sought clarification on identified misstatements, noting that these had not been adjusted within the accounts but had been reviewed by management and assessed as not material.

Members were advised that any changes arising from the completion of outstanding audit work would be reflected in an updated Letter of Representation, which would be reviewed and signed by the Chair of the Audit Committee and Corporate Director of Finance.

Discussion also took place in relation to council tax and collection performance, including the approach to bad debt provision, the need for regular review of collectability, and trends in collection rates over recent years.  Members were advised that collection performance remained broadly consistent, and that the Council continued to review its approach to provisions on an ongoing basis.

Members were advised of the auditors’ work on value for money arrangements, including the assessment of the Council’s arrangements for financial sustainability, governance, and improving economy, efficiency and effectiveness.

It was noted that the auditors had identified significant weaknesses in arrangements, including:

•         Financial sustainability, including reliance on exceptional financial support and ongoing budget pressures.

•         Governance arrangements.

•         Performance management and delivery against strategic priorities.

Members were advised that recommendations for improvement had been made and would be reported within the Auditor’s Annual Report.  The Committee also considered the proposed audit fees, including additional work required in relation to value-for-money arrangements and the impact of backstop arrangements.

It was further reported that, as the audit remained incomplete:

•         The Statement of Accounts had not been finalised.

•         The Letter of Representation had not been signed.

Members considered the report and the explanations provided by the external auditors in respect of the audit findings, outstanding work, and proposed audit opinion.

AGREED that:

1.     The External Audit Completion Report be noted.

2.     The Statement of Accounts be approved, subject to any final amendments arising from completion of the audit.

3.     The Chair of the Audit Committee and the Corporate Director of Finance be authorised to approve and sign the final letter of representation.