Agenda item

A report of the Director of Finance was presented to inform Members of the Committee of the key points of the Redmond Review and discuss the next steps for compliance at the Council.

 

The key findings of the report were as follows:

 

·        An ineffective balance between price and quality with 40% of external audits relating to the 2018-19 financial year failing to meet required reporting deadlines, in part due to under-resourcing and lack of experienced staff.

 

·        A lack of co-ordination and regulation of audit activity across the sector.

 

·        Outcomes from statutory accounts and external audit work not always being

            effectively communicated and presented to the local authority and public.

 

·        The technical complexity of statutory accounts limiting public understanding of the financial position of local authorities and reducing the effectiveness of any scrutiny processes.

 

The findings from the Review had a direct bearing and relevance to the audit of the Council’s 2019/20 accounts.  In summary:

 

·        The statutory deadline of the end of November for the audit had not been met and was now only just complete towards the end of February.

·        There was an ongoing dialogue with the external auditors over a large increase in the level of fees payable for this work.

·        The timeliness of the Council’s ability to publish the audited results of the 2019/20 audit meant that they would be quickly superseded by the 2020/21 accounts.

·        The accounts were very complex and were not understood by the public or other stakeholders. This had been demonstrated by no questions during the public inspection of accounts period over the last two years and Members needing specific training and direction when reviewing and scrutinising the accounts.

·        Due to the regulatory demands on local authority accounts, most of the additional audit work had been on areas of material value that involved technical complexity and professional judgement when preparing. These areas did not have immediate or even medium term bearing on the Council’s financial position.

 

Twenty three recommendations were made as a result of the review and were considered in four main themes which were detailed in the submitted report as follows:

 

External Regulation and Oversight.

Financial Reporting.

Governance.

Financial Resilience and Sustainability.

 

The implementation of some of the recommendations required changes to primary legislation, however, many of them could be implemented without.

 

Assuming that the recommendations were implemented, the key implications for the

Council and the Committee would include:

·        A likely increase in audit fees; with evidence suggesting audit fees collectively were at least 25% lower than required to fulfil current local audit requirements effectively.

·        The requirement for the auditor to present an annual report to Full Council.

·        The appointment of at least one suitably qualified independent member to Audit Committee to assist with scrutinising the accounts.

·        An additional requirement to produce a standardised statement of service

            information and costs.

·        A revised timetable for the statutory accounts process, with a change in the

            reporting deadline for local audit from 31 July to 30 September.

 

Although further consideration of the recommendations was needed, Officers and Members were supportive of the suggestion of appointing a suitably qualified independent member to the Committee. 

 

The Ministry of Housing, Communities and Local Government (MHCLG) and the National Audit Office (NAO) were currently in the process of establishing a sector led working party to take forward the other recommendations. Progress on this would be reported to Members at regular intervals.

 

The Chief Finance Officer wished to place on record his thanks to the Auditors and Council Officers for their work during the last year, acknowledging some of the difficulties currently being encountered in local government finance.

 

AGREED that the information provided was received and noted.