The report of the External Auditors (Mazars) is enclosed.

The Committee considered a report of the External Auditors (Mazars) which discussed progress towards completion of the external audit of 2020/21 accounts.

Karen Murray (Mazars) reported that there had been a considerable amount of progress, such that Mazars were very close to completion of the work. Three particular areas were yet to be completed, namely the completion of 2020/21 Financial Statements work; the valuation of Property, Plant & Equipment (PP&E) Value for and work around cash balances. Mazars were in the process of working through a recently received set of accounts which it was hoped would help to resolve the small number of outstanding queries. Mazars were also awaiting soon to be announced guidance from the Chartered Institute of Public Finance and Accountancy (CIPFA) on the consideration of infrastructure assets. Ms Murray indicated that a number of recommendations would be put forward at the point that the audit is completed, in respect of the Councils measures of internal control to help streamline future external audits and facilitate completion more easily.

The Deputy Chief Executive and City Treasurer confirmed that the audit process had been a particular challenge this year and made reference to no local authority having signed off their accounts at time of the meeting. This was attributable to a number of factors, the most significant of which included changes to the accounting treatments around highways which had been a particular cause of the delay. In addition, the remote close down during the pandemic; single points of failure within the Finance team (due to an unavoidable staff absence); an increased focus on valuations and changes to audit and accounting standards had culminated in issues for all parties. She referred to a piece of work led by the Deputy City Treasurer focussing on lessons learnt which would, in particular, streamline future reporting around cash flow statements.

Discussions moved to whether there would be a knock on effect on the following year’s external audit completion. The Chief Accountant provided an overview of the steps necessary to progress the closure of the 2021/22 accounts and the challenges this presented in view of the planned submission date of September 2022. The Committee therefore noted that a delay on completion of the audit was indeed very likely. In respect of capacity within the Finance team to assist with its completion, the Deputy City Treasurer advised that additional resource had been provided within the Council’s Finance team, with added support from wider Finance Directorate colleagues. Additionally more input was planned around quality assurance measures prior to submission to the external auditors to ease the process. Ms Murray also referred to capacity issues from the perspective of the external auditors, which was largely attributed to their scheduled programme of work with other entities meaning that pauses in progress were, at times, unavoidable.

Decision

1.    To note the progress of the external audit of accounts 2020/21

2.    To note that the finalisation of the external audit of 2021/22 accounts was unlikely to meet the September 2022 completion date.