Agenda item

The External Auditor will update the Committee on their work in relation to their Audit Plan.

Beth Bowers, Grant Thornton (External Auditors) introduced the report to the Committee and highlighted the following areas from within it.

·  Work in Progress – February 2025

o  Financial Statements Audit – We will undertake our initial planning for the 2024/25 audit in March 2025, and discuss with management a suitable timetable for the interim audit. We begin our work on your draft financial statements in June.

o  We will issue a detailed audit plan, setting out our proposed approach to the audit of the Authority’s 2024/25 financial statements at the April Audit Committee.

·  Value for Money

o  Under the 2020 Audit Code of Practice, we are required to undertake work to satisfy ourselves that the Authority ‘has  made proper arrangements for securing economy, efficiency and effectiveness in its use of resources’.

·  Audit deliverables

o  Audit Plan – We are required to issue a detailed audit plan to the Audit Committee setting out our proposed approach in order to give an opinion on the Council’s 2023/24 financial statements. (April 2025)

·  Sector Updates

o  IFRS 16 – Leases: Lesse accounting from 1^st April 2024 – From the adoption of Local Government of IFRS 16 leases on 1^st April 2024, the distinction between operating and finance leases for lessees has been removed. Now all leases, apart from those that are deemed low value or short term, are accounted for on balance sheet by lessees.

o  Public Sector adaption: In the public sector, the definition of a lease has been extended to include the use of assets for which little or no consideration is paid, often called ‘peppercorn’ rentals. This is one instance where the right of use asset and its’ associated liability are not initially recognised at the same value. For peppercorn rentals, the right of use assets are initially recognised at market value. Any difference between market value and the present value of expected payments is accounted for as income. This has similarities with the treatment of donated assets.

·  Local Audit backlog

o  On 19^th November 2024, the Financial Reporting Council (FRC) shared the latest Public Sector Audit Appointments Ltd (PSAA) data on the number of local government audits outstanding nationally.

o  The FRC showed that on 30^th September, on average every local authority buying their external audit services through PSAA had two years audits outstanding.

o  We are pleased to be able to show that Grant Thornton rates of delivery are well ahead of the national average. PSAA data shows that by mid November 2024, Grant Thornton had signed off 74% of all opinions due up to and in respect of 2022/23. For prior year value for money audits , 99% have been completed, putting us significantly ahead of the national average.

o  The 2024/25 audit is planned to conclude earlier than in previous years.

Beth Bowers apologised to the Committee and explained that the title of the section of the report on page 44 on the agenda pack should read ‘Pensions Investment Review – Have your say’.

Councillor Toby Simon asked what portfolio the Council has as lessees and how would the issue regarding peppercorn rent affect our accounting and the University of Bath.

The Group Accountant for Financial Accounting & Treasury replied that there were around 30 leases coming into the Council with 8-10 of these having to show on the balance sheet, which will be a change in accounting arrangements.

She added that they will be looking into the matter of peppercorn rents across the Council and that the site of the University of Bath would be assessed as part of this ongoing work.

The Chair commented that he would welcome the Committee receiving further information on this subject to a future meeting.

John Barker commended the work of Grant Thornton regarding the Local Audit backlog. He asked if there was a danger of the goalposts moving nationally which may influence the focus of risk from clients or potential clients.

Beth Bowers replied that as a company they have reduced their portfolio, but have taken on more complex cases. She added that they were clear that priority will be given to those cases that have assurance over those that do not.

She stated that B&NES remains in line to continue within their first phase of audit deliveries as long as the Council can provide the necessary accounts within the agreed timescales.

Councillor Sam Ross asked if the proposed earlier timescales described for future audits were feasible.

The Head of Financial Management replied that they were in regular discussion with the external auditor and planned to issue the draft accounts one month earlier than the deadline, this being the end of May. He added that they had managed to achieve this for the past two years.

Councillor Toby Simon asked if it had yet been decided who would have the role of Section 151 Officer within the Council.

The Interim Executive Director for Resources (S151) replied that this had not been decided yet.

The Director of Financial Services, Assurance & Pensions added that the new Executive Director for Resources, Simon Parker, was due to join the Council on 17^th March and that he would not be holding the position of Section 151 Officer.

Councillor Simon asked that once a decision had been made on the role, that the Committee be informed.

The Chair referred to page 34 of the report and asked officers if they have any initial comments on the Localis report and its proposal to ‘strengthen internal audit functions to identify emerging financial threats’.

The Head of Audit & Assurance replied that they were due to review the Whistleblowing Policy in the next financial year (2025/26) and said that he believed that there were already strong systems and processes in place.

He added that in terms of strengthening the internal audit function they had been able to increase the capacity of the team by recruiting two further officers since the last meeting of the Committee had been held. He said that the role of internal audit is to look at all threats and risks and to liaise with finance officers to take matters into account when forming the Internal Audit Plan.

The Audit Committee RESOLVED to note the External Audit Update Report.