To consider the verbal report of the Council’s External Auditor.
Minutes:
The Chief Finance Officer and Geraldine Daly, Associate Audit Director from Grant Thornton presented a verbal update on the status of the External Audit report.
The Chief Finance Officer explained that Grant Thornton had won the bid to deliver audits for the whole of the South West from the Public Sector Audit Appointments Ltd (PSAA) who were responsible for appointing auditors to principal local government. Delivering audits was a challenge and for the reasons of resource and recruitment issues at Grant Thornton, the external audit could not be delivered by 31 July 2019.
This was the first instance for an external audit not being delivered on time at Exeter and there were very limited time constraints for Grant Thornton to undertake the final audit for Exeter. The Section 151 Officer considered Grant Thornton’s decision to not complete the audit, to be the correct choice, rather than rushing and producing an unsuitable audit. However, given the constraints imposed there was a potential risk that the same issue could happen again next year, and that it was important for the Council, that an external auditor deliver a quality outcome. The Chief Finance Officer stated that Exeter City Council had delivered their accounts on time and were not at fault.
Geraldine Daly expressed her apologies to the Members for being unable to deliver the external audit on time. Grant Thornton aimed to deliver work to the deadlines for all their clients and confirmed that this delay would not impact on Exeter City Council’s reputation. Grant Thornton took full responsibility and a statement explaining the reasons why would be published on the Council website.
She explained that there were resource issues and they had sought to recruit staff. The quality requirements had risen for commercial sector audits, which Grant Thornton took seriously, but with resource issues it was difficult to maintain a high quality level. Members were advised that the accounts were more complicated and Grant Thornton needed the right numbers on their team to provide assurances to the Council and would strive to complete the work by 18 September 2019.
In response to Members’ questions, The Chief Finance Officer and Geraldine Daly explained
· The PSAA option wasn’t deemed as a risk when the audit was tendered, but was too late to back out once the risk factors had been recognised by the Section 151 Officer. However the fees for the auditors had been reduced from those of previous years;
· The issue of external auditors not delivering on time would not impact the operational function of the Council and therefore had not been placed on the risk register;
· Exeter City Council had advertised for three accountants and had successfully recruited one person from the private sector. The remainder posts would be filled, and would look at a Market Supplement, if required, to recruit the positions;
· Grant Thornton would ensure that they would complete the work and meet the new external audit deadline, following the revised timetable for resource allocation;
· There was no liability to Exeter City Council and Grant Thornton’s contract was with the PSAA who would reimburse Exeter City Council if appropriate;
· There had been 10 other Local Authorities delayed because of the resource issues at Grant Thornton;
· The Wealth Advisory team was made redundant last year but they were a different area of the business and it hadn’t impacted the Audit area, which had grown larger but still faced a recruitment shortfall;
· Grant Thornton were not asking for more information from Exeter City Council and were following the Audit Plan, which identified the areas being focussed on, which included the valuation of land and building and pensions.
The Audit and Governance Committee noted the verbal update.