Agenda item

Draft Audit Findings Report 2021/22

To consider the report of the External Auditors (Grant Thornton)



The External Audit Manager (Grant Thornton) referred to the well documented ongoing delays in the completion of audit work nationally and of Grant Thornton’s efforts to continue to progress their audit work for Exeter City Council. He presented the interim Audit Findings for the City Council’s 2021/22 financial statements and confirmed that a final report would be issued at the completion of their work. There were no matters which required modification of the audit opinion, subject to a number of outstanding matters detailed in the report, including a specific audit focus on the material statement and the accounting estimation element. Grant Thornton have competed the majority of that work, although of note was the updated Pension triennial valuation position.


The following matters were highlighted:-


·         the Value for Money arrangement work was ongoing with the recommendations of the 2021/22 accounting average return and the position with regard to providing a defined audit report. To ensure relevancy in terms of the information being used, there would be a combination for the 2022/23 audit report.

·         there were no major issues in relation to the management Override of Controls, other than the identification of the level of ‘super user access’, in respect of system administration and no issues had been identified.

·         further work in relation to the high level of activity and the triennial valuation of the Pension Fund had taken place in relation to the current membership numbers. They were seeking a letter of assistance to be able to conclude that element.

·         information was awaited to complete the review of the work on the audit for Exeter City Living, but no issues in relation to the audit had been identified.

·           internal control assessment recommendations had resulted in two areas being identified, Declarations of Interest made by senior officers and the individuals with super user access, with recommendations included in the action plan at Appendix A.  Management response was awaited on these matters.


The External Audit Manager (Grant Thornton) responded to the following Members’ questions:-


·         in respect of debt management, the Statement of Accounts included the borrowings of the Council and their role as External Auditors included establishing accurate disclosure as well as the minimum revenue provision for the servicing of debt by the organisation. Although how debt management was handled was part of their VfM review work, it was for Members to consider the appropriate level of debt.

·         the Authority’s Group Accounts include Exeter City Living, which are audited through PK Francis Clark Accountants.

·         the property valuation and estate management offered a broad picture of accuracy in relation to Exeter City Council.

·         it was desirable for the receipt of Declarations of Interest in respect of senior officers to be at a nil.

·         Materials Requirements Planning (MRP) was a calculation of set aside to cover debt management and management will take the view of the appropriate level based on the debt being carried.  Grant Thornton will have a view on this matter in due course.


The Director Finance also responded to the following Members’ questions.


·         the reference to property ownership raised in the Interim Findings report should be read in conjunction with the Council’s Statement of Accounts. There is a description of the related parties in the Group Account’s section as well the investment and commercial property portfolio, which included Council dwellings and garages as part of the Housing Revenue Account (HRA) properties, other operational land and buildings where the Council’s operational activities are carried out and investment properties as part of the commercial portfolio. Other areas included infrastructure assets such as bridges, footpaths listed in the Corporate Risk Register and heritage assets and a range of community assets that generate a rental income.

·         the super user is the System Accountant and the access was monitored through audit logs. The move to the new finance system across the three authorities will address this accounting system in a different way.

·         the Government are undertaking a review on MRP and will put in place definitive guidance, but many local authorities have raised issues in relation to the repayment of Council loans and what could be seen as double accounting in the set aside approach. The Council has not taken this approach but a report on this area will be made in due course.

·         a link would be provided to the Final Audit Findings with the full Statement of Accounts which will include the Group Accounts.

·         the focus of this work was on the 2021/22 audit. In respect of Exeter City Living’s audit, PK Francis Clark had completed their work for 2021/22, and the audit for 2022/23 had not been completed. The External Audit Manager (Grant Thornton) stated that as the 2022/23 accounts were still open, any post balance sheet adjustment could be made and the Group Auditors would take a view.


RESOLVED that the Interim Key Findings report by Grant Thornton be noted.


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