Agenda item

Report to follow

Chris Blundell, Director of Corporate Services and S151 Officer introduced the report and made the following points:

·  The 2022/23 audit opinion was a disclaimer opinion and this was happening across the local government sector. This was caused by the backlog currently being experienced in the sector;

·  There were going to be a significant number of local authorities that were going to be issued with disclaimer opinions;

·  It was hoped that 2023/24 would produce a better audit opinion for the sector as the backlog eases;

·  The above comments were not a criticism of Grant Thornton but rather it was a situation currently obtaining in local government;

·  Legislation had been passed to manage this situation;

·  The text that was in the report from Grant Thornton was standard text;

·  The text was a little harsh. However it was worth noting that issuance of disclaimers would be happening to more local councils for the period under review;

·  Officers hoped that Thanet District Council would be in a different position for the 2023/24 audit;

·  The Head of Finance and Procurement and his team had worked on re-prioritising work together with Matt Dean and his team.

Matt Dean made the following points:

·  All of the officers had a role to explain the message;

·  The government guidance would help explain the situation;

·  The statutory recommendation was that the disclaimer wording had to be in the opinion;

·  The audit period 2023/24 would be challenging because the starting figures to be used would be from 2022/23;

·  Grant Thornton would not like disclaimers to run longer than they needed to.

Matt Dean made the following points:

·  Each of the key players had a role to play in explaining the message regarding the audit opinion for the period under review;

·  The government guidance helped explain the situation currently faced by the local government sector;

·  The statutory recommendation was that the wording on a disclaimer had to be in the opinion;

·  The 2023/24 audit period would also pose its own challenges because the starting figures would be from 2022/23;

·  There was very little way of 2022/23 not affecting accounts for 2023/24 because the latter uses closing balances from the former;

·  Rebuilding assurance would take time. Looking at in-year balances would help build the assurance levels;

·  The view was to move as far as possible with the 2023/24;

·  Leading up to February 2026, there would just be the 2024/25 set of accounts to focus on;

·  This would help come up with a normalized opinion, as there would be more time to do the accounts;

·  It was working over two different sets of accounting periods that was currently the challenge.

Members asked questions and made comments as follows:

·  The current audit situation in local authorities was not a good look for local government at a time when the public had low trust;

·  The committee wanted to understand from Grant Thornton and Section 151 Officer what it is that the Council would need to do as additional activities to get things right for the 2023/24 audit;

·  Whilst Grant Thornton was prioritising its work for different accounts, it should note some of the characteristics for Thanet District Council that needed special consideration and prioritisation;

·  The Council previously experienced governance problems. That created  low trust amongst residents and that was why the committee thought there was a question of value for money to be considered;

·  There was no budget issue causing the accounts not be audited;

·  This backlog was covid related. Was there a realistic chance that these 2023/24 accounts would be audited to completion?

·  National issues had affected the Council’s circumstances;

·  Why was the Council paying for an incomplete audit service?

·  There was quite some anger about this situation and the issue was out of the Council’s control.

Matt Dean and Chris Blundell responded to member questions and comments as follows:

·  Value for money audit was up to date;

·  The audit fee had increased but that was not the issue. The backlog was a sector wide challenge;

·  There were a range of factors over the past three years and government had decided to draw a line on the matter;

·  Grant Thornton could have done abbreviated accounts but the stakeholders opted for this approach;

·  This was a problem only for local councils in England as Scotland and Wales were not experiencing this backlog;

·  When the Audit Commission was abolished the auditing fees went down and this was the evidence that the private sector was more efficient at audit. However recent event had shown that this was not necessarily the case;

·  With regards to value for ,money the councils were asking these questions regarding audit fees and the service being provided;

·  Covid delayed some of the audit work. This was now the time for recovery. The longer the audit went on the more issues that would turn up as well;

·  Grant Thornton had a team now working on the 2023/24 accounts till February 2026 to cover as much ground as was possible;

Chris Blundell said that he could write to Grant Thornton to address the issue of the Council paying the full audit fee for an incomplete audit, if the committee agreed.

Matt Dean said that it would be for the Public Sector Audit (PSA) to pay back the fee for the 2022/23 audit. He further said that responses to objections would be forwarded to Thanet District Council. And that all objections had been dealt with.

The Governance & Audit Committee agreed that Chris Blundell and the Chair write to Grant Thornton requesting that Thanet District Council be prioritised for the 2023/24 audit.

The Governance & Audit Committee agreed that Chris Blundell and the Chair write to the Public Sector Audit regarding fees for incomplete audit for 2022/23.

The committee noted the Draft Audit Opinion for the 2022/23 Statement of Accounts.