Agenda item

Report of the Director of Finance and Resources

The Audit and Procurement Committee considered a report of the Director of Finance and Resources (Section 151 Officer), setting out a series of documents from the external auditor, Grant Thornton, relating to the Councils 2020/21, 2021/22 and 2022/23 statutory accounts.

In September 2024, the Government passed legislation designed to address the backlog in the completion of local authority accounts. This legislation specified deadlines for the completion of audit work for particular financial years. In the event of uncompleted audits by the specific deadlines, auditors would be required to issue either qualified opinions or disclaimers, as appropriate.  The relevant deadline for the accounts of financial years up to and including 2022/23 is 13th December 2024.

Grant Thornton have not been able to complete the audit of the Council’s 2020/21 accounts and have not started the audit of the 2021/22 and 2022/23 accounts.  This is primarily due to the significant delays in the completion of the audit of the 2019/20 accounts, which the Committee has been briefed on previously.

The documents from Grant Thornton, attached as appendices to the report, detailed the situation in relation to the three uncompleted years and dealt with the necessary matters required in advance of the deadline.  In particular, they had issued an Audit Findings Report (AFR) in relation to the work they had previously carried out on the 2020/21 accounts.  In addition, Grant Thornton had provided an Audit Report for 2021/22 and 2022/23 clarifying that it was not possible to audit the accounts for these years and detailing the other non-audit work that they did carry out.

Although some audit work was carried out on the 2020/21 accounts this was not sufficient for the auditor to issue a qualified opinion. As a result, Grant Thornton have issued disclaimers with regards to all three years’ accounts (2020/21, 2021/22 and 2022/23). To complete the administrative process, the auditor provided draft management letters of representation, one for each respective year of accounts, for the Council to review and authorise.  Upon authorisation, these accounts would be published on the Council’s website as soon as was practically possible and in advance of the 13^th December 2024 deadline.

The Committee sought clarification on a number of matters for each financial year’s accounts, particularly in respect of the historic valuations and the impact these have had on the accounts, additional works required and the level of fees due to the external auditors.  The Committee were assured that the issues with historical valuations was due to a movement from an internal valuer to an external valuer, but that it was a common area to find these sorts of issues.  The changes in fees was due to the additional work that had been required in respect of the 2020/21 accounts.  However, fees were reduced for later financial years due to the external auditor being unable to complete substantive works on these accounts.

The Committee noted that there were around 900 sets of unaudited accounts being dealt with across the country and that Coventry were not unique in being in the situation where accounts were not audited.  It was stressed that the main implication going forward was that the external auditor could not give assurance in respect of opening balances and reserves.  The external auditor was clear in stating that this did not mean that there were errors in balances and reserves, just that they were not able to confirm there were not.

The Director of Finance and Resources further assured the Committee that whilst the external auditor was not able to give confirmation over the accuracy of opening balances and reserves, that the accounts had been processed as though they would be audited and that he was confident with the accuracy of these matters.  However, should any amendments be identified these would be reported to the Committee prior to publication of the accounts.

RESOLVED that the Audit and Procurement Committee:

1.  Note the details presented in the 2020/21 Audit Findings Report and the Audit Report for 2021/22 and 2022/23.

2.  Accept the disclaimed opinions provided by the external auditor in relation to the 2020/21, 2021/22 and 2022/23 accounts.

3.  Grant authorisation for the requested letters of representation, in relation to these financial years, to be signed and returned to the external auditors.