Agenda item

Update on External Audit STA21-017

Reporting Person – Steve Bladen (BDO) / Leigh Clarke


The Chairman welcomed Steve Bladen from BDO to the meeting for an update on the progress of the External Audit for the 2019/20 and subsequently 2020/21 accounts.  Steve advised that previously it had been hoped to bring a final report to this meeting setting out the results of the Audit.  Unfortunately this had not been possible due to resourcing issues at BDO, and Steve noted that the Council’s Group accounts were required to be signed off before an audit opinion could be provided.  Across the sector the situation was challenging with audits taking longer than expected, adversely affected by the pandemic.  It was noted that the Council’s subsidiary accounts had been signed off recently, with consolidation into the group accounts to take place.


Work had resumed by BDO last week around the valuations of property, plant and equipment alongside valuations, with activity to take place next week on the Collection Fund.  It was difficult to say definitively when the Audit would be completed, however it was hoped to be early next year.  There were no significant matters of concern to bring to the Committee’s attention. 


The Chairman stated that the situation was extremely disappointing, leaving aside the Council’s group accounts, as at the September meeting of the Committee assurance had been provided by BDO that the team was resourced and ready to continue with the audit.  That had not happened and the resource had only been recently applied.  The Council needed to have reliance on its auditors, however to find now that the planned work was only just beginning was of great concern. 


It was noted that the work currently taking place should be completed within the two weeks that the BDO team were onsite.  Steve acknowledged the frustrations that the Committee felt, stating that the BDO had been prioritising its resources and that the consolidation of group accounts was required for its opinion.  However, the Chairman noted that the position was known at the September meeting and that the Committee had been advised that resources would be in place shortly afterwards.


Regarding the 2020/21 Audit, BDO staff had been resourced to begin work in January with the aim of having continuity in the Audit team.  In the event that the accounts for 2019/20 had not been completed the staff time would be reallocated to this Audit, which BDO would need to complete before beginning the 2020/21 Audit.


Members expressed disappointment at the current position.  It was noted that BDO would review the work of the Thameswey subsidiary companies’ auditor and deal with comments made regarding the judgements reached, noting BDO would provide an opinion on going concern and any risks of fraud for the group accounts as a whole.  Auditing standards required oversight of the subsidiary auditor and their working files, as the balances of the subsidiary accounts would form part of the group balance sheet.  As the subsidiary year accounts had a December year end and the Council had a March year end, movements between the subsidiary and Council accounts would also be audited. 


Reference was made to comments and concerns made by the subsidiary auditor as part of the Thameswey accounts and it was noted that BDO would have regard to how the Council oversaw its subsidiaries, however it was too early in the process for BDO to comment on such statements.  It was suggested whether it would be appropriate for the Committee to meet with the subsidiary’s auditors and the matter would be considered by the Chairman and Leigh outside the meeting, noting that the auditors reported to the Directors at Thameswey and did not have a relationship with the Council, although the Council was the major shareholder in Thameswey.  It was noted that the Thameswey group had expanded significantly over the past few years and so would involve more work for the subsidiary auditors to provide their opinion. 


The Council had initiated a Financial Review of the Borough’s assets due next year, and Leigh confirmed that the appointed firm for the Review, EY, would be contacting BDO as part of the process to share knowledge and avoid duplication.  EY had been provided with valuations as at 31 March 2021, which BDO would not have started work on as yet.


The Committee noted that auditing accounts from a couple of years ago was harder as the working papers would have been prepared some time ago and there may have been some staff turnover.  Steve stated that it was hoped that the auditing sector would have caught up by 2023, although it was difficult to predict so far ahead. 


A question was raised over loan finance to Moyallen stated on the Companies House website, and it was agreed to clarify the situation outside the meeting.  Steve confirmed that as part of the value for money work BDO reviewed the Council’s Medium Term Financial Strategy and had no significant concerns to raise over its financial standing.


Noting that the next meeting of the Committee was due to take place in March 2021, the Chairman asked Steve to provide early notice of any further issues in the interim, and it was anticipated that the groundwork planned for the next couple of weeks would be completed on time, leading to a sign-off of the accounts early in the New Year.  The Chairman thanked Steve for attending the meeting and for his update.




That the update be received.

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