Report to follow.
Reporting Person – Steve Bladen (BDO) / Leigh Clarke
The Chairman welcomed Steve Bladen and Julian Frost of BDO to the meeting. Steve reported that BDO was continuing to focus on the Thameswey group of companies and the consolidation of its accounts into those of the Council, noting that access to the working papers of Thameswey’s previous auditor (Hamlyns) had not been possible and so an alternative method of gaining the required assurance was required. BDO had set out a number of transactions within the subsidiary accounts which would be provided to the Council in the coming days and lead to a discussion with Thameswey as to the evidence behind them.
Steve advised that Thameswey’s new auditor (Menzies) had completed the 2021 accounts and had identified a number of prior period adjustments and stated that the Council would need to consider its own accounts for that financial year accordingly.
In addition, BDO was considering the recoverability of loans to the Thameswey group; Minimum Revenue Provision calculations and any consolidation adjustments. As part of the Value for Money conclusion, the Committee was advised that consideration was being given to a recent public interest report relating to a local authority from KPMG, as BDO felt there could be some synergy with Woking regarding loans made to subsidiary companies. Steve stated that BDO would request the legal advice obtained by the Council prior to some asset acquisitions and could require the Council to seek updated legal advice. BDO was also considering any work arising from the recent Medium Term Financial Strategy that the authority was in the territory of Section 114.
In light of the report from BDO being made verbally with no written report provided in advance, it was proposed, seconded and agreed nem con that the meeting be adjourned to enable the Committee to consider the verbal update. The Chairman adjourned the meeting at 7.15pm and the Committee reconvened at 7.30pm.
The Chairman and Committee Members commented and asked questions in relation to the verbal update that had been given. The Chairman reported that the Committee was extremely disappointed that its governance was being affected by the lack of a written report provided in advance by BDO. A dialogue had been taking place regarding the delayed Audits with Public Sector Audit Appointments and the Department of Levelling Up, Housing and Communities. It was stated that BDO should provide the Council with clear instruction regarding any further risks and work required following the KPMG report which had been published in December. The Committee was also concerned that little progress appeared to have been made since the last meeting and noted the pressure on the Council’s finance team from requests for information relating to 2019/20 continued on top of their usual work. BDO were urged to make requests for information from the Council at the earliest opportunity.
Steve reported that the key assurance issue was related to the Thameswey transactions which had been identified as the working papers of Hamlyns were not available, and therefore evidence to be provided by Thameswey would need to be considered by BDO. Resources from BDO would be assigned to the work once a response had been received. It was added that as all assets, liabilities, income and expenditure of the subsidiary were consolidated into the Council’s final accounts, the prior period adjustments from the 2021 Thameswey accounts audited by Menzies would require consideration.
Brendan Arnold, the Council’s Interim Section 151 Officer, expressed concern over the current position along with the lack of written information provided to the Committee meeting and stated that he would be seeking an urgent meeting with BDO to seek a target date for the formal Opinion to be delivered.
The Chairman noted that there was now a duty on Auditors to raise issues as they came to light, irrespective of the financial year being audited, and Steve stated that there were no matters being brought to the Committee’s attention at the meeting.
Following a suggestion by the Chairman, it was agreed that consideration be given as to whether a Special meeting of the Committee should be held to receive an update from BDO, noting that the next scheduled meeting would be held on 6 July.
That the update be noted.