A verbal report of the Deputy Chief Finance Officer.
Minutes:
Steven Houchin, Interim Deputy Chief Finance Officer (IDCFO), gave a background briefing from both a national and Eastbourne Borough Council perspective, to explain the current backlog of external audits, and noted the most recent guidelines and funding arrangements issued by the Department of Levelling Up, Housing and Communities (DLUHC).
The IDCFO reported that, following delegation to Officers by the previous Audit and Governance Committee, the 2019-2020 Statement of Accounts had been signed off on 3 April 2023 and were published on the Council’s website. Officers confirmed that the final Statement of Accounts would also be published on the Committee papers website, and that copies would be emailed to Committee Members, along with copies of a letter sent in May to the Minister of State, DLUHC, and to Deloitte, at the request of the previous Committee, regarding its concerns about the state of affairs with local government audits.
The IDCFO outlined Deloitte’s latest estimated delivery times for the remaining external audits: A draft Statement of Accounts for 2020/21 should now be expected by 29 September and a draft Statement of Accounts for 2021/22 by 12 January 2004.
The IDCFO explained that work to publish the draft Statement of Accounts for 2022/23 was currently ongoing. He reported that the new, earlier Government deadline for publishing draft accounts of 31 May had been missed, due to the ongoing delays with Deloitte for prior year accounts, as well as the national issues created by the requirements of Local Government financial reporting, and the increase in assurance work now required of auditors, as detailed earlier in the update. A public notification of the delay had been published on the Council’s website and publication of the accounts was currently expected by 31 July 2023.
The Chair thanked the IDCFO and the Committee considered the update.
Members welcomed the news that Grant Thornton UK LLP had been appointed as replacement for Deloitte but expressed concerns over the latter’s commitment to deliver the outstanding audits.
Officers confirmed that, to their knowledge, Eastbourne Borough Council had always submitted its accounts on time and that there had been no delays to the publishing of the Annual Accounts prior to working with Deloitte. The CFO, Homira Javadi, advised the Committee that the current backlog would have a negative legacy impact on the timely production of external audits going forward.
Officers confirmed that for the 2020/21 Audit, and every year thereafter, the External Auditors would be asked to present its report to the Committee including information about its findings and any areas of concern, and that Members would have the opportunity to question the External Auditor on its draft Statement of Accounts and any of its findings at Committee.
Officers confirmed that Deloitte had typically attended Committee meetings remotely via Teams, but that it was the Officers’ experience to expect external auditors to appear in person at some point.
Following questions around the value of feedback of old accounts, Officers explained that timely external audits were valuable and seen as a critical part in the financial planning process by all councils and that there was still a value to securing a process for Deloitte to meet its own revised deadlines. However, Officers recognised that much of the value of information in the overdue accounts had largely passed. The CFO advised that there would be a discussion about the audit fees once Deloitte had met all its audit obligations.
In response to queries about the presentation of the draft Statements of Accounts submitted by the Council to Deloitte, Officers explained the process for an external audit, and how the allocation of an appropriate period of time for review work by the External Auditor was a critical element for ensuring a clean audit process. The CFO reminded Members that Councils around the country were suffering similar experiences of delayed external audits.
The CFO thanked the Committee for awarding delegated authority to Officers and the Chair to sign off the 2019/2020 Statement of Accounts. The CFO added that, without the delegation, finalisation of those accounts may have incurred further delays, due to Deloitte’s decision to move its staff onto other projects in April.
In response to comments from Members regarding clarity around delegation of authority, the CFO explained that Deloitte’s Statement of Accounts had been submitted in November 2022 and that the delegated authority had been requested because Deloitte had assured the Council that it was not expecting any changes. The CFO referred to the minutes of the Committee’s meeting in March which captured the remit of the delegation.
In response to a question by committee, the CFO commented that the Council’s Finance Team had arranged for a ‘lessons learnt’ session to engage with Deloitte to see how the process could be improved going forward and agreed that Deloitte would be encouraged to confirm its commitment to the delivery timelines. CFO also added that Deloitte had been copied into the letter sent to the Minister of State, and a copy sent directly to them.
The CFO assured Members that an audit trail already existed to provide a record of the on-going concerns raised by the Committee.
The Chair thanked the Committee Members for their contributions.
RESOLVED (unanimously)
To note the update.