Minutes:
The Chairman brought this matter forward to item 4 on the agenda.
Capacity of External Auditors
Suresh Patel from Ernst & Young acknowledged the Council’s frustration regarding the 2017/18 accounts. He assured the Committee that Ernst & Young had recently recruited a number of new staff to ensure that the company delivered the expected quality of service. It was understood that some of the new staff would require training. He noted that the Council had expressed concerns to the Public Sector Accounts Authority and he reported that these concerns had been passed to Ernst & Young.
Resolving queries
Suresh Patel reported that visits by Ernst & Young in early August had resulted in queries that had not been responded to in a timely way. This had led to further delays. The external auditors now planned to visit the Council in early November and all being well will complete the audit of the 2017/18 accounts by the end of November. It was noted that significant adjustments had been made and the group accounts needed to be prepared.
In response to questioning, Suresh Patel explained that it was impossible to know how many additional queries the external auditors would raise on the 2017/18 accounts.
The Head of Finance explained that the outstanding queries had been resolved and the group accounts would not take long to complete. He also reported that the significant adjustment was a favourable one for the Council and had been made to the 2017/18 accounts. He also acknowledged that there had been some communication issues with Ernst & Young. The Council had employed temporary staff to assist with this process.
Identifying errors
Following a brief discussion the Committee acknowledged that the External Auditors could not be expected to uncover all errors in the accounts. It was noted that the External Auditors have a minimum figure to define what is considered a material concern.
Actions
It was noted that at its previous meeting the Committee had asked Ernst & Young to provide the details of the necessary work required to sign off the 2017/18 accounts with an explanatory comment and a rating on current status of each relevant factor. Suresh Patel was reminded that he had previously agreed to provide the Committee with an effective audit toolkit and training on the investment strategy.
The Head of Finance agreed to ascertain when the next housing re-evaluation was taking place.
Update on the 2018/19 and 2019/20 Accounts
Suresh Patel explained that that aim was to complete the audit of the 2018/19 accounts by the end of January and then start work on the 2019/20 accounts to have them completed by the June deadline. It was noted that the 2018/19 accounts required a starting balance from the 2017/18 accounts and that Ernst & Young had not carried out any preparatory work on either the 2018/19 accounts or the 2019/20 accounts. The Head of Finance considered the end of February 2020 to be a more realistic target for the signing off of the 2018/19 accounts than January 2020.
Task and Finish Group
The Chairman explained that the Task and Finish Group would meet in early October and early November to monitor the progress being made on the signing off of the 2017/18 accounts. It was agreed that a representative from the PSAA should be invited to the next meeting in early October. It was hoped that the letter of engagement sent to the PSAA could be found. It was noted that the PSAA had appointed Ernst & Young for the Eastern Region and 98% of local authorities had accepted the external auditors appointed by the PSAA. The PSAA had explained that the only alternative the Council had was to appoint one of the other external auditors who had been awarded a regional contract, but the PSAA had warned that they too were experiencing the same capacity issues as Ernst & Young.
The Head of Finance explained that the PSAA were hosting a Local Quality Audit Forum on 25 November and he promised to circulate the details.