Minutes:
The Chair noted Items 9 and 10 would be taken together. The Finance Manager explained that the Statement of Accounts was published by the Corporate Director of Resources on 31 May 2024 and published on the Council’s website the same day. She noted a 30-day public inspection period 3 June to 12 July. She added that Auditors has started their process 8 July, to be completed mid-November. She noted this was subsequent to the 30 September deadline, however, reiterated previous information in this regard, namely the national backlog in terms of audit work.
The Finance Manager noted that representatives from Mazars were unfortunately not able to attend, however, noted the report set out the terms of reference for External Audit for the year ending 31 March 2024. She noted the report contained sections on the audit opinion, internal controls, fraud, risk, and audit fees.
Councillor J Atkinson noted the audit backlog, post-COVID, and asked whether audit companies were hiring enough staff, and whether we were getting what we needed. The Corporate Director of Resources, Paul Darby noted that Durham County Council (DCC) was largely unaffected, with its accounts having been completed within the requisite timescales and was classed a ‘low risk’. He reminded Members that DCC was one a very few Local Authorities last year that had their accounts signed off by External Audit by 30 November.
The Corporate Director of Resources explained that Government had said Local Authorities should put in place arrangements to show that the work would be done, and a qualified opinion could be given. He added that DCC was not at that point, and that it was anticipated that the audit would be completed by 30 November as the local audit market had not been as impacted as much as other areas in the country. He added that Mazars were subject to robust questioning at the Council’s Audit Committee, and it was noted that Mazars were also engaged in carrying out audits of other public sector bodies within the region.
Councillor J Atkinson asked as any fees would be incurred as a result of the delay. The Corporate Director of Resources noted there would be resources used in recalculating figures, adding it was best to carry out any audit as soon as possible after the year end. He reminded Members of the good working relationship between Mazars, DCC and the Pension Fund Committee and reiterated that the Audit Committee, as well as the Pension Fund Committee, rightly scrutinised the process as they were paying for a service.
The Chair noted the mitigating factors as previously discussed in terms of the estimated date for completion of the audit. The Corporate Director of Resources noted the issues in terms of resourcing and staffing was an issue with audit companies, noting that Statements of Accounts were now hugely complex and a lot of work for those companies.
A Broadbent asked as regards the Council being ‘low risk’. The Corporate Director of Resources noted DCC being low risk as a Local Authority, given its history and the quality of the work of the Finance Manager and her team over many years. He added that, following the Redmond Review, fees had increased, although the Council had received some additional Government funding in this regard.
Councillor C Fletcher noted the position was that of ‘catch-up’ nationally in terms of audit completion and that if Mazars was not as badly impacted and they could only aim for November, it seemed the deadline of the end of September was not realistic. The Corporate Director of Resources noted that if deadlines were relaxed, then there was the possibility that audits could slip further behind. He reiterated that DCC had hit all of its deadlines and very few Local Authorities of similar size and complexity had managed to do so. He thanked the Finance Manager and her Team for their excellent work and reiterated that a number of other public sector audits were being carried out, including the NHS, which was impacting upon auditors.
Resolved:
That the update on Pension Fund Statement of Accounts and External Audit - Audit Strategy Memorandum be noted.