Issue - meetings

To consider and approve the draft unaudited statement of accounts for the years 31 March 2019 to 2023 in compliance with the backlog regime.

Paul Taylor, Chief Accountant, introduced the report on the  2018-19 to 2022-23 Spelthorne Backstop arrangements for the outstanding Annual Audit and Value for Money Statements. A contextual background into the cause of the backlog position was provided. It was explained that this was due to delays by the previous auditor, KPMG, who were responsible for auditing the 2017-18 accounts, which prevented the successive auditors, BDO LLP from starting their work until May 2023, (at which point national backlog proposals had emerged). The backlog regime, implemented to address significant delays across England, required audited accounts to be published by 13 December 2024. BDO had now compiled disclaimed opinions for the outstanding years due to the inability to perform full audits within the tight deadlines. It was reminded that the unsigned Draft Statement of Accounts were still presented to the Audit Committee upon publication, and explanations on movements within the accounts were provided at the time. Committee were now asked to review the disclaimed opinions and approve the unaudited financial statements to enable the Council to move on with its incoming external auditors Grant Thornton who are underway with their external audit of 2023-24 accounts.

Barry Pryke, Senior Audit Manager from BDO summarised the main points highlighted within each combined Audit Planning and Completion report which covered the years 2018-19 to 2022-23. Each report featured a draft audit disclaimed opinion, with the backstop arrangements cited as the reason for not performing all necessary audit procedures. The reports closely followed the Local Audit Reset and Recovery Implementation guidance as issued by the National Audit Office and were limited in scope, with no risk assessments or audit testing having been performed. An overview of the main significant risks was detailed which were consistent across the five years and focused on management override, fraud in revenue recognition, expenditure cut-off, property valuations and valuation of net pension assets. The next steps in finalising this process involved the signing of the five separate Management Representation letters by the Deputy Chief Executive and Chair of the Audit Committee by the backstop deadline of 13 December 2024.

The committee discussed sector-wide challenges, including recruitment issues, COVID-19 impacts, and increased regulatory expectations. They also touched on the potential future role of AI in assisting with audit work. The Committee emphasised the need to facilitate ongoing negotiations between the Council’s management and BDO regarding the variation to the audit fees considering the minimal audit work which was undertaken due to conditions of the backstop arrangements. The Deputy Chief Executive confirmed he will continue to liaise with BDO and the Public Sector Audit Appointments (PSAA) to confirm this position. 

The Committee resolved to approve the unaudited financial statements for the years ended 31 March 2019 to 2023 Appendix B to F, in compliance with the backlog regime.