This report provides an update since the last meeting in August 2018 on progress being made towards completing the audit.

Further to Minute 3 of the meeting held on 1 August 2018, the Head of Finance submitted a report providing an update on progress with the audit of the 2016/17 and 2017/18 accounts.  The Committee noted that the 2016/17 Accounts should originally have been audited and signed off by 30 September 2017, and that regular reports had been made to the Committee since then providing updates on progress. 

The report stated that a revised set of accounts had been presented to the Committee on 1 August 2018 and formally submitted to the External Auditor subsequent to the meeting.  The External Auditors had recommenced the audit following the Committee meeting and the audit was still ongoing.  Following detailed discussions with the Auditors, it had been agreed that identifying sufficient evidence to substantiate some creditor and debtor balances was not viable given the passing of time and the turnover of officers at the Council.  Consequently, the External Auditor had indicated that this aspect of the 2016/17 accounts would need to be qualified.

There were also a number of fixed asset and capital accounting issues still to be resolved with EY.  These would impact on the value of Property, Plant and Equipment and two of the unusable reserves.  Council’s expert consultants were working through these issues and the proposed amendments to deal with EY’s concerns had been presented to the Auditors.  The Council’s consultants had recommended further changes to the accounts for the Council’s two Public Finance Initiative (PFI) Schemes and had provided EY with details of the changes.  The amendments to the accounts would be made as soon as agreement had been reached with EY. 

The report anticipated that EY’s external audit field work would be completed in early October 2018.  However, the draft opinion would be subject to consultation with the Council and review by EY’s Professional Standards Panel.  Given the delay in the audit and the potential qualification, it was likely that a review by Public Sector Audit Appointments would also be required.  Therefore, EY did not expect to be in a position to give an opinion on the accounts until late October or early November 2018 at the earliest. 

Additionally, EY had confirmed that if the opinion on the 2016/17 accounts was qualified, the 2017/18 opening balances would also be qualified due to uncertainties around the creditor and debtor balances.  To ensure the qualification was lifted on the balances at 31 March 2018, the Finance Team had commenced a full review of all year end balances on creditor and debtor ledger codes in 2017/18 to ensure that they were fully evidenced and correctly calculated.  Until the issues with fixed asset and capital accounting in 2016/17 had been resolved with EY it would not be possible to finalise the entries in the ledgers for 2017/18.  EY had advised that the 2017/18 accounts should not be finalised until they had finalised their opinion on the 2016/17 accounts.  This did not prevent the finalisation of transactions in 2017/18 ledgers and officers would finalise this work as soon as the exercise on creditors and debtors was complete, which would enable the outturn figures already reported to members to be confirmed.  It was anticipated that the 2017/18 accounts would be ready for issue to EY in late November 2018.

Resolved:       That the progress made by the External Auditor and officers in finalising the 2016/17 accounts be noted.