Agenda item

Grant Thornton ISA 260 Report

Appendix to follow

Minutes:

The External Auditor introduced the report and highlighted the following points:

·        This report is to highlight key issues found in the audit of the Council’s financial statements for year end 31 March 2021.

·        This was a very difficult audit, as BCC is a major unitary authority with lots of responsibilities, including valuations. This report is later than expected due to the increased scope and difficulty. Audits require more staff hours and expertise following increased demands from regulators. The External Auditor (EA) is now more alert to these requirements and is embedding new processes for the future.

·        There was a particular focus on valuation estimates in property, investments and pensions. The EA has challenged accounts in some areas with significant adjustments, but this is not unusual. Subject to outstanding queries being satisfactorily resolved our proposal is to give an unqualified opinion on the financial statements.

·        The EA has received one objection to the financial statements which is almost resolved.

·        The EA have not yet concluded the Value for Money (VfM) work and reasons are explained in more depth in the report. The VfM report will come to a future Audit Committee, and there is a 3-month completion deadline, following the signing of the accounts.

·        The External Auditor thanked BCC officers for their support during the audit.

·       The EA spent a considerable amount of time on valuations. One area to highlight is the valuation of council dwellings. The valuer used the most up to date indices at the time of completing the valuation for the 31 March, however we now have more up to data indices and when these were applied it produced a variation of £20m which was adjusted.

·       The EA is not expecting material issues on the valuation of the Bristol Port Company (although this work is still ongoing) or the pension fund. 

·       In reviewing the group accounts the EA undertook a review with PWC of their file and findings on BE 2020. No issues have been noted in respect of the group audit. 

·       On the Bristol Beacon valuation, the EA looked at accounting treatment as an asset under construction and the value at year end. This topic required the employment of an expert who is expected to complete the work this week.

 

Discussion notes:

·       The committee welcomed the news that Grant Thornton is moving operations out of Russia but noted it was still active in Belarus. GT confirmed that it was in discussions about the future of its Belarus network.

·       A member commented that the land price increase of 0.4% seemed small considering the recent market.

It was confirmed that the valuation followed the standards in the Royal Institution of Chartered Surveyors (RICS) “Red Book” so was not challenged. The valuation was also for 2021 so would not reflect very recent trends.

·       There was a discussion about the ‘winding up’ timeframe for BE 2020 .

This is a matter for the administrators rather than the auditors or BCC. Officers confirmed that this is a ‘solvent liquidation’ which tend to be more complex and as such no specific end date can be provided, however initial estimates were around 18 months.

·       The audit of the financial statements is expected to complete 6 months after the end of the financial year. This is 12 months, which represents a significant delay. While the committee understands some of the reasons of complexity and Covid delays, other complex organisations have delivered on time.

Audits nationally are more difficult and taking longer. It was noted that this is the earliest publication of financial statements for BCC for the past 3 years. 

·       It would be helpful if future reports from the external auditor were in a searchable pdf format.

·       Members sought further clarity in relation to the objection to the accounts.

It was confirmed that the objection received was in relation to expenditure on political publicity.

·       Members were concerned whether they could sign off the statement of accounts, with the residual ongoing work; only for the EA to find more material differences later.

The EA confirmed that they were far enough in the process that further material items were very unlikely. If they did occur, a further report would be submitted to the committee. It was also confirmed that this report was by exception, so any area not otherwise mentioned in the report is assumed to be satisfactory.

·       The report mentions it is good practice for significant transactions to be reported to members. This was clarified as members of Cabinet and Audit.

 

Supporting documents: