Agenda item

Mazars reported that the Audit for 2020/21 had been completed, the audit certificate had been issued on 15th September 2023. The audit certificate formally closed and concluded the 2020/21 Audit.

The Audit for 2021/22 had been substantially completed with the audit completion report being issued in November 2022, however following the resolution of the previous issues which Mazars had updated Members on, a further national issue had arisen.

The new national issue was related to the impact of the delay in the 2021/22 audit work. The previous delays had resulted in the triennial revaluation of the Teesside Pension Fund being available with more up to date information for management to reflect in the 2021/22 financial statements. The way forward took time as the delay was unprecedented, the way forward was agreed as the following:

•           Authorities (Including the Council) obtained updated IAS19 valuation reports and amended the 2021/22 financial statements for the new figures.

•           Pension Fund auditors were to complete testing on the reliability and accuracy of the updated pension fund membership data.

Unfortunately, Mazars were unable to be provided with the full results of the testing until September 2023. But there were significant discrepancies the membership data used by the fund and that indicated by testing. Mazars informed Members that only around 27% of audit opinions had been abled to be issued by mid-July 2023 due to this delay. Mazars told members that the delays outlined above had been unprecedented, While also stating that it was their priority to bring the audit to a conclusion as soon as possible.

The Mazars report went on to state:

It is important to note that in relation to the 2021/22 audit of the financial statements:

• We still anticipate issuing an unqualified audit opinion;

•The delays are nothing to do with management or those charged with governance, and are national issues beyond the Council’s control;

•The issues causing the delays are all in relation to technical accounting issues, none of which will have an impact on the resources available to the Council or its underlying financial position.

Officers then moved onto the 2022/23 Audit update. Reminding members that the Audit Strategy Memorandum for the 2022/23 audit had been presented to the July 23 Audit & Governance Committee, which indicated the timing for completion was October 23 subject to the completion of the 21/22 audit.

The audit fieldwork for 2022/23 financial statements was substantially completed with the key outstanding areas being property, plant and equipment, and IT audit. One issue that Mazars had been working with Officers in relation to the 2022/23 financial statements was accounting for the net pension asset (this was the first time there had been a net pension asset).  Through the looking at the actuarial report to see if the net asset disclosed needed to be capped at a lower level, but the actuarial report had in facg confirmed that the net asset disclosed was less than the asset ceiling and consequently a futher adjustment to the 2022/23 financial statements has not been required.

Mazars informed members that they were aiming for the 2022/23 audit to be completed by December 2023. However, as for the 2021/22 audit, Mazars were anticipation a further delay in receiving the Pension Fund auditor assurance letter. Officers were working to minimise the delay with the latest estimated date to issue an opinion by 31 March 2024.

Mazars understand that nationally just one per cent of local authority accounts were signed off by 30 September 2023 and the Government, the NAO, audit suppliers and regulators were working together to find a way to clear the backlog in 2023/24, which is the first year of a new external audit contract let by Public Sector Audit Appointments Limited. Mazars would update the Audit and Governance Committee as soon as a way forward was agreed with all stakeholders as all parties recognised that the current situation in the public sector external audit market is unsustainable.

Members AGREED to note the update.