The Chairman introduced the Engagement Lead for the Council’s external auditors, who presented the report which set out their Annual Audit Plan for 2023/24, and the external auditors’ sector update. He explained the council’s historic audit position. There were three years (2021/22, 22/23, and 23/24) of accounts that were open for audits. The 2023-24 financial year would be the first of these to be audited. A number of local authorities had outstanding audit years, and a backstop would be introduced to set a date after which qualified or disclaimed opinions would be given on all older audits, regardless of how far the audit had progressed. It was anticipated, with the change in central government, that legislation for this would be introduced around January 2025. The external auditors thus planned to complete the 2023/24 audit, and examine the opening balances for the remaining years to ensure the Council were in order for the future.

He set out the Audit Plan for 2023/24 in detail. The audit would include the risks in valuation of land and buildings, and pension fund liability from Kent County Council. They would further consider the risk of fraud in Housing Benefit expenditure. The materiality calculations would be re-examined following the publication of the 2023/24 financial statements. Work on the risk assessment for value-for-money (VFM) for 2022/23 had nearly been completed, and would be fed into the assessment for 2023/24. The auditors aimed to start the audit of the 2022/23 accounts in October, with a target completion date of December 2024. The audit opinion would be contingent on the confirmation of the backstop and any work on opening balances that would need to be completed as a result of this.

He explained that the increase in the audit fee for 2023/24 stemmed from the new PSAA tender, which rebased all audit fees across all local authorities due to growing demand, increasing complexity, and regulator demands. The fee for the audits of 2021/22 and 2022/23 could not be finalised until the work required for them had been confirmed.

In response to questions, he explained that the significant risks were consistent with previous years and other authorities, with the exception of the Housing Benefit expenditure. This was not a serious concern, and the work would be similar to prior audits. Housing Benefit expenditure had been included due to it being several times larger than the materiality threshold, in-line with public sector audit guidance. As part of their risk assessment, the external auditors had examined the work of all stakeholders, including internal audit.

The Engagement Lead clarified that procurement would be examined under the VFM risk assessment, and would encompass both the risk for 2023/24, and how this would progress in future years. Significant transactions would also be included in the VFM assessment. A specialist VFM team would assist in the audit should the risk assessment highlight significant weakness in a certain area.  The external auditors would reconcile the fixed asset register with the ledger, to ensure any material issues were detected. The audit of management override of controls would involve examination of key judgements and estimates and journals to locate areas that were at high risk of fraud.

Members discussed the report and individual members raised concerns about the efficiency of IT spending across the council and the budget overspend on waste and recycling.

Resolved: that the report be noted.