REPORT REFERENCE NO.	APRC/19/16
MEETING	AUDIT & PERFORMANCE REVIEW COMMITTEE
DATE OF MEETING	13 NOVEMBER 2019
SUBJECT OF REPORT	AUDIT PROGRESS - REQUEST FOR A LATE AUDIT
LEAD OFFICER	Director of Finance & Resourcing (Treasurer)
RECOMMENDATIONS	The Committee is asked to express its view to the external auditors on the potential for a “late” audit; That the Director of Finance & Resourcing be delegated authority to publish a revised audit notice by 31 July 2020 in the event that the Committee is minded to agree to a “late” audit
EXECUTIVE SUMMARY	The Accounts and Audit Regulations 2015 brought forward the timetable for closure of the accounts, production of the financial statements and subsequent external audit from 2017/18 onwards. This Authority has successfully published draft accounts by the revised deadline of 31st May with the external audit having been completed by the 31st July of each year. However, across Local Government, external auditors are struggling to meet the demands of the new schedule and there were many organisations which failed to meet the 31st July deadline in 2019. This Authority’s external auditor, Grant Thornton, has proposed that some of their lower risk clients have a “late” audit during September 2020, on the basis that fewer issues are likely to arise which can’t be resolved by the end of September. The Service does not have a preference over the timing of the audit but would like to seek the view of the Committee. However, it is important that this Authority is not open to criticism for having inappropriate financial controls, systems and processes in place to produce a good set of accounts.
RESOURCE IMPLICATIONS	A potential September meeting of the Audit and Performance Review Committee; Finance team workload/conflict with budget setting; Finance team annual leave planning; Potential conflict with the dates of Her Majesty’s Inspector of Constabulary and Fire & Rescue Services (HMICFRS) second inspection.
EQUALITY RISKS AND BENEFITS ANALYSIS (ERBA)	N/A
APPENDICES	Audit Progress Report and Sector Update
LIST OF BACKGROUND PAPERS

1.	INTRODUCTION

The Accounts & Audit Regulations 2015 (the Regulations) sets the legislative requirement for publication of the Authority’s Statement of Accounts each year.

The Regulations brought forward the timetable for closure of the accounts, production of the financial statements and subsequent external audit from 2017/18 onwards. This Authority has successfully published draft accounts by the revised deadline of 31st May with the external audit having been completed by the 31st July of each year, as stipulated in the Regulations.

Across Local Government, however, external auditors are struggling to meet the demands of the new schedule and there were many organisations which failed to meet the 31st July deadline in 2019. This Authority’s external auditor, Grant Thornton, has proposed (as set out within their accompanying Audit Progress Report on the agenda for this meeting) that some of their lower risk clients have a “late” audit during September 2020 on the basis that fewer issues are likely to arise which cannot be resolved by the end of September. Grant Thornton is seeking the view of the Committee in taking this course of action for this Authority.

1.4	The points for consideration on this matter are therefore as set out within this report for the Committee’s consideration.

2.	LEGISLATIVE BACKGROUND

2.1	The relevant provision within the Regulations relating to the Fire & Rescue Authority is set out in paragraph 10 as follows:

(1)	A Category 1 authority must, after approving the statement of accounts in accordance with regulation 9(2) but not later than 31st July of the financial year immediately following the end of the financial year to which the statement relates, publish (which must include publication on the authority’s website)—

(a)	the statement of accounts together with any certificate or opinion, entered by the local auditor in accordance with section 20(2) of the Act;

(b)	the annual governance statement approved in accordance with regulation 6(2); and

(c)	the narrative statement prepared in accordance with regulation 8.

(2)	Where an audit of accounts has not been concluded before the date specified in paragraph (1) an authority must—

(a)	publish (which must include publication on the authority’s website) as soon as reasonably practicable on or after that date a notice stating that it has not been able to publish the statement of accounts and its reasons for this; and

(b)	comply with paragraph (1) as if for “but not later than 31st July of the financial year immediately following the end of the financial year to which the statement relates” there were substituted “as soon as reasonably practicable after the receipt of any report from the auditor which contains the auditor’s final findings from the audit which is issued before the conclusion of the audit”.

(3)	Where documents are published under paragraph (1) an authority must—

(a)	keep copies of those documents for purchase by any person on payment of a reasonable sum; and

(b)	ensure that those documents remain available for public access for a period of not less than five years beginning with the date on which those documents were first published in accordance with that paragraph.

2.2	This indicates that the Authority does have the vires under paragraph 10(2) to accede to the auditors wishes to have a “late” audit during September 2020 but there are a number of factors that should be considered if the Committee is minded to do so.

3.	CONSIDERATIONS FOR A “LATE” AUDIT

3.1	It is important that this Authority is not exposed to criticism for having inappropriate financial controls, systems and processes in place to produce a good set of accounts in compliance with the Regulations. If the Committee was minded to accede to the request for a “late” audit, the following points should be considered:

A potential September meeting of the Audit and Performance Review Committee;

There may be additional costs associated with expanded publication of the notice specifying the reasons for the accounts not being audited by 31 July. Regulation 10(2)(a) indicates that something additional to publication on the Authority’s website is required;

The impact on the Finance team workload/conflict with the budget setting process for 2021/22;

Finance team annual leave planning;

A potential conflict of dates with Her Majesty’s Inspector of Constabulary and Fire & Rescue Services (HMICFRS) second inspection;

It is unclear at this stage whether this is a one off request or a recurring issue.

3.2	Grant Thornton has indicated in its Audit Progress Report that “Increased scrutiny, the higher regulatory burden and limited specialist audit resources being available means that we are seeking to deliver a number of our post statement audits later in the summer. We have held initial discussions with officers about the scope for delivering the audit in September 2020. There are also like to be cost considerations in relation to the additional work arising from the increased expectation on auditors and we will provide an update in our detailed audit plan. We would welcome the view of the committee on the proposed timing of the audit”.

4.	CONCLUSION

4.1	This Authority has always had a positive working relationship with its auditors, both past and present. Grant Thornton seems to be indicating in its Audit Progress Report that the cost of the audit may be increasing but this will not be known until the Audit Plan is forthcoming next year.

4.2	If the Committee was minded to accede to the request, the Regulations stipulate that the notice to be published must make clear the reason for the “late” publication of the accounts. In this instance, the reasons should specify that this was at the request of the external auditors and has no reflection on the Service’s ability to have appropriate financial controls, systems and processes in place to produce a good set of accounts and complies with the Regulations.

4.3	The Committee is asked to express its view to the external auditors on the potential for a “late” audit.

4.4	In the event that the Committee is minded to accede to the request for a “late” audit, the Director of Finance & Resourcing be delegated authority to publish a revised notice by 31 July 2020.

AMY WEBB

Director of Finance & Resourcing (Treasurer)