Report to:

 

Audit Committee

Date:

 

22 November 2024

By:

 

Chief Finance Officer

Title of report:

 

Review of the Grant Thornton (GT) report to those charged with governance and Statement of Accounts for 2023/24

 

Purpose of report:

 

For the Committee to review the Independent Auditor’s (GT) report to those charged with governance prior to its submission to the Governance Committee.

 

 

RECOMMENDATIONS:   The Committee is recommended to:

(1) note the report and its appendices; and

(2) identify any concerns arising from the Independent Auditor’s (GT) report or the management response to it, that need to be brought to the attention of the Governance Committee.

 

1.         Background

 

1.1       This report summarises the key findings arising from GT’s audit work in relation to the Council’s 2023/24 financial statements. The audit report, at Appendix 1, references that whilst final audit files review remains to be completed, together with a review of the final set of financial statements, there is no suggestion that this will identify issues that require the audit opinion or statement of accounts to change.

 

2.         Supporting Information

           

2.1       Under its terms of reference, it is the role of this Committee to “Review the annual statement of accounts and the external auditor’s report to those charged with governance.”

 

2.2       It is the role of the Governance Committee to approve the County Council Statement of Accounts having considered whether appropriate accounting policies have been followed and any issues raised by GT from the audit of the accounts.

 

2.3       The Grant Thornton Audit Findings Report to those charged with governance is attached at Appendix 1, with the Council’s Statement of Accounts for 2023/24 at Appendix 3.

 

2.4       I am pleased to be able to report that GT are anticipating being able to issue an unqualified audit opinion for the 2023/24 Statement of Accounts.

 

2.5       The report’s appendix D sets out the Audit Adjustments identified. A small number of presentational adjustments arising from normal audit work have been noted, discussed, and resolved. There were also items for which the decision was made not to adjust, as either not material or an extrapolated misstatement for which adjustment was not appropriate. Any decision to adjust the accounts considers whether the adjustment improves the reader’s understanding of the accounts.

 

2.6       The report’s appendix B identifies 2 management recommendations, for which there are management responses:

 

Issue and Risk

Recommendation

Management Response

GIA and Land Area Records

 

There were instances identified where the Council was unable or struggled to obtain backing for their gross internal areas (GIA) and Land Areas.

 

The Council improves their system of storing data in relation to GIA and Land  Area records to ensure that the information is being appropriately updated and is readily available for audit purposes.

We will undertake an appropriate review of the documentation held on land and floor areas and obtain updated support where necessary.

Cut off error in insurance claim income recognition

 

One error was identified in which insurance claim income was being recognised based on when the Council received the income post year end, as opposed to when the Council had confirmation that the insurance claim was successful pre year end, which would have been the correct point at which to recognise the revenues under accrual principles. 

The Council ensures that the income cut-off recognition policy (accruals based) is applied in the same way to all relevant streams of income that the Council receives.

We will provide training in year-end process to ensure that all transactions, both income and expenditure, are appropriately accrued in the future, where required.

 

2.7       Appendix 2 provides the Financial Statements: Information Technology report, as part of the overall audit. This has identified an issue with SAP, the main accounting system for ESCC, relating to segregation of duties. Some members of the SAP technical support team have access permissions which would allow them to both develop changes and then import those changes in the production environment, as there are only limited segregation of duties in the Team structure. This issue was identified and reported in the 2022/23 financial year audit and has been revisited as part of the 2023/24 IT Audit Review. There is a SAP IT General Controls report that is in draft, which will be concluded once management responses have been received.

 

2.8       The report’s appendix E sets out total audit fees of £279,996. The fee will be subject to Public Sector Audit Appointments review and confirmation in due course.

 

 

3.         Conclusion and reasons for recommendations

 

3.1       In carrying out their responsibility for review, Members of the Audit Committee should consider:

·         The findings made by the external auditors as a result of final audit of the 2023/24 accounts; and

·         Whether there are any issues arising that Members might wish to bring to the attention of the Governance Committee when it meets to approve the Statement of Accounts for 2023/24.

 

 

IAN GUTSELL

Chief Finance Officer

 

 

 

Contact Officer:

Ian Gutsell, Chief Finance Officer

Tel. No.

07825 523633

Email:

Ian.Gutsell@eastsussex.gov.uk

 

Local Member(s): All