Agenda item

Officers introduced the external audit update.

The 2022-23 Teachers’ Pension audit had successfully completed with no material items to report. Similarly, the Capital Receipts Pooling for 2022-23 had also completed. Currently, the Housing Benefits Certification for 2022-23 was underway and was expected to be completed by the end of June. The Value for Money Assessment and Pension Fund audits for 2022-23 were nearly completed, with results expected to be presented to the next Audit Committee in April.

The 2023-24 Council audit was in an interim phase, focusing on transactions up to December and ensuring compliance with established processes and controls. This work was progressing on track.

On the 2022-23 Council audit, Hillingdon was not among those authorities facing significant audit backlogs, with only 2022-23 outstanding.  Efforts were being made at the national level to address this backlog and consultations were underway. Officers from EY gave further updates on these consultations, noting proposed amendments to the Code of Audit Practise and measures to address the backlog. A joint consultation launched by Department for Levelling Up, Housing and Communities (DLUHC) and the Financial Reporting Council (FRC) was noted, with the deadline for responses on 07 March 2024.

Subject to this consultation, there may be some amendments to the Code of Audit Practice around the ability to report on a composite basis for Value for Money, rather than reporting annually. This would not be an issue for Hillingdon as it was only the 2022-23 Value for Money audit that EY were currently working on.

On the National Audit Office Code consultation, the main element was in relation to encouraging auditors to cooperate where a transition had taken place. This would not affect Hillingdon who were continuing with EY as external auditors.

On the DLUHC consultation, there were three key elements:

Phase one: to address the backlog which would see a backstop date of the end of September 2024 for all financial years up to 2022-23, and if the audits were not complete by this time, then auditors would be required to issue a form of modified opinion, either limitation of scope or a disclaimed opinion on all financial statements.

Phase two: a recovery period which would see backstop dates introduced for each financial year up to the end of the five-year PSAA contract (2028/29).

Phase three: longer term reform of reporting and auditing within the local government sector.

There was one additional consultation expected from the FRC in relation to the basis under which the Council prepares its financial statements. This was expected imminently and will address the extension of the statutory override in relation to infrastructure asset accounting. Other elements on this consultation would include how pension disclosures are set out within the financial statement (moving from an IFRS basis to an FS102); and moving for operational assets to the application of indexation rather than the requirement as it currently stands for formal valuations to be received. If these changes were implemented, they would affect 2023/24 and 2024/25. EY would keep officers updated on this.

It was confirmed that Hillingdon would have the opportunity to respond to the consultations.

RESOLVED: That the Audit Committee:

1. Noted EY verbal update on the 2022/23 Council Audit & Value for Money assessment;

2. Noted EY verbal update on the 2022/23 Pension Fund Audit;

3. Noted update on the 2023/24 Council Audit; and

4. Noted other audit updates