Verbal report by Nicola Wright and Nick Rayner (Deloitte)
Minutes:
Considered –
The verbal report of Nicola Wright (Audit Partner, Deloitte) advising of progress of the external audit of the County Council’s accounts, including the accounts of North Yorkshire Pension Fund. She reminded Members there were two parts to achieving the sign-off of the 2020/21 accounts:-
(i) The remediation work on the 2019/20 accounts that linked to the FRC review – The remediation work was now complete and there remained only one person to confirm their satisfaction, which was expected to happen either that afternoon or the following morning. This work had confirmed that there was no issue with the 2019/20 accounts. However, with regard to the large adjustment which had been made to the valuation balance of schools within the 2019/20 accounts, the FRC reviewer had asked Deloitte whether there should have been a prior year adjustment in a similar fashion, and Deloitte had not believed so, and Deloitte had confirmed that. However, Deloitte should have reported, to the Audit Committee, the value, which was not material. Therefore, Deloitte would be adding that into their updated 2020/21 report for clarity and including it in the representation letter. This did not require change to the accounts which had been signed for the previous year.
(ii) Once the remediation work on the 2019/20 accounts was signed off, either later that day or the following morning, Deloitte would be in a position to close down the 2020/21 financial statements. Nicola Wright understood that there had been some recent liaison with the Council’s Accountancy Team around “dotting the I’s and crossing the T's”, but she hoped these would be signed-off that week.
In response to Members’ questions, the following points were clarified:-
• The planned signing-off, later that day or the following morning, related only to the remediation of the 2019/20 accounts. Thereafter, Deloitte would be able to proceed to the signing of the 2020/21 accounts.
• Ill health within Deloitte had delayed the external audit because different people, who had been providing cover, had raised questions to which the Council’s Accountancy Team had had to respond. To provide an assurance to Members, Nicola Wright advised that she and Nick Rayner had been on a call that morning with the review partner and she could not see a reason why Deloitte would not be able to sign the accounts that week and to have it done before the Christmas break.
• Gary Fielding (Corporate Director – Strategic Resources) reported that he was really keen for the Council’s Accountancy Team to be able to move on to deliver local government review in North Yorkshire, which was a massive piece of work, and that, as long as the audit window remained opened, there was the prospect of Deloitte raising more queries. He sought assurance that the only questions now being asked were to deal with outstanding issues as opposed to new material. Nicola Wright responded that she understood that the queries which Deloitte was raising were things that had been asked previously and Deloitte was just “dotting the I’s and crossing the T's”, making sure that their questions had been answered, that they understood the explanations and answers provided by the Council, and that Deloitte’s documentation was absolutely at the quality and standard it should be. She did not believe that Deloitte had raised any new questions during the previous few weeks but asked Gary Fielding to contact her if he thought new matters had been raised. Nicola Wright added that there were 6 steps of review. Other people were involved in the review and it was quite normal to have some tidying-up points at this stage as an audit was being closed down, to make sure everything was documented appropriately etc. She confirmed that no big pieces of work were outstanding, and no questions were being asked which would lead to a change in the accounts.
• The delay in the external audit of the Council’s accounts did not reflect badly on the Council because only around 9% of authorities had had their accounts signed-off by the statutory deadline due to national issues surrounding the audit market, the audit process and various reviews. Gary Fielding advised that around 50% of county councils had now had their accounts signed-off, although that figure had been 9% just a month or so previously.
Members were reminded that the Chief Executive Officer, using his emergency powers, had previously delegated power to the Corporate Director – Strategic Resources, in consultation with the Committee’s Chairman, to approve the Final Statement of Accounts for 2020/21 and the Letter of Representation, unless there were any material changes resulting from the final stages of the audit. Gary Fielding and Members commented that they had heard nothing, in Nicola Wright’s verbal report to today’s meeting, to suggest there were any major issues of principle to resolve from the final stages of the audit. Gary Fielding advised that he considered that the power, previously delegated, was not time-limited and could be relied on for the signing of the 2020/21 accounts.
Resolved –
(a) That the report be noted.
(b) That the Corporate Director – Strategic Resources inform Audit Committee Members once the accounts are signed-off.