Agenda item
STATEMENTS OF ACCOUNTS 2021/22 & 2022/23 AND EXTERNAL AUDIT REPORTS TO THOSE CHARGED WITH GOVERNANCE
Minutes:
The Head of Financial Control introduced the report and then invited the representative of Ernst and Young (EY), the external auditors, to present the report the Audit Completion Report from Ernst and Young LLP on the 2021/22 and 2022/23 Statement of Accounts, together with the 2021/22 and 2022/23 Financial Statements for approval.
The Council was required to prepare annual financial accounts covering the period from 1 April to 31 March. These accounts were required to comply with the CIPFA/LASAAC Code of Practice on Local Authority Accounting in the United Kingdom (the Code). The Accounts and Audit Regulations 2015 required that the authority prepared and published its unaudited accounts by 31 May, however; the Accounts and Audit (Coronavirus) (Amendment) Regulations 2020 revised the statutory publication date for 2021/22 to 31 July 2022. This reverted back to 31 May for 2022/23. Regulation 9(2) required Members to approve the Statement of Accounts that was to be published, either by meeting as a whole or through a committee.
Once Members had approved the Statement of Accounts, regulation 10 set out the requirements for publication of an authority’s accountability statements. These comprise of the Statement of Accounts together with the opinion and any certificate, the Annual Governance Statement approved by Members and the Narrative Statement. Over recent years Havering, like many local authorities, had experienced significant delays with the audit of its accounts.
To address the backlog, and following a period of consultation, the system leaders developed a solution involving ‘backstop dates’. As a result, a large number of financial statements would be published with modified opinions. To mitigate any potential reputational risk and so that local bodies were not unfairly judged due to disclaimed or modified opinions, auditors would be expected to provide clear reasons for the issuing of such opinions. Havering’s draft accounts were published on the Council's website. The 2021/22 accounts were published on the 29th of July 2022, and the 2022/23 accounts were published on the 31st of May 2023.
The local audit backstop arrangements had been established to set dates by which an authority must publish a final version of its statement of accounts for a particular year, irrespective of the progress that had been made by the auditor. It was to be noted that thefirst of these dates was the 13th of December 2024, by which time the 2022/23 should be published. The 2021/22 and 2022/23 statement of accounts that the Committee were asked to approve were unchanged from the draft versions which were previously published on the Council’s website. The auditor had done a value of money for both years and the pension fund accounts for both years were also audited.
A number of procedures were preformed to ensure understanding of the entity and fraud risks through letters to management, the Audit chair, internal audit and the Monitoring Officer. Limited comparative and casting cheques that made recommendations were made to ensure consistency. Page 8 of the report gave the reason for the disclaimer and the background of why the audit of 2021/22 and 2022/23 was unable to be performed. The 2023/24 audit was underway and would be reported in January and February to the Committee.
In discussion, it was explained that it is the auditor’s responsibility to look at the arrangements any local authority had in place, primarily around governance, economy, efficiency and effectiveness, and financial sustainability. Under governance it would be the committee structure and whether it was appropriate to discharge the Council’s business, but not whether that structure provided the best value that a policy decision that the management would want to make. If recommendations and follow up to queries were not done in a timely matter that would be an issue for internal audit and then in turn for the auditor. It was also agreed that a deep dive could be done on any specific issues where concerns were raised. In addition, EY would come and speak to the Committee once a year independently as well. Therefore, should Members wish to raise specific concerns they could do so.
In regard to a question asked about Mercury Land Holdings and it being a significant borrower of Council finance, the business plan was scrutinised yearly and it was explained that if it’s a wholly owned subsidiary, auditors don’t necessary have the capacity or policy mechanisms to scrutinise how business plans were run properly. However, that would be a worthwhile discussion and could be taken offline to see if an internal audit review could come back to the Committee.
RESOLVED that the Committee:
1. Considered the following External Auditor’s reports in relation to the financial years 2021/22 and 2022/23:
· Value for Money, Interim Report September 2024 (Appendix A)
· Pension Fund Audit Results Report 2021/22 (Appendix B)
· Pension Fund Audit Results Report 2022/23 (Appendix C)
· Audit Completion Report for the years ending 31 March 2022 and 31 March 2023 (Appendix D)
2. Approvedthe Statement of Accounts for the financial year ended 31st March 2022 and to delegate authority to the Section 151 Officer and the Chair of the Audit Committee to sign the Accounts on behalf of the Council following any further audit adjustments that might be required before release of the audit opinion (Appendix E).
3. Approvedthe Statement of Accounts for the financial year ended 31st March 2023 and to delegate authority to the Section 151 Officer and the Chair of the Audit Committee to sign the Accounts on behalf of the Council following any further audit adjustments that might be required before release of the audit opinion (Appendix F).
4. Approvedthe draft Letters of Representations for Havering Council and Havering Pension Fund and delegate authority to the Section 151 Officer and Chair of the Audit Committee to update and sign on behalf of the Council once the audit opinions are provided (Appendix G and Appendix H).
5. Approvedthe 2021/22 and 2022/23 Annual Governance Statements, signed by the Leader and the Chief Executive, confirming the governance arrangements that were in place during both years (Appendix I and Appendix J).
Supporting documents:
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Covering Report - Financial Statements and Audit 2021-22 and 2022-23 Final, item 8.
PDF 216 KB
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Appendix A London Borough of Havering - Interim VFM Report - 24 September 2024, item 8.
PDF 2 MB
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Appendix B 2022 Havering PF Audit Results Report, item 8.
PDF 3 MB
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Appendix C 2023 Havering PF Audit results report, item 8.
PDF 4 MB
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Appendix D LB of Havering - Audit Completion Report for Those Charged with Governance - 18 November 2024, item 8.
PDF 4 MB
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Appendix E LBH Statement of Accounts 21-22 v.5 NOV24, item 8.
PDF 3 MB
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Appendix F LBH SoA 22-23 V.3 NOV24, item 8.
PDF 6 MB
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Appendix G(i) Draft Letter of Representation LBH 2021-22 for Audit Committee, item 8.
PDF 383 KB
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Appendix G(ii) Draft Letter of Representation LBH 2022-23 for Audit Committee, item 8.
PDF 384 KB
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Appendix H(i) Draft Letter of Representation PF 2021-22 for Audit Committee, item 8.
PDF 287 KB
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Appendix H(ii) Draft Letter of Representation PF 2022-23 for Audit Committee, item 8.
PDF 471 KB
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Appendix I Annual_Governance_Statement_2021_2022, item 8.
PDF 325 KB
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Appendix J Annual_Governance_Statement_2022_23, item 8.
PDF 7 MB
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Appendix K FRC Local_Audit_Backlog_Rebuilding_Assurance, item 8.
PDF 827 KB