Issue - meetings

The Committee are reccomended to note the work completed by the Audit and Risk Management Service’s Counter Fraud Team during the period 1 April 2022 to 31 March 2023

Gemma Young (Head of Internal Audit and Risk Management) presented this item highlighting the key points from the report, including overpayments being identified and potential savings of £2.6m, mainly through National Fraud Initiative data experts, right to buy clams and financial investigations.

An area of increased activity in the past year has been in relation to the investigation of secondary employment where there have been 5 cases in Enfield. Training has been provided to prevent secondary employment issues and whistleblowing has been promoted.

Responding to Members questions, Officers explained they have recovered 8 Council properties this year and are keen to increase the recovery rate on arising housing fraud.

NOTED 2022-23 Annual Counter Fraud Report.

General Purposes Committee is recommended:

1.    To note the information provided within this report on the progress of audit of LBE’s open sets of accounts since January GPC.

2.    To note the current accumulated backlog of three years of open, unaudited statement of accounts.

3.    To note the approach to be taken for 2022/23 accounts closure

4.    To formally request from BDO an update at the June GPC detailing their audit plan for completing the audits and the staff resourcing strategy to provide targeted progress.

The Director of Finance – Corporate reminded the committee that the Council had open, unaudited, accounts for the three financial years 2019/20, 2020/21, and 2021/22. The report provided an update on the audit status for each year of open accounts, plus commentary on preparation of the 2022/23 accounts closure process.

Separately to the agenda, an update from BDO had been circulated and published on the progress with the 2019/20 and 2020/21 audits. The update was based on the position up to and including 8 March 2023.

The director, responding to questions from the Committee, advised that there had been significant progress made with regards to the outstanding items, with both the Council’s Finance Team and the External Auditor working closely together.

Lisa Blake from BDO reiterated David Eagles’ undertaking that staff at BDO would remain focused and anticipated that the accounts would be closed down by the end of April 2023 and be ready to be brought to the meeting of the General Purposes Committee in June 2023. This was dependent on no other material issues coming to light of material value to delay the work.

Members noted that, following a strategic review, BDO had chosen not to undertake further audits with local authorities.

Members expressed their disappointment and frustration with the continued delay, whilst acknowledging some progress had been made and the improved relationship between officers and the external auditors. Previously, an undertaking had been given to the committee that the accounts would be closed by early spring, a date that was very close. The Committee had expected the work to have been completed by the end of February 2023, but yet again there had been a delay. David Eagles absence was noted, and members expressed the view that they expected him attend the meeting in June 2023, preferably in person, but should this not be possible, remotely. Should the work not be completed, and the accounts not signed off, then David Eagles would be invited to explain the reasons why. It was acknowledged that David Eagles would need to attend the meeting when the accounts were signed off. Once the 2019/20 accounts had been signed off then work could continue on the 2020/21 audit. Any work on further years would not be possible until the 2020/21 had been signed off.

The Director of Finance - Corporate confirmed that the Government had stated, the previous week, it would be writing to all Local Authorities with open accounts. The Council had not received such a letter at the time of reporting.

AGREED that:

1.    The information provided within the report be noted;

2.    The current accumulated backlog of three years of open, unaudited, accounts be noted;

3.    The approach to be taken for 2022/23 accounts closure be noted; and

4.    BDO be formally requested to provide an update at the June 2023 General Purposes Committee detailing their audit plan for completing the audits and the staff resourcing strategy to provide targeted progress.

For the Committee to receive a verbal update on the Audit of the 2019/20 and 2020/21 Statement of Accounts and Pension Fund and progress on the 2021/22 Council's Accounts.  An update will also be provided by the Council’s External Auditors, BDO.

The Committee received a verbal update and PowerPoint presentation from the Director of Finance - Corporate update on the audit of the 2019/20 and 2020/21 statement of accounts and pension fund and progress on the 2021/22 Council's accounts.

The Director of Finance - Corporate, during his presentation, highlighted his concerns that the work undertaken by BDO on the 2019/20 audit to finalise the accounts had been further delayed, with a revised deadline for the completion of the review and any follow-up would now be the end of February 2023. The Committee noted that, following the information received from BDO advising of the new delays in preventing any further sign-off of the 2019/20 accounts, a conversation had been held with BDO regarding the critical path and the sizeable resources required to address the issues raised, not least the 123 additional comments.

The Director of Finance - Corporate informed Members that the bulletin issued by CIPFA on 11 January 2023 set out the requirements to address the Infrastructure Assets issues raised. The LBE Finance Team were reviewing the requirements and working with highways colleagues to complete the changes to the accounts, aiming to complete this work by late January 2023. This would then be submitted to BDO for review.

The Director of Finance also advised that there are still further issues which had been raised and was part of the 2020/21 audit. This was the testing of school asset valuations and was also likely to have a significant impact on the 2019/20 valuations and required an adjustment to the 2019/20 accounts and a prior period adjustment for 2018/19 comparatives. LBE staff had only been made aware of this issue two days before the meeting and were now working to establish the position and the values/assets impacted. This was going to further delay the signing-off of the 2019/20 Accounts.

Members noted the update on the 2020/21 audit and that BDO had been asked to provide a date when the audit would be completed as the Council’s LBE Finance Team would continue working on the audit until then. Due to delays in finalising the 2019/20 accounts this was now estimated that it would be taken to the meeting in May/June 2023. BDO had been asked to either confirm this date or to advise an alternative.

The Partner provided a verbal update and PowerPoint presentation on the progress on the 2019/20 and 2020/21 audits, together with an update on the International Standards of Auditing (ISA) 265 recommendations. The presentation also detailed the reasons BDO had been unable to progress the audit for 2019/20.                                                                                 

The Partner advised that there had been some residual tidying points to go through which were listed out and needed to be worked through. He considered there to be a couple of days’ worth of tidying in terms of the 2020 roll forward position and this was where they were getting to the point to review the comparators by comparing the information, BDO held at 2019 to what was being used in  ...  view the full minutes text for item 4

Following the publication of the draft 2021/22 Statement of Accounts (including Pension Fund), the report provides an update on the audit status of each year of open, unaudited accounts for the three financial years 2019/20, 2020/21, and 2021/22.

Following the publication of the draft 2021/22 Statement of Accounts (including Pension Fund), the report provided an update on the audit status of each year of open, unaudited accounts for the three financial years 2019/20, 2020/21, and 2021/22.

At the request of the Committee, the representatives from the External Auditor undertook to provide an update on the sector-wide infrastructure assets issue, which remained open whilst CIPFA continued to work on a solution, in January 2023.

AGREED that:

1.  The information provided within the report of Officers on the progress of audit of LBE’s open sets of accounts since the October meeting of the General Purposes Committee be NOTED;

2.  The current accumulated backlog of three years of open, unaudited statement of accounts be NOTED; and

3.  At the submission point of the report, the External Auditor, BDO who had intended to have finalised the audit of the 2019/20 statement of accounts in time for the meeting, barring the sector-wide infrastructure assets had not done so be NOTED.

Following the publication of the draft 2021/22 Statement of Accounts (including Pension Fund) the report provides an update on the audit status for each year of open unaudited accounts for the three financial years 2019/20, 2020/21, and 2021/22.

Members of the Committee welcomed the representatives of the Council’s External Auditors, BDO, Lisa Blake and David Eagles, who had attended the meeting together with officers, to provide an update on the unaudited accounts for the three financial years 2019/20, 2020/21, and 2021/22.

Officers provided an update on the audit status for each year of open unaudited accounts for the three financial years 2019/20, 2020/21, and 2021/22 (including Pension Fund) together with a position statement with regards to the situation with the Council’s external auditor, BDO.

At the invitation of the Chair and for the benefit of the committee, the BDO representatives gave additional context to the previous two and a half years, summarised the current position and explained their plan to ensure that the unaudited accounts were signed off.

The Committee noted the reasons why the accounts for the last three years had not been signed-off and the events leading up to the current position.

Members of the committee expressed their dissatisfaction with the overall performance of BDO, which was considered to be totally unacceptable, and BDO’s inability to progress sign-off of the accounts as stipulated in the current contract. Members insisted that BDO provide a clear timetable and end-date as to when the accounts would be signed off, barring the sector-wide infrastructure assets issue which had been fully explained to the committee in reports at previous meetings. Members noted that it was hoped the infrastructure issue would be concluded before the end of the 2022 calendar year or very early in the new year. 

Members were deeply concerned regarding the reputational risks to the Council. Members could not understand why there was a further delay when BDO had indicated that they hoped that an audited set of accounts, infrastructure assets aside, would be brought to the committee meeting. Members also expressed their dissatisfaction with the contractual arrangements with the Public Sector Audit Appointments Limited (PSAA), which allowed for continual shift and prevented the sign-off of the accounts.

Officers reported that all the information necessary for the audit to continue through the due process had been supplied to BDO and Council staff were on standby and ready to respond to any further requests for information from BDO.  It appeared to members that there were problems being experienced by BDO in providing sufficient resource to continue with the audit and that BDO appeared to prioritise audits for other organisations, namely the NHS, over and above Enfield.

The representatives from BDO explained that it had been very difficult to reschedule the work due to the resources available, although some additional resource had been supplied by BDO. The representative also confirmed that BDO would not be paid until the audits were complete. The Audit Partner, David Eagles, responsible for the 2019/20 audit, explained that he was booked in on 1 November 2022 to work on Enfield’s 2019/20 audit, and hoped that 2019/20 accounts audit would be finalised, infrastructure assets aside, for the next GPC meeting on 1 December 2022. Lisa Blake,  ...  view the full minutes text for item 8