Agenda item

To receive a verbal update from BDO, the Council’s External Auditor.

The Committee received the Audit Planning Reports for the Council and the London Borough of Enfield Pension Fund.  The documents summarised the planned audit strategy for the year ended 31 March 2021.

NOTED

1.    David Eagles, Partner, BDO LLP, the Council’s External Auditor, provided a detailed update to Members on the 2019/20 audit which was nearing completion.  The internal review had yet to be concluded before being referred for external review, which was expected to be 21 March 2022 or by 28 March 2022 at the latest.

2.    David Eagles explained the reasons why the Council’s audited accounts had not been signed-off.  The main being reason was that a national issue had been identified which affected all Local Authorities in England.  This related to infrastructure and private equity assets, which may not be appropriately valued as the valuations may not be based on observable market data.  This was considered to be a significant risk as there could have been a material overstatement of the value of the Council’s assets and it involved a higher degree of estimation uncertainty.  The effect would be to devalue the assets.

3.    David Eagles gave the reasons why the changes had occurred at this time and that it had been raised at a national level with the National Audit Office.  A paper had been considered at the Local Government Technical Network meeting held on 24 February 2022 at which the Chartered Institute of Public Finance and Accountancy (CIPFA) body had attended.  However, more work was required as it would be necessary to change the account code to comply with legislation.  All opinions on the 2019/20 accounts were on hold until this issue had been resolved.  The next meeting was scheduled to take place on 10 March 2022, when it was hoped that this could be concluded. 

4.    In response to questions from Members, David Eagle reported that for 2018/19 between five to ten percent of Councils had not had their accounts signed-off and for 2019/20 it was fifty to sixty percent.  This was not in step with best practice.  BDO had consistently applied the current codes and was equitable.

5.    All other matters would be in a position to be signed-off by the end of March 2022, but it was unlikely that the value of assets issue would have been resolved by then.  It was anticipated that all would have been subject to the Engagement Quality Control Reviews by early April this year.

6.    Lisa Blake, Partner, BDO LLP explained that some of the interim work had commenced on the audit of the 2021/22 accounts although there would be an impact due to the unresolved issue of 2019/20.  This was because of the absence of the quality checks and the opening balances.  There were limited options however and work was being progressed where possible.

7.    David Eagles, in response to questions from Members, confirmed that the Pension Fund could not be signed-off at this stage.

8.    The Executive Director Resources Department, Fay Hammond, reported that by 30 November 2021 45% of Local Authorities had had their audited accounts signed off for 2020/19 and 40% for 2020/21.  The Executive Director explained that it was critical that the issue of the valuation of the infrastructure had been resolved.  There were no other quality checks outstanding and the Council was not aware of any issues arising from the quality reviews.  Mr Eagles had dealt with them.  If the infrastructure issue had not been raised the accounts would have been signed off subject to the quality reviews.

9.    Members expressed the view that, if necessary, a special meeting of the Committee be held once the 2019/20 audit was available to be signed off.

10.Sebastian Evans, Audit Manager, BDO LLP presented the report to the Pension Fund Committee on the Borough’s Pension Fund.

AGREED

The Audit Plan Main Accounts 2020/21 and Audit Plan Pension Fund Accounts 2020/21 be noted.