Agenda item

This report presents the External Audit Plan for 2023/24. In accordance with audit regulations, these items must be presented to Committee.

The Committee received a report presenting the External Audit Plan for 2023/24.

The following matters were considered:

a)            Clarification. The Chair asked the External Auditors to explain what the ‘group’, referenced within the report, encompasses. The External Auditor explained that the Epsom & Ewell Group is the Borough Council’s accounts and EEPIC’s accounts. The External Auditor informed the Committee that the EEBC accounts and EEPIC accounts are audited separately, but are both brought within the group accounts, as the Council controls EEPIC.

b)            Terminology. A Member of the Committee asked for a definition of materiality and PY. The External Auditor explained that an item is deemed material if it’s omission or error would affect the view of a reader of the accounts, so if a particular item wasn’t there, someone would look at those accounts and form a different view of the Council’s financial position. The External Auditor explained that PY stands for Prior Year.

c)            Section 114. A Member of the Committee asked for the opinion of the External Auditors on EEBC’s accounts and whether they believe the Council could be at risk over the next 3-5 years of section 114 territory. The External Auditor responded to inform the Committee that Grant Thornton felt that at the end of 2023 the financial sustainability position of the Council was green, which would put the Council in a relatively strong position. The External Auditor made clear to the Committee that no one can predict the future, in regard to the central government and the economy, but EEBC are in a positive position, but should always remain cautious.

d)            Lease register. A Member of the Committee asked if the Council would ever be expected to look at how its leaseholders perform against the conditions or whether that would be separate to an audit report. The External Auditor responded to explain that is not something they would look at or comment on and if there were concerns the Council could get Internal Auditors to look into it.

e)            Progress against prior year audit recommendations. The Chair asked why there is an assessment of TBC and why it has not been completed. The External Auditor responded to explain that they will only be able to form a detailed view on that item when it comes to the year-end account, then they will be able to form an assessment.

f)             IFRS 16. A Member of the Committee raised that they had submitted questions via email that they would like answered and circulated to Committee Members. The Member asked ifEEBC and EEPIC are now maintaining a register which includes immaterial leases, in compliance with IFRS 16, effective from April 1^st, 2024. The Chief Finance Officer confirmed to the Committee that IFRS 16 must be implemented this financial year, and the information will be presented in the 2024/25 statement of accounts which will be published at the end of the current financial year. The Chief Finance Officer informed the Committee that the Finance Team have been preparing, having completed a data collection exercise with budget holders to determine what assets the Council leases that are affected by IFRS 16 and expect to be fully ready to produce the statement of accounts and present the information required.

g)            Risk of homelessness. A Member of the Committee asked if the Council are recording a risk for our homelessness in the Private Sector Leasing scheme relating to IFRS 16. The Chief Finance Officer responded to explain that IFRS 16 is an accounting change, not an operational change, meaning there is no impact on how these properties are operated.

h)            Right of Use Assets. A Member of the Committee asked how EEBC and EEPIC are incorporating IFRS 16 requirements into the valuation of Right of Use assets. The Chief Finance Officer responded to confirm that the Council will fully implement IFRS 16 and incorporate right of use assets onto the balance sheet in the 2024/25 statement of accounts. The Chief Finance Officer confirmed that the Council already maintains a lease register. 

i)             Key decisions. A Member of the Committee asked what key decisions still need to be made regarding the Council’s accounting policy for IFRS 16. The Chief Finance Officer informed the Committee that IFRS 16 is an accounting change, it won’t affect the Council’s revenue budget at all, so there are no key operational decisions to be made related to IFRS 16, other than for the Council’s accountants to implement IFRS 16’s requirements into the 2024/25 Statement of Accounts.

j)             Legal implications. A Member of the Committee asked how the legal implications of committee reports are identified and managed. The Chief Finance Officer informed the Committee that all reports are reviewed by Legal, and not all decisions have material legal implications, and where there aren’t any, that will be reflected in the no significant legal implications arising from the contents of this report comment.

k)            Surrey Treasurers Group. A Member of the Committee asked who EEBC send to the Surrey Treasurers group and if EEBC attend all meetings and arrange substitutes when the nominated officer is unable to attend. The Chief Finance Officer confirmed that they personally attend the Surrey Treasurers Group meetings, and the Chief Accountant would attend in their absence.

l)             Training. A Member of the Committee raised a query about training for substitutes for Audit and Scrutiny Committee. The Chair noted the comments and informed the Committee that training for A&S Members and nominated substitutes will be followed up on.

Following consideration, the Committee unanimously resolved to:

(1)      Receive the External Audit Plan for 2023/24;

(2)      Consider and approve the management responses to Grant Thornton’s enquiries, as set out in Appendix 2.