Agenda item
External Auditor - Audit Progress Report and Sector Updates
Minutes:
David Johnson (Grant Thornton) introduced the report and highlighted:
a)
There were lessons to be learnt from the December 2024 meeting of
the Audit and Governance Committee and the very late provision of
reports to Committee Members and Grant Thornton were working
towards providing reports in a timely manner for the February 2025
meeting of the Audit and Governance Committee to sign off the
reports;
b)
The 2023/24 accounts backstop date was 28 February 2025;
c)
The field work on the 2023/24 accounts was due to be completed
within the following two weeks;
d)
Grant Thornton were on site in Plymouth w/c 13 January 2025 to
discuss outstanding issues with officers;
e)
The audit opinion would be disclaimed due to lack of assurance over
opening balances and Grant Thornton expected the 2024/25 audit
opinion to be subject to a form of qualification as well, with an
aim to move to unqualified opinions in future years following a
rebuilding of assurance.
In response to questions, with support from Carolyn Haynes (Lead Accountancy Manager) and David Northey (Service Director for Finance), it was further explained:
f)
New guidance on low value leases would only be relevant for 2024/25
accounts onwards but it would be a responsibility of Council
management to deem which leases were low value, especially as this
might vary between different local authorities;
i.
Grant Thornton would provide a response outside of the meeting to
Committee Members on how assets that might have had a low value
when new but were, at present time, valuable, would be dealt
with;
ii.
Identification of low values leases was ongoing and there was a
meeting scheduled for 17 January 2025 with Arlingclose, the
Council’s treasury management and financial advisors, to
discuss the impact of IFRS16 (Independent Financial Reporting
Standard) on the Council;
iii.
The volume of leases meant it was a sizable task for a small team,
but the officers would, of course, do their best and a report would
be provided to the Audit and Governance Committee once work was
complete;
g)
Grant Thornton would respond outside of the meeting on elaboration
on the following paragraph from a report presented to the Audit and
Governance Committee in December 2024, and if this was going to be
further clarified in the report for February 2025, as the
colleagues who had worked on that report were not present for the
meeting;
i.
“The MTFS, in February 2022, shows a cumulative
deficit over the next four years to 2026/27 of £118 million,
however this gap has widened significantly to £256 million,
in September 2022, as the MTFS fifth years has been recalculated to
include the 2027/28 financial year. The financial risks facing the
Council are significant and given the low level of reserves,
current indications are that the Council’s financial position
is critical.”
ii.
David Northey (Service Director for Finance) reported that the MTFS
(Medium Term Financial Strategy) had been through Cabinet and City
Council in November 2024;
iii.
There had been an £18 million budget gap for 2025/26, but
this had been updated to a balanced budget as of 13 January 2025
and would have a direct impact on future years;
iv.
There was work to do but the gap would not be in the region of
£118-256 million;
v.
His opinion on the robustness of the reserves would form part of
the reports due to be presented to the Committee in February
2025;
vi.
The MTFS was recalculated to include 2027/28 as it was a rolling 5
year plan;
h) The team would provide answers to the suggested questions by Grant Thornton (on Page 25 of the agenda pack) on IFRS16 in a report to a future meeting.
Supporting documents: