Agenda item

The circulated report of the Executive Director of Finance (S151 Officer), was received to inform and update members of the committee on the findings of the Redmond Review, into the effectiveness of local authority financial reporting and audit. Appended to the report was the Redmond Review recommendations and the Ministry of Housing, Communities and Local Government (MHCLG) responses.

The Executive Director of Finance (S151 Officer) presented the report and appendix.

Whilst the review and its findings were published several months ago, as a new Audit Committee for a new Authority, it was considered useful to remind Members of the findings of the review and also provide details of the response from the MHCLG.

Last year, 8 September 2020, the Government published the results of an independent review into the effectiveness of local authority financial reporting and audit, led by Sir Tony Redmond.  Local authority accounts are complex and the Review highlights a number of potential weaknesses with the current local audit framework and makes recommendations to address these. The report summarised the key findings and recommendations within the report, as well as implications for the Council.

The Review identified a number of potential weaknesses with the current framework of local audit, including:

·           An ineffective balance between price and quality with 40% of audits in 2018/19 failing to meet required reporting deadlines in part due to under-resourcing and lack of experienced staff;

·           A lack of coordination and regulation of audit activity;

·           Outcomes not always being effectively considered and presented to the local authority and the public;

·           The technical complexity of statutory accounts limiting public understanding and scrutiny.

The Review identified four key themes for change:

·           Local Audit Arrangements;

·           Current Fee Structure for External Audit;

·           Governance Arrangements;

·           Transparency and reporting.

The Review contained 23 recommendations over four categories; a number of the recommendations were relevant to specific types of Authority:

·           External Audit Regulation;

·           Financial Resilience of local authorities;

·           Smaller Authorities Audit Regulation;

·           Transparency of Financial Reporting.

The Executive Director of Finance (S151 Officer) also referred to some of the key implications for the Council, assuming that the recommendations were implemented. These included the likely increase in external audit fees and whether these would be covered by the additional £15m from Government is not yet known; requirement for the external auditor to present an annual report to Full Council; continuation of the appointment of at least one suitably qualified independent member to Audit Committee; the revised timetable and a change in the reporting deadline; further consultation timings and payments to audit firms in-year rather than upon completion of an audit.

Members were being asked to note the report and content of the Redmond Review.

The Chair referred to the requirement for a qualified independent member to the Audit and Governance Committee. As part of the recruitment the Chair suggested incorporating into this process a request for a supportive skills-based assessment from members of the committee. This was agreed by the Executive Director of Finance (S151 Officer).

The recommendation contained in the report was duly MOVED by Councillor Mark Pengelly and SECONDED by Councillor Kirk Harrison. On being put to the vote this was carried.

RESOLVED that:-

(i)         The Redmond Review and report be noted.