The Director of BDO LLP (external audit) presented the report to the Committee.

Members asked the following questions to the Director of BDO LLP (external audit):

·       Councillor Collins sought clarity for the phrase financial instruments.

o   Any investments or debt that the Local Authority holds.

·       Councillor Collins noted the objections to the financial statements and asked if the Local Authority should be worried or if it was an administrative error.

o   One of the duties is to consider the legality of those transactions. No particular red flags, but it is something that will need to be looked at and concluded on.

·       Councillor Worrall asked when will a response be received from the forensic team to formalise whether there is an issue with the objections to the financial statements.

o   It is a long progress, and the response will not go into the public domain.

o   Additional powers can be issued. If in the public interest a report could be published to highlight any issues to the public. The Local Authority could be issued with statutory recommendations to change processes. A court could declare transactions illegal, but that is very unusual.

·       Councillor Worrall asked for a timeframe.

o   To be completed alongside the audit in February/March 2024

o   Progress is good.

·       Councillor Collins noted from the report the mismanagement identified and asked how the Local Authority could stop this from happening again.

o   Audit will audit balances and adjustments to make sure that figures and stack up with the audit work and that there's nothing in the accounted period that shouldn't be.

·       Councillor Collins asked if the work could be undertaken by internal audit.

o   Looking at investment transactions, valuations, and changes in valuations

o   Schedule that is allocating transactions year by year.

·       Councillor Collins asked how you stop management manipulating records and overriding controls.

o   Any transaction that is on the schedule will then be passed to external audit for deliberate review.

o   Internal audit will tend to be focused on ongoing transactions within the system.

·       Councillor Raper asked if external audit was finding it easy to get all the information they needed from the Local Authority.

o   Yes, no reason to think that this wouldn't continue either.

·       Councillor Worrall asked what the process is for the finding RAAC.

o   The Local Authority will need to propose how they've assured themselves that they don't have RAAC in their buildings.

o   Records should identify issues.

·       Councillor Collins sort and explanation of heritage assets/valuation of noncurrent assets.

o   Culturally significant assets for example paintings. Coalhouse fault was identified.

·       Councillor Collins sort clarity on valuation of pension liability risk detail assets.

o   Level 1 assets would be something that has an available price, for example, the Stock Exchange

o   Level 3 assets don't have an observable input.

·       Councillor Collins asked if non collection of receivables is people not paying rent.

o   Yes

·       Councillor Thandi asked for an update on Toucan and asked if it is running smoothly and if there is an end date.

o   Process is progressing within timelines, hoping to have an outcome within this financial year.

o   Administrators continue to run the process.

·       Co-Optee Member Jasdip Nijjar asked with regards to manual adjustments, what controls did the Council have before they entered

o   Going through each element of the investments and agreeing classification and valuation.

·       Co-Optee Member Jasdip Nijjar asked what the thought process was behind keeping materiality at 1.75%

o   Range of factors, benchmark is 0.5 to 3%.

·       Co-Optee Member Jasdip Nijjar asked for an estimate of the fees.

o   No estimate at the moment.

·       Co-Optee Member Charles Clarke asked in observations so far has external audit observed any serious controls over the corporate control environment.

o   Controls aren’t tested, it is a fully substantive audit.

o   Haven't identified any issues with your entity level controls.

·       Co-Optee Member Charles Clarke asked as it was substantive testing what additional timeline or resource do you need.

o   The majority of the substantive work is done and has been factored in and provided for.

At 19:54 Rachel Brittan, Louise Sayers and Johnathan Wilson left the meeting.