Agenda item

To recommend to Council that the Public Sector Audit Appointments (PSAA) invitation to ‘opt-in’ to the sector led national scheme for the appointment of external auditors for the five financial years commencing 1 April 2023 be accepted.

34.1          The report of the Head of Finance and Asset Management, circulated at Pages No. 38-44, set out the proposals for appointing the external auditors to the Council for the 2023/24 accounts and beyond.  Members were asked to recommend to Council that the Public Sector Audit Appointments (PSAA) invitation to ‘opt-in’ to the sector-led national scheme for the appointment of external auditors for the five financial years commencing 1 April 2023 be accepted.

34.2          The Head of Finance and Asset Management advised that it was five years since Members had considered the appointment of an external auditor and there were three options available to the Council under the current framework: to appoint its own auditor; to act jointly with other authorities to procure an auditor; or to opt-in to the national auditor appointment scheme administered by a body designated by the Secretary of State as the ‘appointing person’ which was currently designated to PSAA.  He explained that the obvious benefits of opting into a national scheme were the efficiencies in terms of the time and cost associated with making the appointment and, following the appointment, the ability to communicate effectively with the auditor in terms of the overall contract.  This option had been strongly recommended when it had last been considered and subsequently approved by Council with Grant Thornton appointed as the auditor for Tewkesbury Borough Council.  As such, it was recommended that the same route be followed in 2022 to ensure a successful appointment was made going forward for a five year period, as set out in the report.

34.3          A Member noted that the audit fee had increased to £20,100 and she asked for a summary of the extra work that was carried out by the external auditors.  The Head of Finance and Asset Management explained that the depth and breadth of audit work which Grant Thornton and other bodies undertook had increased significantly over the last few years, for example, pension funds and valuations of property/estate, which was very different from when the scale fee had been agreed.  The movement in fees over the last 10 years had been quite dramatic – the fee paid to the Audit Commission, as the Council’s previous auditors, was in the region of £140,000 a year which was significantly more than the current scale fee of £35,000.  This clearly impacted on the audit sector hence the recommendation for greater funding in order to deliver the audit work required and give the public assurance on local authority accounts.  The representative from Grant Thornton advised that Tewkesbury Borough Council’s audit had previously taken around three to four weeks but this year had taken eight to nine weeks; the onus on the external auditors had increased which required additional work in terms of added scrutiny and challenge to interrogate the figures.  Having gone down in recent years, it was likely the trend would now be that fees would increase again.  The Head of Finance and Asset Management noted that the Audit and Governance Committee had approved the Statement of Accounts at its last meeting and Tewkesbury Borough Council had been very lucky to have the support of Grant Thornton to get the accounts agreed by September – something only 9% of local authorities had achieved due to the amount and complexity of the work which now had to be done as well as the impact of COVID-19 on working practices etc.

34.4          A Member noted that the Council was one of the 98% of eligible bodies which had opted-in to the national scheme in 2018 and this had meant the fee had stayed as low as possible so she felt it was the right thing to do.  A Member asked what the likelihood was that Grant Thornton would be appointed as Tewkesbury Borough Council’s external auditor going forward and the Head of Finance and Asset Management confirmed that Officers had a good working relationship with Grant Thornton which he would be delighted to continue but, at this stage, it was not known if Grant Thornton would be making a bid for local authority work; if a bid was made by Grant Thornton, there were benefits of continuity but there were also contrary arguments in favour of having a fresh set of eyes etc - ultimately, PSAA would consider what the right appointment was for the authority.  Another Member asked if there was a chance to look at a joint appointment with other local authorities and was informed that joint appointments tended not to happen as only 2% of local authorities chose not to opt-in to the national scheme so there was not much opportunity for collaboration.  The Head of Finance and Asset Management had spoken to the Chief Finance Officers within Gloucestershire and they were all of the opinion that they would opt-in to the PSAA led scheme on the basis of efficiencies and value for money in the long run so there would be no option to work with another authority locally.  The representative from Grant Thornton advised that, in the previous round of appointments, a number of local authorities in the South West had formed a group but the nature of those authorities meant they were intrinsically linked; this was the only group she was aware of and it had not made much of an impact.

34.5          Having considered the information, it was                       

RESOLVED           That it be RECOMMENDED TO COUNCIL that the Public Sector Audit Appointments (PSAA) invitation to opt-in to the sector-led national scheme for the appointment of external auditors for the five financial years commencing 1 April 2023 be accepted.