Agenda item

To present the report of Audit Wales.

The report of Audit Wales incorporating the quarterly update as at 31 December, 2022 on the progress of Audit Wales’ work programme and timetable was presented for the Committee’s consideration. Also included in the report was an update on the status of work by Estyn and Care Inspectorate Wales.

Yvonne Thomas, Audit Wales Financial Audit Manager updated the Committee on the progress of financial audit work confirming the completion of the audit of the Council’s financial statements in January, 2023; the certification of Non-Domestic Rates return in March, 2023 and audit of Teachers Pension contributions for 2021-22 at the beginning of April, 2023. Certification of the Housing Benefit Subsidy Grant return for 2020-21 is still in progress and work on the Housing Benefit Subsidy Grant Return for 2021-22 has commenced.

Alan Hughes, Audit Wales’ Performance Lead confirmed that most of the 2021-22 performance audit work had been completed and that  work under the 2022-23 performance audit programme is at various stages of progress as documented in the report with the programme timetable having slipped slightly. However, he expected to be reporting to the Governance and Audit Committee on the outcome of the reviews as listed over the coming months.

The Committee in noting that Housing Benefits Grant Subsidy certification was still not up to date asked the Director of Function (Resources)/Section 151 Officer to clarify the situation.

The Section 151 Officer referred to the HB grant subsidy claim return certification process and explained that the outcome of the audit of one year’s HB subsidy claims return influences the subsequent year’s work in as much as errors identified by the auditors on the conclusion of one year’s audit then means the Council being asked to carry out additional CAKE testing the following year. This involves extra work and if any further errors are identified leads to additional testing the next year in a repeating pattern that has contributed to the backlog in recent years. Also, co-ordinating external auditor and Finance Service capacity and time to enable the extra work to be done has been a challenge. While the 2019-20 HB subsidy grant claim return has now been certified, it has required further testing at the outset of the  2020-21 HB grant subsidy claim certification process; this work is now substantially complete with the  auditors having also concluded their initial sample testing with some queries arising therefrom needing to be addressed. Although the Council is undertaking further testing on specific elements of errors identified from the initial sample testing it is hoped the claim can be certified by the end of May, 2023. The Council has also been simultaneously working on the 2021/22 HB subsidy claim return and has progressed elements of the CAKE testing the aim being to address the results of the auditors’ sample testing over the summer months. Resources permitting, certification of the claim should be completed by the end of September. The timetable set by the DWP for the completion of the 2022/23 audit is the end of November, 2023 unless an extension to the schedule is again granted to allow for Covid related pressures. Although it is unlikely that the audit of the 2022/23 subsidy claim will be completed by this deadline, the Council will be in a much better position and will complete the audit early in 2024.  Following the departure of the officer responsible for HB subsidy, agency staff have been engaged to undertake the work supported by a secondment. The staffing structure is being reviewed to strengthen the resource allocated to HB subsidy work and implement an ongoing checking regime with a view to reducing the number of errors thereby expediting the process in also reducing the amount of CAKE testing required the following year.

In response to further questions by the Committee regarding the 2022/23 audit and associated considerations, Audit Wales clarified the following –

·                That revisions to ISA 315 requiring auditors to undertake a risk identification and assessment process ahead of putting together the audit plan has had a bearing on the audit cycle and means that the final detailed audit plan will not be presented to the Committee until the summer. A draft outline plan has been drawn up and shared with the Council for agreement after which it will be brought to the Committee.

·                That carrying out the risk assessment work and what that entails in terms of staff resources will be reflected in a higher audit fee for 2022/23. A letter outlining the changes and what they mean for the audit timetable has been issued to the Council.

·                That as regards the risk assessment work adding to the pressures on auditors and the audit process and potentially leading to slippage at a time when efforts are being made to clear the backlog with the HB subsidy claim work, the new requirements have led to a reappraisal of how the work is approached and performed across the audit sector including what skill set is required at different stages of the process and lessons will be learnt from implementing the changes in practice.

·                That completion of the 2022/23 financial audit by the end of November, 2023 remains the objective.

It was resolved to note the Audit Wales Programme and Timetable update.