Agenda item

To present the report of Audit Wales.

The report of Audit Wales detailing its audit plan for the 2024/25 audit year was presented for the committee’s consideration.

Rachel Freitag, Audit Wales Financial Audit Manager provided an overview of the proposed audit of the financial statements for 2024/25 including the materiality levels, significant financial audit risks and the planned response. The audit timetable and deliverables were outlined with the aim being to issue the auditors’ opinion and certify the accounts by the end of October 2025, one month earlier than the previous year as part of the ambition to restore the pre-pandemic audit schedule.

Carwyn Rees, Audit Wales Performance Audit Manager outlined the planned performance audit work which focuses on reviewing the Council’s arrangements for securing value for money and compliance with the sustainable development principle under the Well-being of Future Generations (Wales) Act 2015.

The basis of the audit fees covering both financial and performance audit work for 2024/25 was also explained.

The committee raised the following issues on the external audit plan –

·      The audit fee was considered high with suggestions that a more competitive rate could be achieved if the Council were permitted to go out to market. It was recommended that the  Director of Function (Resources)/Section 151 Officer and the Portfolio Member for Finance discuss the fee level with the auditors.

·      The committee questioned whether there is co-ordination between external and internal audit when developing their respective annual plans noting the potential for duplication in relation to IT coverage.

·      Queries were raised regarding the performance audit work around the Council’s compliance with the Well-Being of Future Generations Act. It was noted that the Future Generations Commissioner for Wales has expressed disappointment with the powers available to local authorities in Wales under the Act and has requested a review by Welsh Government. It was therefore suggested that this work may be premature and should be deferred until after the review.

·      Concern was also expressed regarding Welsh Government penalties for failing to meet  recycling targets. It was highlighted that councils having experienced many years of austerity should be able to retain all their resources, particularly if as in the Council’s  case, their recycling rates are near the target. It was suggested that portfolio members consider raising the matter with Welsh Government.

·      The committee noted that none of the assessments with regard to value for money include any measure of productivity.

The auditors responded as follows to the issues raised –

·      That there is an annual opportunity to comment on the audit fee and associated work. Audit Wales benchmarks its fees against counterparts in England where a lack of market capacity has delayed the audit of accounts and has resulted in significant fee increases. The Auditor General has previously commissioned work to private sector firms. Fee levels are overseen by a board  to provide the Auditor General with assurance that value for money is being achieved.

·      Confirmed that external audit has consulted with the Council’s IT department regarding planned work. Some elements of the financial audit such as systems audit have to be undertaken each year under audit standards. A meeting has been held with IT officers to discuss scheduling pressures and to ensure work is planned to suit all parties. Efforts have been made to accommodate the Council’s needs with respect to timetabling and scope of the work.

·      That the summary of the proposed review of the Council’s recycling and waste management notes the factors that may increase the risks of failing to secure value for money. The detailed examination when complete, may result in positive findings regarding the Council’s recycling and waste management services.

·      That the Well-Being of Future Generations (Wales) Act 2015 requires the Auditor General to review public bodies at least once during a specified period to assess their compliance with the sustainable development principle. The auditors will also consider whether the Council is taking a long-term and  preventative approach when assessing its value for money arrangements.

·      That the auditors’ responsibility is to ensure that the Council has arrangements in place to secure value for money, specifically that it is achieving its intended outcomes with the resources allocated and to identify any barriers. While productivity is not currently included in the value for money framework, if the committee considers it an important measure, it may be better addressed through the balanced scorecard.

It was resolved to note external audit’s detailed audit plan for the Isle of Anglesey County Council 2025.