Agenda item
APPOINTMENT OF EXTERNAL AUDITORS
(Report by the Deputy Chief Executive Corporate Development and s151 Officer)
Minutes:
Councillor Jonathan Noble introduced a report by the Deputy Chief Executive (Corporate Development) and Section 151 Officer, setting out arrangements for the appointment of external auditors.
The report stated that at its meeting on 21 November 2016 the Council had opted into the ‘appointing person’ national auditor appointment arrangements established by Public Sector Audit Appointment Limited (PSAA) for the period covering the accounts for 2018/19 to 2022/23.
Under the Local Government Audit and Accountability Act 2014, the Council was required to appoint an auditor to audit its accounts for each financial year. Three options were available to the Council:-
- To appoint its own auditor, which required it to follow the procedure set out in the Act;
- To act jointly with other authorities to procure an auditor following the procedures in the Act;
- To opt into the national auditor appointment scheme administered by a body designated by the Secretary of State as the ‘appointing person’. The body currently designated for the role was PSAA.
PSAA was undertaking a procurement for the next appointing period, covering audits for 2023/24 to 2027/28. All local government bodies needed to make important decisions about their external audit arrangements from 2023/24 and the report concluded that the sector wide procurement conducted by PSAA would produce better outcomes and would be less burdensome for the Council than a procurement undertaken locally as:-
· collective procurement reduced costs for the sector and for individual authorities compared to a multiplicity of smaller local procurements;
· if it did not use the national appointment arrangements, the Council would need to establish its own auditor panel with an independent chair and independent members to oversee a local auditor procurement and ongoing management of an audit contract;
· it was the best opportunity to secure the appointment of a qualified, registered auditor - there were only nine accredited local audit firms, and a local procurement would be drawing from the same limited supply of auditor resources as PSAA’s national procurement; and
· supporting the sector-led body offered the best way of to ensuring there was a continuing and sustainable public audit market into the medium and long term.
The national opt-in scheme, as recommended, provided the following benefits:
· the appointment of a suitably qualified audit firm to conduct audits for each of the five financial years commencing 1 April 2023;
· appointing the same auditor to other opted-in bodies that were involved in formal collaboration or joint working initiatives to the extent this was possible with other constraints;
· managing the procurement process to ensure both quality and price criteria were satisfied. PSAA had sought views from the sector to help inform its detailed procurement strategy;
· ensuring suitable independence of the auditors from the bodies they audited and managing any potential conflicts as they arose during the appointment period;
· minimising the scheme management costs and returning any surpluses to scheme members;
· consulting with authorities on auditor appointments, giving the Council the opportunity to influence which auditor was appointed;
· consulting with authorities on the scale of audit fees and ensuring they reflected scale, complexity, and audit risk; and
· ongoing contract and performance management of the contracts once these had been let.
The auditor appointed at the end of the procurement process would undertake the statutory audit of accounts and the Best Value assessment of the council in each financial year, in accordance with all relevant codes of practice and guidance. The appointed auditor would also be responsible for investigating questions raised by electors and had powers and responsibilities in relation to Public Interest Reports and statutory recommendations.
The auditor must act independently of the council and the main purpose of the procurement legislation was to ensure that the appointed auditor was sufficiently qualified and independent.
It was noted that since the audit contracts were last awarded in 2017, there had been many changes resulting in an urgent drive for the Financial Reporting Council (FRC) to deliver rapid, measurable improvements in audit quality. In addition the situation had been accentuated by growing auditor recruitment and retention challenges, the complexity of local government financial statements and increasing levels of technical challenges as bodies explored innovative ways of developing new or enhanced income streams to help fund services.
PSAA was now inviting the Council to opt in for the second appointing period for 2023/24 to 2027/28 along with all other eligible authorities. Based on the level of opt-ins it would enter into contracts with appropriately qualified audit firms and appoint a suitable firm as the Council’s auditors. Details of the invitation from PSAA were provided in Appendix A of the report.
It was moved by Councillor Jonathan Noble, seconded by Councillor Peter Watson and
RESOLVED
1. That the Public Sector Audit Appointments’ invitation to opt into the sector-led option for the appointment of external auditors to principal local government and police bodies for five financial years from 1 April 2023 be accepted. 2. That delegated authority be given to the Section 151 officer (or deputy in their absence) to communicate the willingness of the council to join the scheme, led by PSAA and to enter into the scheme after a satisfactory examination / negotiation of the proposed terms and conditions is concluded.
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(The meeting ended at 7.55 p.m.)
Supporting documents:
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External Auditor Report BBC Council 07.03.22, item 49.
PDF 287 KB
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Boston Borough Council - Appendix A, item 49.
PDF 96 KB