To receive a report from the External Audit Manager, Mazars LLP.

Mark Surridge, External Audit Manager from Mazars LLP provided Members with an update on the External Audit Progress Report as at 27 March 2024.

The report provided updates on the status of the 2021/22 and 2022/23 Audits, pages 35 to 42 of the Agenda refer.

The External Audit Manager informed Members that there had been no significant changes since the previous update and that the compilation of the group accounts remained outstanding.  It was further advised that two areas had prevented closure of the audit which was related to non-compliance with the Companies Act requirements on maintaining accounting records and on the asset valuation methods that had been used for Kingfisher Caravan Park. 

Members were invited to put their comments and questions forward.

·         A Member queried whether Andy Fisher, Assistant Director – Fund Assets was able to provide an update.  In response, the Assistant Director – Fund Assets advised Members that the Council was working with PSPS colleagues to ensure that further information had been provided on the breakdown of assets to assist with the valuation. 

It was further advised that the Council was required to maintain one format of accounts as a Public Authority and that a separate set needed to be maintained for Invest East Lindsey as a Company, and that challenges existed where the conversion of the different accounting practices was required for the Council to align with the International Financial Reporting Standards (IFRS).

·         A Member queried the reason it had proven difficult for the Council to source valuers to undertake asset valuations of caravans.  In response, the Assistant Director – Fund Assets advised Members that the evaluation had been undertaken through the Royal Institution of Chartered Surveyors (RICS) formal evaluation standards known as ‘The Red Book’ which was generally applicable to brick-built assets.  It was further advised that the Council had experienced challenges in sourcing a RICS valuer that was able to undertake the valuation in the required format.

·         The Chairman queried whether the contract was being put out to tender or further attempts were being made to hire a valuer.  In response, Nicole Hayes - Senior Finance Business Partner (PSPS) advised Members that the Council was working closely with Mazars and with Invest East Lindsey to determine the best approach to reach a solution and sign off the 2021/22 accounts.

·         A Member queried whether other Councils were in a similar position and whether benchmarking had been undertaken.  In response, Sam Knowles - Chief Finance Officer (PSPS) advised Members that communication with other Local Authorities with caravan parks and a similar asset base had occurred and that it had not yet been possible to obtain comparatives due to differences in how the assets were held in the accounting records.  The Chief Finance Officer (PSPS) confirmed that further comparatives were being sought.

·         A Member queried if a timeline was available for the closure of the 2021/22 Accounts.  In response, the External Audit Manager, Mazars LLP confirmed the backstop date was for September 2024 and it was advised that a timeline was dependent on the timely provision of information from Invest East Lindsey.  The External Audit Manager, Mazars LLP estimated that conclusion of the 2021/22 accounts was to occur no later than July 2024 and advised that it was highly unlikely the 2022/23 audit would occur as no accounts would be available.

No further comments or questions were received.

The Chairman thanked the External Audit Manager, Mazars LLP for providing an update.

Following which it was,

RESOLVED:

That the External Audit Progress Report be noted.