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

Jon Machej, External Auditor, Mazars LLP was in attendance virtually to present Members with the External Audit Completion Report 2021/22 for the year ended 31 March 2022, pages 27 to 74 of the Agenda refer.

Members were referred to Section 4 of the report which set out conclusions and significant findings on the audit risks and areas of management judgement in the Audit Strategy Memorandum which included:

• Management override of controls;

• Valuation of the net defined benefit liability; and

• Valuation of land and buildings and investment properties.

Members were further referred to Section 5 which set out internal control recommendations, including the need to improve the financial reporting arrangements currently in place, Section 6 which set out audit misstatements and Section 7 which outlined work on the Council’s arrangements to achieve economy, efficiency and effectiveness in its use of resources.

Mazars LPP concluded that there were no significant matters outstanding for their status and audit opinion at the time of preparing the report.

Members were invited to put their comments and questions forward.

·         In reference to ‘Adjusted misstatements’, the Chairman queried whether the implications could be explained in more detail, pages 52 to 55 of the Agenda refer.  In response, the External Audit Manager, Mazars LLP explained to Members that misstatements arose from the incorrect accounting for PSPS as a joint venture where the Council had moved into a different category following the merger into the Partnership.  Members were further advised that the merger had resulted in a number of alterations to the accounting entries in the financial statements and that issues had been identified with the loans balances and their treatment for Invest East Lindsey in addition to other general adjustments explained in the report.

·         A Member commented on the findings on the risks for the valuation of land and buildings and queried whether Members could obtain details of the assumptions made.  In response, the Section 151 Officer advised Members that clarification would be sought on the methodology and reference points used in the valuers’ evaluations. The External Audit Manager, Mazars LLP further advised Members that a formal evaluation report would be produced at the end of the year which would provide additional clarification.

·         A Member queried whether the External Auditors had a view as to whether Invest East Lindsey was a liability.  In response, the External Audit Manager, Mazars LLP advised Members that it was not the External Auditor’s role to share a view and that they were only able to report on any weaknesses in arrangements.  The Section 151 Officer further advised Members that it was the responsibility of Invest East Lindsey’s auditors to determine any liabilities when making their annual going concern assessment.

·         A Member sought clarification on the Section 151 Officer’s opinion of the External Audit Completion Report 2021/22.  In response, the Section 151 Officer commented that the PSPS team had experienced numerous changes over the years and that a precession of financial statements was now coming forward following additional work being undertaken.  Members were further advised that the 2022/23 statements were expected to be published on the ELDC website by the end of the week and that the 2023/24 audit was expected to be on track to commence.  The External Audit Manager, Mazars LLP further advised Members that they were pleased to see the completion of 2021/22 financial statements.

There were no further comments or questions received.

Following which it was,

RESOLVED:

That the External Audit Completion Report 2021/22 be noted.