The report of the Engagement Lead is to follow.

Contact: Grant Patterson (0121) 232 5296

The Committee received the report of the External Auditor - copy attached to the signed minutes – which provided an overview of the planned scope and timing of the statutory audit of Shropshire Council for those charged with governance.

The External Auditor drew attention to the key points set out in the report.  She explained that External Audit were responsible for expressing an opinion on the Council’s financial statements and as the Audit Plan was a constantly moving document, she confirmed that the risk assessment around payroll would be revisited and would be reported back as it had not been flagged as a risk. 

The External Auditor explained that they had to consider whether the Council had proper arrangements in place to secure economy, efficiency and effectiveness in its use of resources and whether there were any significant weaknesses. Planning in this area was ongoing and further details would be provided to the Committee as part of their progress update.

The External Auditor drew attention to the significant risks identified (as set out on pages 6-8 of the report) for which External Audit would undertake a significant level of work, and which included the risk that revenue and expenditure may be misstated, management over-ride of Controls, valuation of land and buildings and annual Pension Fund valuation.

They also had to build in work around accounting estimates and related disclosures (set out on pages 10 to 11) including how the Council deals with its accounting estimates and identifies its significant accounting estimates in particular.

The External Auditor discussed materiality and logistics (set out on pages 14 and 15 of the report) and she confirmed that any changes would be reported back to the Committee.  She then drew attention to the Audit fees set out on page 16 of the report and highlighted other pieces of work that they complete for the Council eg certification claims in relation to housing capital receipts, teachers pensions and housing benefit claims.

In response to a query, it was confirmed that with the exception of infrastructure, they were not aware at present of any outstanding information.  In response to a query about the number of objections relevant to the Council, it was confirmed that there were two, one in relation to highways and one in relation to planning.  The External Auditor confirmed that these had been progressed and it was hoped to bring them to a conclusion shortly.  It was confirmed that this would cause additional fees.

In response to a query, the Executive Director of Resources (Section 151 Officer) explained that the increase in the number of children in care was a key financial risk and had been reported through the quarterly monitoring reports for last year and this year and was discussed the previous day at Performance Management Scrutiny Committee in relation to the Performance report and the Financial Monitoring Report.  He confirmed that this was an area where they were seeing growth, partly due to lockdown when normal procedures weren’t able to operate so there was an element of catch up.  For assurance, the cost of those associated changes in performance were flagged, so as more children go into care, and more children were identified as complex, as the complexity of cases increases, so too does the level of cost increase, which was being tracked.  They were currently working on a three-year trajectory of what that might look like so they had greater visibility on the impact of that going forward because clearly it was unsustainable growth at the moment and they needed to find ways of understanding that before they could start to tackle it on a financial basis.  The overspend for the Council for 2022/23 was around £9.4m and a significant percentage of that overspend was due to Children’s Social Care so they were aware of it and were attempting to manage it and by the end of the year they would be hoping to bring that overspend down without impacting on the necessary controls that need to be in place within Children’s Social Care to ensure that children are protected appropriately and dealt with as they should be.

RESOLVED:

That the contents of the report be noted.