Governance and Audit Committee - Wednesday 4 December 2024, 2:00pm - West Yorkshire Combined Authority Webcasting

Governance and Audit Committee
Wednesday, 4th December 2024 at 2:00pm 

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  1. Debbie Simpson, Chair (Independent Member)
  2. Sarah Naylor, Committee Services (West Yorkshire Combined Authority)
  3. Debbie Simpson, Chair (Independent Member)
Share this agenda point
Share this agenda point
  1. Debbie Simpson, Chair (Independent Member)
  2. Angela Taylor, Director (West Yorkshire Combined Authority)
  3. Debbie Simpson, Chair (Independent Member)
  4. Alistair Newall (Auditor) Mazars
  5. Debbie Simpson, Chair (Independent Member)
  6. Rob Winter (Independent Member)
  7. Alistair Newall (Auditor) Mazars
  8. Cllr Jane Scullion (Calderdale Council)
  9. Debbie Simpson, Chair (Independent Member)
  10. Bronwyn Baker, Officer (West Yorkshire Combined Authority)
  11. Debbie Simpson, Chair (Independent Member)
  12. Rob Winter (Independent Member)
  13. Bronwyn Baker, Officer (West Yorkshire Combined Authority)
  14. Debbie Simpson, Chair (Independent Member)
  15. Webcast Finished

Debbie Simpson, Chair (Independent Member) - 0:00:03
I'd like just firstly to welcome our two new members Rob winter and Dave merit. So welcome to your first committee's official members
This this is an additional meeting and it's being held to enable members to consider and sign off minutes of previous meetings
but also to receive the audit opinion and sign off the annual accounts to 22 23 and
The meeting therefore doesn't include our usual standard gender items
Okay, so a gender right someone is apologies for absence. Have you got any?
Thank you chair apologies from absence for absence from councillor
Sarah Naylor, Committee Services (West Yorkshire Combined Authority) - 0:00:38
carol patterson
Kirkley's council councillor and land leads council councilor Denise Jeffrey Wakefield council, but councillor Matthew Marl is ten minutes her substitute
Thank you any declarations of interest
Debbie Simpson, Chair (Independent Member) - 0:00:59
No. And there are no matters which require the exclusion of the press or public.
Okay, so we'll move on to Agenda Items 4 to 6, which relate to minutes and notes from previous meetings.

4 Minutes of the Meeting of the Governance and Audit Committee held on 7 March 2024

Agenda Item 4 is to review and approve the minutes of the last meeting, which is held on the 7th of March.
Any changes or comments from anybody on those, or are we happy to approve?

5 Notes of the Informal Meeting held on 1 August 2024

Yes, we can note those as approved, please. And then agenda item five and six are to receive notes of the informal meetings, one held on Thursday, the first of August and one held on Monday, the twenty eighth of October.
So if we can note that those have been received. Thank you.

7 Approval of Annual Accounts 2022/23

So if you move on to the substance of the gender right which is a gender item 7 and this is to receive the order to support report and to approve the annual accounts of 22 23 and just to note the draft accounts have already been considered by the committee and have been published.
But today members should note that in accordance with government guidance around managing the backlog of public sector accounts
And the accounts that we're going to look at and considerations today won't be audited
but the
you're going to that more for us when you are there and explain what that means in practice and
So could I pass over to?
Who's presented this Angela's going to Angela and Alistair? Yeah. Thank you. Thank you
So yes, so the paper here sets out the current position with the, we're looking
Debbie Simpson, Chair (Independent Member) - 0:02:40
Angela Taylor, Director (West Yorkshire Combined Authority) - 0:02:42
at the 2022 -23 annual accounts and attached to the paper you have got the
two letters for those charged with governance which you saw last time. We
said we're making some minor amendments, they have been done so this is a final
final version in front of you today. We also have the audit completion report,
part of that audit completion report includes the letter representation that
required to provide so there is a copy of that we put onto our letterhead
attached. You also had circulated separately and the actual wording of the
audit opinion which Alastair will talk to as part of the audit
completion report so you hopefully have the packet papers and that document with
you and this is quite a unique position I don't think I've never been in a
position of bringing forward a set of accounts to be signed off for its
Concluded that haven't been audited. I'm probably one of many many many many section 151 and section 73 officers who are in the same position
And you may have already been through this at local authorities. And I think this is the history of this has been well
discussed through this committee and
I don't think what you've got today will be any surprise for those members who've been here longer than and just today
We've considered this at most meetings and I think we've seen this day coming for some
time.
So in effect you are being asked to approve the 2022 -23 accounts without an audit opinion
or with a different audit opinion than the one usually seen.
But I'll let Alastair explain that part in a moment.
I think just to say in terms of reassurance and that's why I said I would come back before
this meeting and lead this item.
I signed off the accounts for audit and so there is an element of
You have my assurances that the accounts were prepared in accordance with the relevant
legislation requirements we acknowledge that they were published after the
Official date again, we've had those discussions through this committee where
We had said we were hoping to find like keeping the accounts open to do final changes up to the point of audit
and then it became obvious that wasn't going to happen,
so we did finalize and publish them.
Clearly, we talked, I think, the last meeting, the one
before, that we are back in the regime now
of irrespective of audit.
I think it caught us all unawares
that there was going to be this mistiming of audited accounts
and audit work happening.
But going forward, we have a robust plan,
and we will stick to the timescales that have been set so that the accounts will be done
and we hope we will get back into a normal rhythm and I'm sure others will think wishes
the same as well.
This isn't easy for either us or the auditors to be fair.
So I can give you some comfort that I believe the accounts were properly prepared and you
don't have the benefit of the audit opinion having been the auditors having
to undertake work on it due to the the backlog and the time scales so and I
think probably that point probably worth Alice if you want to talk through what
eat what you have what you have done because we have there has been some work
done and where we get to is probably when you do that
the ends for the benefits especially as a new members such on the significant
Debbie Simpson, Chair (Independent Member) - 0:06:12
risks and also the audit delays that are detailed in the report. That would be useful. Thank
you.
I will Debbie, yes, thank you and thanks Angela for that introduction. Yes, interesting observation
Angela as probably one of your final acts is signing off a set of accounts to have a
disclaimer opinion and for new members to the committee, your first meeting of the committee
is receiving a report where there's a disclaimer.
For my position, 32 years doing this job
and I signed my first disclaimer opinion last week.
I'm probably going to be signing another eight
in the next week or so.
So that's the first observation is that this unfortunately
is far from an uncommon situation now in local government.
by way of background, so I'll talk to appendix two, which is my audit
Alistair Newall (Auditor) Mazars - 0:07:09
completion report in the
agenda paper, but for the benefit of all members, but especially new members, a little bit of
back history as to how we've ended up, where we've ended up in the sector.
Excuse me. There are many hundreds of sets of local authority accounts which are run audited.
The history as to how that has occurred is long and complicated with lots of factors in play,
including technical accounting issues that have taken a long while to resolve nationally,
which delayed historical audits, shortages of staff on both council local authority and audit sides,
which has meant audits have taken longer to complete,
and small matter of a worldwide pandemic,
which rather scuppered the normal system of operation
that Angela referred to,
where auditors would come into an audited body,
start work and finish pretty swiftly
and leave the organization to their day jobs.
All those things built up an enormous backlog.
There have been extensive discussions
over the past year to 18 months,
is to try and get a practicable,
as practicable as possible solution to this problem.
And the government's solution,
which it issued in the summer,
was to apply a series of what are now known
as backstop dates, where local authorities
are required to publish their audited accounts
by a certain date.
Regardless of whether the audit is complete or not if the order is complete that audit opinion will be an unqualified
audit opinion if the audit hasn't been completed then the audit opinion will be modified either by a
specific qualification or a disclaimer
opinion
The first of those backstop dates is next Friday the Friday the 13th
I don't know quite why the person doing this must have had a little warped sense of humor in picking Friday the 13th
That's the first of those dates
Not with any further issues to be caused
The first of those dates is the 13th of December and that's for all years up to and including 22 23
So that is why we're discussing your 22 23 accounts to enable you to publish your audited accounts
albeit with a disclaimer opinion, by that deadline date
and meet that statutory responsibility that now exists.
There are then subsequently backstop dates
for each subsequent year.
The next one of those for the 23 -24 year
is the 28th of February next year,
which if we take out a couple of unproductive weeks
over Christmas, which means pretty much two months from now
is the next backstop date.
So there is no likelihood of the 23 -24 combined authority
accounts having an unqualified opinion.
The 23 -4 necessarily will have a disclaimer.
Pretty much that's the position across the whole sector,
is the way that the dates have fallen,
the government dates have fallen.
If you have a disclaimer on 22 -23,
you will be having a disclaimer on 23 -24.
It's a really regrettable situation.
I didn't get into this job to give disclaimer opinions.
My employer, we believe passionately in the value of public audit
and we're really keen to rebuild that assurance position
and as quickly as possible get to a position where we can give unqualified opinions
on the combined authority accounts.
I'll touch on that at the end.
In terms of the, so I hope that's a useful bit of a history lesson for members.
In terms of the document and the audit we've set out in our audit, our...
It's a formal requirement to report the completion of an audit,
even where there has been very little audit work undertaken,
and what you see in this appendix is our report from our audit work,
setting out the reasons for the disclaimer and the various risks that we had identified.
Couple of things it's important to point out and the combined authority is a is a group as a group because it come it come at solid dates the chief constable for West Yorkshire police's accounts into the.
combined Authority group accounts you can see on my report page 8 on the group
audit approach that we confirm that and that we completed the audit of the chief
constables accounts and for 22 23 and gave an unqualified opinion on those
accounts and the date on that is actually the wrong date that's thinking
we were talking about 23 24 when we signed the chief constables accounts in
October and the date of signing the chief constables accounts for the previous year was around a year earlier than that
And but that audit was unqualified
in terms of the
Significant risk areas that we would
Identify we and there are three of them that we if we have done work we would have done work over and they are all
very
Either they are either required by auditing standards to be focused at a significant risk level or they are of such magnitude and of such complexity that auditors across the sector will be identifying those as significant risk areas.
So those are the valuation of pension assets and liabilities and the valuation of operational land and buildings and investment properties.
To confirm, we haven't undertaken any audit work on those areas.
We have conducted the planning procedures we needed to undertake and some basic checks on the accounts, such as are required by auditing standards.
We report on report page 12 one amendment which the authority picked up in terms of classifying 15 million pounds of investments,
moving that between cash and short -term investments. That was purely a classification adjustment that was made in the accounts that you now have as the final, to be final set.
We haven't identified any control weaknesses from any of our procedures that we did take place, we did carry out.
And in terms of the final thing to say on the appendix, excuse me, is our work on the authorities value for money arrangements.
We did complete that. We reported that earlier in the year and that commentary and those conclusions will be incorporated in the final report that I issue when I've signed the audit opinion.
And that's called the auditor's annual report, which summarises all the work for the year.
and I have that ready to send out to Gary and Angela as soon as I've signed the opinion.
And that commentary you have already seen it came to I think it may have been the March meeting,
but it may have been earlier. My memory fades over the course of the last few weeks,
never mind the last few months. So I mentioned the rebuilding assurance. I think a couple of
things to add to that for members. One, I think Angela made some really perceptive comments
for you as a committee for how you get assurance on a statement of accounts which is going
to have a disclaimed audit opinion on it because I am giving you no assurance on those accounts
as a result. However, Angela is signing her statement of responsibilities. That gives
you assurance of the processes and the assurance that Angela has in order to be
satisfied those accounts are true and fair. There is also the annual governance
statement processes that the authority has in place to satisfy itself that it
has a system of corporate governance that is operating effectively and
integral to that are Bronwyn's head of internal audit opinion and the
program of work that internal audit carry out in order to provide assurance
to the authority that there are no significant weaknesses in any of those controls.
Those are really important matters for the committee to be reassured on in the absence
of me giving you external audit reassurance.
And the final thing in terms of rebuilding our assurance and the assurance that we provide
on the authorities' accounts.
That is something that the national stakeholders
in these discussions are still finalizing the fine details
on what that looks like.
The National Audit Office have issued some wonderfully named
documents called LARIGs,
which I can't recall what the acronym stands for,
but it is about the process for issuing disclaimer opinions
and then rebuilding assurance.
So there is a general framework in place for that,
but the specific detail as to what that entails,
how I go about rebuilding assurance,
where I've got a set of accounts
that I've provided no assurance over,
that detail is still being subject to discussions
and agreement across the audit firms,
the National Audit Office, Ministry, the Financial Reporting Council, all those stakeholders
and SIPFOL, those stakeholders in the sector.
Once that is known and once I've got a clear view on what it entails to rebuilding assurance,
then I'll be having conversations with the Finance Team, Angela's replacement, there's a Section 73 Officer,
to establish what it entails and how quickly we will be able to rebuild assurance.
My focus is on doing that as quickly as possible, but it is probably unrealistic to think that it's going to take one year to do that.
So I will come back to committee once we've got that detail and be able to give you a clearer view and a timetable on when we can rebuild that,
because that is from your perspective that is critical that you have sight of that and you have the opportunity to
Scrutinize that and
Question ask questions and understand that process
So that's helpful. I'll pause chair at that point, but happy to take anyone's questions
Thank you for that I think that's the really concise so I think we're facing three things aren't we first question is are we content
with what things look like now that the committee's having to sign
Debbie Simpson, Chair (Independent Member) - 0:18:47
things off.
And then I think there's a separate issue for the committee to consider, which is whether
we feel we've got sufficient information, given that we're going to have limited opinion
as well moving forward in the interim period.
But I think that's probably for the next meeting to consider that.
And then, as you say, there's that rebuilding of assurance.
I think there's three elements to this, isn't there, that the committee needs to be comfortable
with moving forward. So any members got any queries now on the, yes Rob. Thanks
Rob Winter (Independent Member) - 0:19:25
chair. Just picking up on the last point I think Alistair made really about
rebuilding assurance and whilst this is almost the perfect storm and you
couldn't really ride this, from a Mazars point of view what's changed or what is
going to change in your capacity that will help with you helping you help
us rebuild that assurance because obviously there's a huge issue within the capacity of
all the firms. So from a combined authority perspective what assurances can we receive
about Mazars approach to that? A really good question, thank you Rob. In terms of Mazars,
so to reassure you on the kind of large picture of Fauvis Mazars, I need to keep saying Fauvis
Alistair Newall (Auditor) Mazars - 0:20:11
missiles rather than just missiles because otherwise someone's going to tell me off internally.
We have a significant public sector team across the country, well over 150 auditors who just
audit NHS and local government in our public sector teams. We are focused entirely on that
public sector market and that's really crucial to us so I don't do anything other than local
authorities and the NHS.
Those of you who are aware of the timeframes for that, the NHS audit window is a very prescribed
time constrained period and the rest of the year is devoted to local authority accounts,
much more than half the year to local authority accounts.
and within our leads based team we have
30 I've lost the number now. It's between 30 and 40 auditors
Through to myself and the partners who work in the leads audit our resourcing
If I'm honest our resourcing has never been the major issue
We have the capacity to deliver our portfolio of work and
and predominantly because we are only focused on local authorities and the NHS.
So the issue for us has been the fact that those initial audits around 2019, 20, 2021,
when the local authority technical issues struck significantly, COVID delayed things,
that caused a lengthening to those years' audits,
which meant that the cycle of audits
were then out of tune with the normal reporting.
That then caused an extra strand
because new issues came to light,
which impacted on the combined authority
when we were about to sign off,
but another issue nationally came to light,
so we had to pause until that was resolved,
and that took another three to four months
to resolve nationally.
So the issue for us was never capacity, it was timing and the backlog that we became the hostages too, if you like.
So I'm really confident that once we get through the next few months and we are all working on 24, 25,
subject to how much rebuilding work needs to go on for the retrospective years,
I'm really confident that we will get into that cycle that we were in pre -covid of being able to start and finish
Audits in in the appropriate time frame. Does that help?
Thank you, thank you for that summary and
Cllr Jane Scullion (Calderdale Council) - 0:23:03
Sad person I thought that I am I enjoyed reading it. I enjoyed reading Angela's heartfelt declarations
I think the chair
posed the question, are we content as a committee,
and I have the advantage of having had
the cumulative experience of sitting in this committee,
and I was applying those questions, really,
as we went through in terms of,
have we as a committee been satisfied
around some of the issues of governance?
Have we been satisfied that we've had a dive
into value for money, reporting systems,
whistleblowing, all those things that we've looked at
over the period of the year.
So my answer is really that I do feel content,
I think we should be content as a committee
that we have had sufficient information.
And there is a tendency, even though you
know there are hundreds of other councils in this position,
you see the disclaimer and you think, that's terrible.
Actually, I do feel that underlying foundation
sense of contentment that, yes, we have done those things.
Thank you, Chair.
Thank you. I tend to agree, and Bronwyn, even your audit program has been adapted as this
Debbie Simpson, Chair (Independent Member) - 0:24:17
situation has been coming to life, hasn't it? So I think we've adapted to address some
of those risks and make sure we are cited as far as we can be on it.
That is correct. We are building in more financial controls work now,
Bronwyn Baker, Officer (West Yorkshire Combined Authority) - 0:24:28
and there will be significant
amount of work next year as well, just to make sure that we can continue to give those
assurances. And there's nothing we're worried about at this point, so we'll keep making
that we at least do what we can do to give the committee the assurance it needs.
Debbie Simpson, Chair (Independent Member) - 0:24:46
That's lovely and as I said before if we could do a bit more of a deep dive on this at the
next meeting I think that would be really useful. Any other queries, Ron?
Thanks Chair. Just picking up on that internal audit matter and you've
Rob Winter (Independent Member) - 0:24:57
answered my question
significantly Bronwyn about using internal audit a bit differently in the absence of
and I know that the two aren't the same and can't rely on each other. But if that's the
case and that's going to be the case sort of moving forward a little bit, what's being
compromised now with the internal audit plan because you're doing more on work that you
wouldn't necessarily be doing because of the normal arrangements?
That's a really good question and one of the things we're trying to
Bronwyn Baker, Officer (West Yorkshire Combined Authority) - 0:25:30
build at PACE at the
So historically, we've always had data analytics
at our disposal.
We've not used it as consistently
as we would have liked to do.
A lot of that was tied up in the historic systems
that we had here moving to a new system.
So we had loads of issues around how do you interrogate
the data that has been through quite a significant process
of cleanse and change, et cetera.
So we're in a much better position now
to use the data analytics quite effectively.
We're doing that in the first instance around that reporting at the moment because we are anticipating an HMRC audit on that
So we're with prioritizing that and we will keep prioritizing everything that needs prioritizing
But inevitably it is going to mean that some of the strategic reviews that we would have planned to do. We will have to defer
However, we are trying to make sure that what we do do is a balance across the CA
So that we don't end up with some big pockets of areas that we cannot give that broader assurance opinion around
We're also looking to bring in some co -source support to do some additional auditing
So my team are at the moment trying to look at making some direct awards
It's not as easy as it sounds because everyone's in the same boat and we're all fighting over the same resource pool
But we are working very hard to try and get some some additional capacity and particularly around our transport scheme. So
Bus franchising and mass transit. We really want to to make sure we cover sufficiently those areas of responsibility. So
Yeah, there's a lot there's a lot of plates spinning catching balls juggling
But we will we will absolutely try and make sure that we use every avenue. That's a that's available to us including
Recruitment so we are looking to bring more resource in and we have two auditors starting in January
So we will keep you posted
Any other queries? No? So can I ask members to confirm please if they
Debbie Simpson, Chair (Independent Member) - 0:27:35
approve the account?
Lovely, thank you very much. Okay, so I think that brings us to the end of the meeting.
Thank you very much everybody.
you