Berwick News

Audit Response 30/11/2023

30 November 2023

Whenever concerns are raised about the standards of our work at the Town Council, we take them seriously. It’s absolutely right that we are scrutinized, audited and challenged. It’s our job to respond to those challenges. Sometimes those challenges aren’t always easy to follow, sometimes the facts get lost. Want an example? A local  publication recently reported that we handle £1m a year. We don’t – they got to that figure by double counting income received and cash in hand – but that’s a good example of how confusing our finances can be, and why we have to be open and honest. That way we can resolve the uncertainty that led the same publication to say ‘there is no firm basis for Mazars [our external auditors] to challenge the probity of the Councils nine assertions in its [Annual return]. The best way we can respond to the challenges of understanding our finances is is to tell you what we do and what we’ve done.

We got our Internal Audit report for 2022-23 in June 2023. We published it, and reported it to council. We went further. As soon as we were aware there were issues (with the Asset Register) we told council’s Budget and Administration committee about them, even before we had the report, and explained what we’d done to deal with them. What went wrong with the Assets Register? Council moved offices during the year, and some items of redundant furniture were disposed of. How they were disposed of, and how it was recorded, was not done well, but the Internal Auditor reported (at page 3 of the report) that “The difference of £2,457.20 is not material to the total value of the assets. This should be reviewed and updated in the year to 31 March 2024.” That review is currently underway. Overall, the Internal Auditor concluded that they had “satisfied [them]selves with the standard of the accounting records and internal controls throughout the accounting period to 31 March 2023…” That’s why they signed off the Internal Audit part of our Annual Return.

The issue with the External Auditors was more significant. Each year we have to fill in an Annual Return. We’re expected to make adjustments to the figures for Income and Expenditure if, as sometimes happens, we pay in advance for goods that won’t be delivered until the next financial year, or we receive income that we’re not actually owed until the next year (like an allotment tenant paying two years rent in advance, for instance).

The Annual Return doesn’t allow for these sorts of adjustments, so we have to do some accountancy work in the background. Para 3(j) of the Internal Audit report refers to this (on page 11). In the past this has been sufficient to satisfy our External Auditors. This year, they didn’t accept this, and there were prolonged discussions between us and them about how this should have been reported. Mazars (the External Auditors) didn’t accept the Internal Audit report (produced by Ryecroft Glenton of Newcastle) as evidence) and we ended up out of time with regard to submitting that evidence. We asked if that decision could be reviewed, were told no, and so missed the deadline for publishing Mazars’s report. We’re sorry that happened, and the Town Clerk, as Responsible Financial Officer, takes full responsibility for it. It doesn’t mean that the conclusions of the Internal Audit reports are wrong; it means we have to work harder to provide documents in the format the Auditors ask of us.

Part of the process of being better at this is to bring in new Internal Auditors who will give us two reports a year, and who specialise in Parish Councils. Their Interim conclusion for 2023-24 is Having reviewed the Council, I believe they are at a high standard whilst there is always room for continuous improvement even in a high standard Town Council.’ Those are the standards we will continue to work towards.