Item 7 - External Audit Progress Report
West Dunbartonshire Council · 11 June 2025
Back to Audit Committee — 11 June 2025 and its agenda
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Audit Progress Report West Dunbartonshire Council May 2025 Item 7
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Contents 1. Audit progress and update to our audit strategy and plan 2. Forvis Mazars and other relevant publications
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01Audit progress and update to our audit strategy and plan
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Audit progress and update to audit strategy and plan Purpose of this report This report provides the Audit Committee with information about progress in delivering our responsibilities as external auditors for West Dunbartonshire Council. 2023/24 audit status We are progressing our audit of the Council’s annual accounts for the year ended 31 March 2024. See page five for details of the matters outstanding at the time of reporting. We also include our audit timetable on page seven. We have met regularly with officers to discuss audit progress and will continue to do so. Changes to our audit approach We provided details of our intended audit approach in the Annual Audit Plan presented to you on 4 September 2024.The significant risks we identified remain as: ▪ Management override of controls ▪ Valuation of property, plant and equipment ▪ Valuation of the net defined benefit liability. We have reviewed and updated our risk assessment following the conclusion of the 2022/23 audit. This has resulted in us identifying an enhanced risk relating to the Council’s liabilities from service concession arrangements. See page six for a detailed description of the risk and our planned response. Materiality Our provisional materiality at the planning stage of the audit was set at £11.309m for the Council (Group: £11.523m) using a benchmark of 2% of gross revenue expenditure at surplus/deficit level, with performance materiality set at £7.916m for the Council (Group: £8.066m). We received updated financial statements on 28th March and reassessed the risk factors considered in setting materiality. This resulted in a revised performance materiality of £6.809m (Group: £6.936m). Our final materiality will be set when we receive the updated annual report and accounts with all corrected audit adjustments. 2024/25 Best Value thematic work - Transformation We have started our review of how the Council is redesigning services to maintain outcomes and deliver services more efficiently. We held an initial meeting with People and Change and Business Support officers in April and are scheduling further discussions with officers on community and third sector engagement in transformation projects.
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5 Status of our audit Our audit of the 2023/24 annual accounts is progressing. The main areas where work is outstanding are outlined below. Area of work Property, plant and equipment: We identified material differences between the fixed asset register and the annual accounts and valuation reports. Officers have investigated and identified issues with how depreciation and revaluation entries have been made in the asset register. Officers are reviewing and updating the asset register. We will require the updated asset register to complete our testing of this account area. High Area of work Leases: Officers are updating the schedule of leases where the Council is the Lessor. Supporting information provided for audit did not agree to the financial statements’ disclosure. We will perform sample testing of leases on receipt of the corrected schedule. Medium Area of work Other areas with outstanding queries: We are working with officers to obtain outstanding information to complete our audit work in the following areas: Financial Instruments, Cost of Service Expenditure, Taxation and Non-Specific Grant Income, Council and Group Cash Flow Statements, Short-Term Creditors, Movement in Reserves Statements and consolidation procedures. Medium Area of work Audit quality control and completion procedures: Our audit work is undergoing initial stages of review by the Engagement manager and director and further quality and compliance checks. In addition, there are residual procedures to complete, including updating post balance sheet event considerations to the point of issuing the opinion, obtaining management representations and agreeing adjustments to the final set of accounts. Medium Area of work Annual report and accounts and letter of representation: We will complete our final review of the annual report and accounts upon receipt of the signed version of the accounts and letter of representation. Low Status High - Likely to result in a material adjustment or a significant change to disclosures in the financial statements. Medium - Potential to result in a material adjustment or a significant change to disclosures in the financial statements. Low - Not considered likely to result in a material adjustment or a change to disclosures in the financial statements.
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Other key judgement areas 6 Enhanced risks Blank Description Fraud Error Judgement Planned response 1 Liabilities from service concession arrangements The Council has a Public Private Partnership (PPP) contract for the provision of three secondary schools and one primary school, and a Design-Build-Finance-Maintain (DBFM) contract for one secondary school. The contracts include the build of the schools as well as their maintenance and provision of related facilities over the period of each contract. The assets used to provide services at the schools are recognised on the Council’s Balance Sheet as operational assets and as a finance lease liability. The Council has recognised an asset of £131.6 million and a liability of £86.4 million for PPP and DBFM in its 2023/24 annual accounts. The method of accounting for service concession arrangements can be complex and involves management judgement. The Council has identified it as a critical accounting judgement. There is a potential risk of material misstatement if the Council does not appropriately account for its service concession arrangements. No Yes Yes We will address this risk by reviewing the processes and relevant controls that the Council has in place over the financial models. We will also: • update our understanding of the service concession arrangements at the Council; • review the current financial models to ensure they have been appropriately updated with the inputs and for any substantial changes; • test material inputs into the model and agree outputs to the annual accounts; and • review accounting policies and other related disclosures in the annual accounts to ensure they are in line with the Code.
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Planning and risk assessment Nov 2024 (Completed) • Planning our visit and developing our understanding of the Council • Initial opinion and Best Value risk assessments • Risk identification and assessment • Considering proposed accounting treatments and accounting policies • Developing the audit strategy and planning the audit work to be performed • Agreeing timetable and deadlines • Risk assessment analytical procedures • Determination of materiality Interim Dec 2024 – Jan 2025 (Completed) • Updating understanding of key business processes • Performing walkthroughs • Testing including tests of IT general controls • Reassessment of audit plan and revision if necessary • Quality review of unaudited annual accounts Fieldwork Feb – Aug 2025 (In progress) • Review of updated unaudited annual accounts • Delivering our audit strategy starting with significant risks and high-risk areas including detailed testing of transactions, account balances and disclosures • Detailed work to examine and assess wider scope and Best Value arrangements • Communicating progress and issues • Clearance meeting Completion Sept – Oct 2025 • Final review of annual accounts • Final engagement director review • Agreeing content of letter of representation • Reporting to the Council • Reviewing subsequent events • Signing the independent auditor’s report 7 Audit timeline
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02Forvis Mazars and other relevant publications
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Forvis Mazars and other relevant publications 1. Forvis Mazars – Local Government Risk Report 2025/26 The report deep dives into the known and emerging risks for Local Authorities in 2025/26, as well as what they should include in their internal audit plans. Link: Annual Local Government Risk Report for 2025/26 - Forvis Mazars - United Kingdom 2. Forvis Mazars – Public sector in focus: Charting the road ahead This report addresses the significant challenges faced by the public and social sectors, including economic pressures, workforce strategies, and rising demand for services. It emphasises the need for innovative strategies and effective partnerships to navigate these complexities and highlights the importance of operational and technological innovation to improve service delivery and build resilience in public sector organisations. Link: Public sector in focus: Charting the road ahead - Forvis Mazars - United Kingdom 3. Forvis Mazars – Industrial action and operational exposure: Lessons from Birmingham’s bin disruption Following on from recent industrial action by Birmingham City Council's waste collection contractors, this article highlights lessons from the disruption, including: - How third-party risk becomes operational risk; - Embedding third-party resilience into operations; and - A strategic approach to resilience. Link: Industrial action and operational exposure: Lessons from Birmingham’s bin disruption - Forvis Mazars - United Kingdom 4. Audit Scotland - Local government in Scotland: Financial bulletin 2023/24 This publication focuses on Scotland’s councils continued exposure to severe financial pressure and the need for continuous consultation with relevant stakeholders. Link: Local government in Scotland: Financial bulletin 2023/24 | Audit Scotland
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Forvis Mazars and other relevant publications (continued) 5. Audit Scotland – Council Tax rises in Scotland The publication "Council Tax rises in Scotland" by the Accounts Commission discusses the financial pressures leading all 32 Scottish councils to increase council tax rates for 2025/26, highlighting the need for transparent budget decisions and community engagement to manage rising costs and demands. Link: Council Tax rises in Scotland | Audit Scotland 6. Audit Scotland – Transparency, transformation and the sustainability of council services The publication "Transparency, transformation and the sustainability of council services" by the Accounts Commission highlights the urgent need for Scottish councils to adopt more transparent and transformative financial practices to ensure the sustainability of services amidst growing financial pressures. It emphasises the importance of clear budget decisions and community involvement in addressing these challenges. Link: Transparency, transformation and the sustainability of council services | Audit Scotland
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Contact Forvis Mazars Tom Reid Director Tom.Reid@mazars.co.uk Forvis Mazars LLPis theUK firm ofForvis Mazars Global, aleading global professionalservices network. Forvis Mazars LLPis a limited liability partnership registeredin EnglandandWaleswith registerednumberOC308299and with its registered officeat 30Old Bailey, London, EC4M 7AU. Registeredto carryon auditwork in theUK by theInstituteofCharteredAccountantsin England andWales.Details aboutour audit registration canbe viewed atwww.auditregister.org.uk under referencenumberC001139861. VATnumber: GB 839 835673 © Forvis Mazars 2025.All rights reserved.
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