Agenda item

Audit Completion Report Year Ended 31 March 2020 and Gateshead Council Statement of Accounts 2019/20

Report of the Strategic Durector, Resources and Digital


The Committee received a report providing an update on the outcome and findings of the audit of Gateshead’s Statement of Accounts 2019/20 by the Council’s external auditor Mazars.


The Committee were advised that as a result of COVID-19, the Accounts and Audit (Coronavirus)(Amendment) Regulations 2020 extended the statutory deadlines for 2019/20. The publication date for final, audited accounts moved from 31 July 2020 to 30 November 2020.


The annual audit of the Council’s Statement of Accounts and use of resources has now been substantially completed for 2019/20 and the Council’s external auditors, Mazars has issued its  report, subject to the completion of outstanding work.


The Committee were informed that the Audit Completion Report covered:


·        The Council’s Statement of Accounts including significant findings, internal control recommendations and a summary of misstatements;


·        The Council’s arrangements for securing economy, efficiency and effectiveness in its use of resources including a value for money conclusion.


The external auditor’s report was attached at Appendix 1 to the main report and the Council’s Statement of Accounts was attached at Appendix 2 for information.


The Committee were also asked to note that although Mazars anticipate completing their work in October, it should be noted that they also place reliance on the work of other auditors, including Ernst and Young (EY) work to give assurance on the Tyne and Wear Pension Fund (TWPF) disclosures in the Council’s Statement of Accounts, and disclosures in relation to the Council’s interest in the airport. They also need to review the work of KPMG in respect of external Audit of The Gateshead Housing Company (TGHC) Statement of Accounts in order to be able to place reliance on the TGHC figures incorporated into the Group Accounts.


The Committee were advised that an update position will be presented to the Committee by Mazars. A follow up letter will be provided, prior to signing the auditor’s report.


Audit Completion Report


Mazars’ Audit Completion Report was attached to the main report at Appendix 1 and the key messages were:


·        Audit Opinion – at the time of issuing the report, and subject to satisfactory conclusion of the remaining audit work, Mazars anticipate issuing an unqualified opinion on the financial statements, including drawing attention to the Valuer’s material uncertainty statement on property, plant and equipment (PPE)

·        Identified misstatements – the auditor’s work identified a number of misstatements that have been discussed with management. A summary of the identified misstatements is set out in detail further on. Further work is ongoing in relation to the valuation of PPE.

·        Value for Money – at the time of issuing the report Mazars anticipate concluding that the Council had proper arrangements in place to secure economy, efficiency and effectiveness in its use of resources.

·       Whole of Government Accounts (WGA) – the timetable for the Council’s submission has not yet been published by MHCLG. Audit work will be completed as soon as possible once these details have been clarified.

·       Internal control recommendations in relation to the note 10 on grants, Beacon properties records, review of bad debt provisions, and sign off of Housing Rents.


The Committee were advised that in order to provide a full picture of the economic and financial activities of the Council and its exposure to risk, the accounting statements of material subsidiaries and associate companies were consolidated with those of the Council. In 2019/20 the only material subsidiary was TGHC due to the pension liability.


The Committee were advised that the Statement of Accounts was materially consistent with the 2019/20 revenue and capital outturn reports considered by Cabinet on 23 June 2020. Along with minor adjustments and presentational changes, significant findings and misstatements to the Statement submitted for audit on 7 July 2020 have been identified through the audit process.


The Committee also received details of the significant findings, issues discussed with management, unadjusted misstatements, adjusted misstatements and disclosure amendments within the body of the main report for information and noting.




That the information be noted



That the contents of the external auditor’s Audit Completion Report and any update reports be noted



That the Statement of Accounts 2019/20 and their contents be noted



That the Committee agree to the submission to the Accounts Committee for consideration in due course


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