Grant Thornton has “paused” its work on Bournemouth, Christchurch and Poole (BCP) Council’s audit for the 2021/22 financial year following the resignation of the allocated audit manager on the contract.
Peter Barber, a director at Grant Thornton, told this week’s meeting of BCP’s audit and governance committee that the firm had decided to stop work on the audit until a replacement is appointed. He described the resignation of the manager as a “real blow to us” and suggested that audit work would recommence at the “very latest” by the end of June 2023.
BCP councillors at the meeting said they were “flabbergasted” by Grant Thornton’s decision. A BCP spokesperson later told Room151 that the “delay is a real concern to the council”.
The manager was said by Barber to be joining another public sector audit firm. “Interestingly, one of the new entrants that has recently been appointed by Public Sector Audit Appointments for the audits commencing 2024/25 [sic].
“At present we do not have an immediate solution to replacing the manager. We have lots of managers, but we need to allocate those with the most experience to the most complex audits.”
Barber told the meeting that Grant Thornton was not the only firm affected by staff departing to new entrants in the audit market.
Audit capacity
In response, Adam Richens, BCP Council’s director of finance and section 151 officer, said: “It is good to see new entrants into the market, but they are taking capacity out now when those new firms won’t be required to do audits until … quite a long way into the future.”
The BCP spokesperson added: “The audit manager has departed to a new entrant into the audit market; however, these audits will not start until 2023/24. The council is writing to Public Sector Audit Appointments [PSAA] to highlight this loss of capacity in the market and the impact this is having on BCP Council as well as other local authorities across the country.”
It is good to see new entrants into the market, but they are taking capacity out now when those new firms won’t be required to do audits until quite a long way into the future.
Fragile market
Tony Crawley, PSAA’s chief executive, told Room151 that the organisation was “acutely aware of the fragile state of the local audit supply market”, and had publicly highlighted its concerns. “The problems that the audit backlog is causing for all parties are becoming more and more apparent,” he said.
Crawley suggested that some progress could now be made following the government’s introduction in December of a statutory override to help respond to delays caused by the reporting of infrastructure assets. Guidance on this temporary solution was issued by CIPFA in a bulletin published on 11 January.
“The recent finalisation of the temporary solution to the infrastructure assets issue is welcome news, and accounts preparers and auditors will now need to work together on this and other outstanding matters to enable audit opinions to be given.”
He pointed out that many auditors will have to deliver additional work on the part-year NHS accounts and to expect “another challenging year” for audit.
“Ultimately there needs to be more audit capacity and/or more proportionate audit requirements that recognise the fundamental importance of timely opinions,” Crawley said.
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