The report of the Engagement Lead is to follow.

Contact: Avtar S Sohal (0121) 232 6420

The Committee received the report of the Engagement Lead, which provided members with an overview of the scope and timing of the statutory audit of Shropshire Council for those charged with governance.

The Engagement Lead gave a brief summary of the role of External Audit which included looking at the Council’s financial statements and ensuring that they were free from material misstatements.  They also looked at the Council’s arrangements to secure value for money by looking at financial sustainability, governance and economy, efficiency and effectiveness.  They would then draw out any recommendations from their work.

He explained that the Audit Plan was for the year ending 31 March 2025 and he referred Members to page 12 of the report which gave a summary of the audit. Looking at the significant risks, one was around the management override of control and the Engagement Lead explained that this was prevalent on all audits and was not specific to Shropshire Council and involved looking at the journals and estimates etc to ensure they were free from material bias or any detection of management override.  He went on to explain why valuation of land and buildings, valuation of investment property, and valuation of pension fund net liability were considered to be significant risks, which again, was not specific to Shropshire Council.

The Engagement Lead reported a change in the level of materiality (set out on page 12 of the report).  In terms of value for money arrangements, they would be following up on the work done in relation to the significant weaknesses that were raised in relation to the financial sustainability of the Council and the NWRR project and would do further work to identify any further weaknesses or risks.  In conclusion, he reported that the Audit Opinion would be ready to sign off by December.

In response to a query, the Section 151 Officer explained what the exceptional financial support from the Government had been spent on. As there was no option to carry this money forward, they were able the apply the whole of the capitalization direction in 2024/25.  This would be considered by External Audit and if there were any elements that they did not agree with, it would be adjusted.  He agreed to provide Members with a breakdown.

A query was raised as to whether the Engagement Lead was confident that the work could be delivered on time as this had been a problem in the past.  In response, the Engagement Lead informed the Committee that 27 February 2026 was the statutory deadline for sign off, but it was hoped to sign it off in December 2025.  He reported that last year had been held up due to queries around the PPE valuation which took longer to resolve than anticipated.  He assured the Committee that they had the resources in place to sign off by December.

Finally, the Engagement Lead drew attention to the local audit reform set out on page 5 of the report.  He felt it may be worthwhile looking at the guidance from MHCG and CIPFA for guidance on effective Audit Committees, it was not about the number of Members on Audit Committee, it was about how effective they were, how well they understand the subject matter and how much challenge they can give to give assurance to the Committee.

RESOLVED:

To note the contents of the report.