The report of the Engagement Lead is attached.

Contact: Avtar S Sohal (0121) 232 6420

The External Auditor presented an update on the Shropshire County Pension Fund audit, advising that the audit was substantially complete, with only a small number of outstanding items of evidence required prior to finalisation. It was noted that the ISA 260 report would be issued once these matters were resolved. The External Auditor confirmed that completion of the pension fund audit would be aligned with completion of the Council’s main financial statements audit, and that final sign-off was expected to take place in November.

It was further explained that while the audit fieldwork was largely complete, the certification process remained dependent on final completion procedures and the receipt of necessary assurances. A potential delay risk was highlighted in relation to the timing of the final confirmation of Exceptional Financial Support arrangements, which had previously resulted in delays in the prior year.

The External Auditor also confirmed that the financial statements audit for the Council was progressing in parallel and remained on track for completion within the same timeframe. It was noted that the audit findings report and draft value for money commentary had been completed and shared with management for response. The findings were described as robust, and it was indicated that statutory recommendations were likely to arise from the finalised report, subject to refinement following management responses. The report was also described as containing forward-looking commentary in addition to retrospective assessment of the 2025/26 arrangements.

In response to a query regarding whether any governance lessons from the pension fund audit could be applied more widely across the Council, the External Auditor advised that the pension fund operated as a distinct governance and financial structure with different regulatory and operational characteristics. It was noted that, although the governance framework differs significantly from that of the Council, improvements had been observed in responsiveness to audit queries and timeliness of audit completion across both areas.

A Member raised a query regarding the differing risk scoring methodologies used in the pension fund audit compared with the wider Council risk framework, specifically the use of three-level and four-level risk colour systems. The External Auditor confirmed that risk reporting approaches would be aligned at the point of final reporting to ensure consistency across the pension fund and Council audit outputs.

The Section 151 Officer provided clarification on the timetable for consideration of external audit outputs. It was confirmed that the Auditor’s Annual Report and Value for Money conclusions would be presented to a special meeting of full Council within the statutory timeframe, followed by consideration by the Audit and Governance Committee at its subsequent meeting. It was further confirmed that the financial statements audit was expected to conclude in November, although final confirmation of Exceptional Financial Support arrangements was not anticipated until February, which could impact final sign-off timings.

The External Auditor confirmed that the draft Auditor’s Annual Report had been shared with senior officers and that management responses were currently being finalised. It was indicated that the final report would reflect both identified weaknesses and progress made, alongside recommendations for ongoing improvement.

RESOLVED:

to note the update.