Preparing for Audit
All councils and parish meetings, regardless of whether their income and expenditure are over or under £25,000, are required to undergo an annual audit and approve an annual governance and accounting statement of the Annual Governance and Accountability Return (AGAR). This ensures that councils have effective financial management, a strong governance framework, and reliable internal control systems. To achieve this, there is a dual system of independent audits: internal and external.
NB: If a parish meeting has had NO FINANCIAL TRANSACTIONS during the financial year, it is not required to approve an annual governance and accounting statement, however it would have to complete AGAR form 1.
Internal audit
When appointing an internal audit provider, councils and parish meetings must adhere to two key principles: independence and competence. The internal auditor must be independent which means that they have not had any involvement in, or responsibility for, the financial decision making, management or control of the authority, or for the authority’s financial controls and procedures. For more detailed information, refer to the Governance and Accountability Practitioners’ Guide, starting from page 24.click on this link for further information.
An internal auditor should provide you with a letter of engagement which would normally include:
· roles and responsibilities
· audit planning and timing of visits
· reporting requirements
· rights to access to information, members and officers
· period of engagement
· remuneration
· any other matters required for the management of the engagement by the authority
An internal audit should be carried out from 1st April and no later than 30th June, if possible.
The internal auditor will complete the Annual Internal Audit Report (AIAR), page 4 of the AGAR. This report must be signed by the auditor with a wet signature (physically signed with a pen on paper). A scanned copy of this signed document is acceptable. Additionally, the council must receive a report outlining the internal audit conducted. Any findings will be detailed in the report, and the council is required to address any reported matters, ensuring that their responses and actions are recorded in the minutes.
It is recommended, though not legally required, to complete the internal audit before the council signs the annual governance and accounting statements (pages 5 and 6 of the AGAR). The accounting statements must be filled out in draft so that the internal auditor can cross check the figures. The internal auditor should not fill in the governance and accounting statements for the council.
External audit
PKF Littlejohn LLP was appointed for a period of five years from 2022/23 as the external auditor for Suffolk by the Smaller Authorities’ Audit Appointments Ltd (SAAA).
Under the limited assurance regime, PKF Littlejohn undertake a limited range of specified procedures to give a report that provides limited, rather than reasonable, assurance about the accounting statements. For councils and parish meetings that do not claim exemption, PKF Littlejohn undertake two types of review procedure: basic and intermediate. The type of procedure undertaken determines the documentation that the council and parish meeting must submit. As the appointed external auditor, PKF Littlejohn cannot provide any accounting advice or guidance.
PKF Littlejohn will issue an email providing audit information, documents and guidance towards the end of March 2025 which explains in full the process to follow.
If there has been a change in email, please get in touch with PKF Littlejohn NOW to inform them of this by emailing sba@pkf-l.com or call 020 7516 2200.
BE PREPARED, CHECK OUT OUR HELPFUL VIDEO GUIDANCE – CLICK ON THIS LINK TO VIEW AND VIEW OUR GUIDANCE ON PREPARING FOR AUDIT WHICH INCLUDES LOTS OF INFORMATION
KEEP A LOOK OUT FOR OUR NEXT BLOG ON GUIDANCE OF WHAT YOU NEED TO SEND TO PKF LITTLEJOHN WHEN YOU ARE UNDER £25,000