Westmorland & Furness Council has encountered significant difficulties in its financial reporting for the year ending 31 March 2024, leading to a disclaimer of opinion from independent auditors Grant Thornton UK LLP. A disclaimed audit opinion is issued by auditors when they are unable to form an opinion on the accuracy and fairness of an entity's financial statements.
The audit, which examined the council’s financial statements, governance, and use of resources, found multiple challenges, including missing evidence and governance weaknesses.
Grant Thornton UK LLP issued a disclaimer, stating that they were unable to obtain sufficient appropriate audit evidence regarding the council’s financial statements. As a result, auditors said they could not determine whether the financial statements were free from material misstatement.
"The complexities of the reorganisation and delays in obtaining necessary audit evidence have made it impossible for us to provide a formal opinion on the council’s financial statements," said Gareth Mills, Key Audit Partner at Grant Thornton UK LLP.
Additionally, a delay in the production of accounts by Westmorland and Furness Council meant that the draft financial statements were not published until 16th January 2025, barely meeting the last possible deadline for publication. This delay contributed to the auditors’ inability to complete their work ahead of the statutory backstop date of 28 February 2025.
The audit report identified significant weaknesses in governance arrangements, including issues related to cyber security and disaster recovery. The auditors recommended that the council develop a Corporate IT Disaster Recovery Plan to prioritise and protect critical applications against potential threats. Furthermore, the council was advised to discontinue the use of high-risk ICT systems to safeguard its operations against cyber-attacks.
Procurement and contract management were also highlighted as key areas for improvement. The council’s contract register, as of 27 March 2024, contained 423 contracts, but 91 had missing end dates, and 84 had already expired. The auditors recommended urgent updates to the register and improved transparency around procurement processes.
In response to the audit findings, the council acknowledged its challenges in a formal representation letter. While confirming compliance with accounting standards, the council admitted that limitations in available information had hindered the audit process. They also reaffirmed their belief that the financial statements should be prepared on a going concern basis, indicating confidence in the authority’s financial stability moving forward.
"We recognise the challenges in the financial reporting process and are committed to addressing the issues raised by the auditors. Steps are already being taken to improve our internal controls and governance frameworks," said the councils Section 151 Officer who announced in December she would be leaving the council in March.
In the letter to the auditors the council has also outlined measures to address internal control weaknesses, including efforts to enhance financial reporting capacity and ensure more timely responses to audit requirements. The council also committed to strengthening its governance frameworks and procurement practices to align with regulatory expectations.
The councils audit committee will consider the report and audit findings on Tuesday at a meeting in Kendal when members of the committee will be asked to considering the Audit Findings Report and Approve the councils unaudited 2023/24 Statement of Accounts.
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