Others may disagree (and that's fine by me!) but I would say it is up to the council, not the auditor, to take a view on this.
By way of an example, I once failed to balance my accounts by around £12 on budgeted income of circa £200K. I never did find it, My council took the view that it was costing more to look for the £12 than it was worth finding it, and therefore wrote it off as "an administrative error". That was written into the accounts so that by the time they got to the auditor they balanced.
So if its a piffling amount vis a vis the overall the budget then writing it off is an option. If it's a significant amount then, sorry, you need to keep looking.
Lets see what others think.