Agenda item

Report of the Director of Finance

The Committee received a report on the External Audit Plans for 2019/20.  The report summarised how the external audit of the Council’s accounts and Pension Funds for 2019/20 would be conducted and the key aspects of the audit plan.

Lucy Nutley of Mazars, the Council’s Auditors, introduced the report with reference to the audit approach, significant risks and areas of key judgement.  Both audits included identified risks and the testing approach to those risks.  The Committee was informed that there would be an update on the need to prepare consolidated group accounts.

The Auditor drew particular attention to: the significant changes arising from the adoption of IFRS 16 (Leases); the Medium Term Financial Strategy had not been made public at the time the accounts were written; and a change in the materiality benchmark to reflect the second year of appointment as the Council’s Auditors from 1% to 1.5%.

In response to queries from Members on the Audit Strategy Memorandum, the Committee was informed that:

·                     whilst the Council’s budget was not specifically mentioned, it was considered through value for money work and financial monitoring;

·                     the regeneration spend was not expected to be a material risk in the current financial year.  The Audit looked at the account spend and whether it had been correctly classified and was value for money;,

.

·                     there was a judgement as to materiality of between 1-2% of gross revenue expenditure and the Audit had used 1.5%.  There was specific materiality on items such as senior officer remuneration;

·                     the Audit was not driven by Internal Audit although assurance was taken from it.  The Internal Audit plan was reviewed and care was taken not to duplicate work;

·                     with regard to budgets in general terms, the Audit reviewed instances where the spend had not been anticipated. It did not consider spend where the budget had been foreseen, was appropriate and met the prudential indicators;

·                     with regard to commercial properties the Audit would be around the governance process, which considered assessments, and would look at values;

·                     the Director of Finance would be liaising with the Auditor regarding the new Code of Audit Practice due to be adopted in January 2020 in order to provide the required resources and ensure compliance.

Members asked a number of questions with regard to the group audit approach on the Council’s trading companies.  The Auditor responded that detailed work would be undertaken on related party transactions.  The Director of Finance referred to the trading company accounts which were reported quarterly to Cabinet and advised that the business plans would be reported to the June or July Cabinet meeting.  A Member acknowledged that details were registered at Companies House as separate legal entities but requested, as these were abbreviated information, full financial statements with full disclosure.  The Chair agreed that the Member submit a request for the information to the Director of Finance and Director of Legal and Governance Services.  Following their advice as to whether it was necessary to bring the information to GARMS he would review the way forward which would be circulated to Members of the Committee.

With regard to questions on the Pension Fund Audit Strategy Memorandum, it was noted that interim work would commence subsequent to receipt of the final report from the actuary.  Additional work around the triannual evaluation would take place as part of the standard audit report.  The Director of Finance referred to a report submitted to the Pension Fund Committee and stated that if the fund improved it was a good result for the Authority.

RESOLVED:  That the report be noted.