Agenda item

Under the statutory Code of Audit Practice for Local Government bodies our external auditors, Grant Thornton were required to issue a report to those charged with governance summarising the conclusions from their audit work.  Members considered this report which was presented by Mr Smith. 

Mr Smith advised that at the time of writing the report the audit work was substantially complete and there were no issues which they were aware of that would require further modification of the audit opinion or material change to the financial statements.

As such the anticipated audit opinions were: -

·         The anticipated audit report opinion would be unqualified;

·         The External Auditors anticipated issuing an unqualified value for money conclusion.

As reported earlier on the agenda (Revisions to the Statement of Accounts 2019/) there were three adjusted mis-statements relating to:

·         McCloud – IAS 19 adjustment for HM Treasury Consultation remedy;

·         the difference between the valuer’s report and the fixed asset register; and

·         backdating of pension contributions of day crew plus and other allowances.

In addition, there were seven minor disclosure changes which were required (as set out on page 22 of the Audit findings Report).

It was noted that the auditor report highlighted:

·         All information and explanations requested from management were provided;

·         The financial statements were received on 15 July 2020, and published in advance of the statutory deadline;

·         The financial statements were prepared to a good standard with embedded quality review processes in place;

·         Working papers were available at the start of the audit and were detailed, and clear to understand;

·         The responses to audit samples and queries were comprehensive and timely.

It was noted that a draft audit fee of £28.4k was originally agreed as part of the Audit Plan. 

It was noted that additional audit work has been required to review the critical judgement on the backdating of pension contributions on day crew plus allowances.

In addition, Covid-19 had impacted on the audit of the financial statements in several ways, including:

·         Revisiting planning – the auditors had needed to revisit their planning and refresh risk assessments, materiality and testing levels. This had driven additional areas of audit work.;

·         Management’s assumptions and estimates - there was increased uncertainty over many estimates including property, pension and other investment valuations. Many of these valuations were impacted by the reduction in economic activity and the auditors were required to understand and challenge the assumptions applied by management. There were similar challenges for management and the auditors on areas such as credit loss allowances, financial guarantees, and other provisions.

·         Financial resilience assessment – the auditors were required to consider the financial resilience of audited bodies. Whilst the impact on the Authority had not been as significant as on other parts of the local government sector, there had been a small increase in the amount of work needed to undertake on going concern and value for money (financial sustainability).

·         Remote working – the most significant impact in terms of delivery was the move to remote working. In many instances the delays were caused by the auditor’s inability to sit with an officer to discuss a query or working paper. Gaining an understanding via Teams or phone was more time-consuming. The Government’s current expectation to work from home as the default position was now likely to make this a greater issue for the audit than if it had been possible to gradually return to offices and Authority premises over the autumn of this year, as originally anticipated.

The auditors were currently reviewing the impact of this on fees, and it was proposed that the Treasurer be authorised to agree an amended fee with the auditors in due course, and to report this to the subsequent Audit Committee.

RESOLVED: -   That the Committee: -

i)          Noted and endorsed the matters raised in the report;

ii)         Noted the unqualified opinion on the financial statements;

iii)        Noted the value for money conclusion;

iv)        Noted that fees would increase as a result of additional work undertaken and authorised the Treasurer to agree and amended fee with the auditors.