Agenda item

Georgia Jones, Key Audit Partner presented the Audit Findings report to the Committee.

Under the Statutory Code of Audit Practice for Local Government bodies, the Authority’s external auditors, Grant Thornton, were required to issue a report to those charged with governance that summarised the conclusions from their audit work.

The audit was substantially complete, and the auditors expected to issue an unqualified audit opinion following the Audit Committee meeting subject to receipt of the management letter of representation and final quality procedures. The Value For Money (VFM) work had been completed.

Since the last report to the Audit Committee, the following areas of work had been completed:-

·     Verified the responses from the pension fund auditor to gain assurances on underpinning controls and supporting data for the pension fund net liability.

·     Checked the International Financial Reporting Interpretation Committee (IFRIC 14) assessment from the actuary on the amount pension fund asset (surplus) in the Local Government Pension Scheme (LGPS) and tested the amendments to the financial statements.

·     Tested the updated Government Actuary Department (GAD) report which reflected part year inflation for the valuation of the Firefighters pension fund and agreed the revised entries in the financial statements.

·     Completed testing on areas of land and buildings valuations, which included the examination of the assessment of the impact of reinforced autoclaved aerated concrete (RAAC).

·     Completed testing on the fair value of financial instruments.

·     Examined the Information Technology (IT) assessment on the data migration controls to the new Oracle Fusion system and completed additional work in that area.

·     Checked the final set of financial statements.

Georgia Jones highlighted that the Lancashire Pension Fund auditor had provided assurances on the controls surrounding the validity and accuracy of membership data; contributions data and benefits data sent to the actuary by the pension fund and the fund assets valuation in the pension fund financial statements. The Authority obtained an IFRIC 14 assessment from its actuary which concluded the asset ceiling as £nil. The Authority had now updated the financial statements to reduce the Local Government pension fund net asset from £19.877m to £nil. Discussions were held with the Government Actuary’s Department (GAD) on the level of inflationary increases within their assessment of the year end liability. GAD had not included part year inflation in their original calculations. As a result, the Authority received a revised assessment which increased the year end liability by £12,040k (from £639,496k to £651,536k). The Authority had updated the financial statements to reflect this.

Regarding the issue of incomplete or inaccurate financial information being transferred to the new general ledger, Georgia Jones informed that, to gain assurance over the completeness and accuracy of the data migration from Oracle EBS to Oracle Fusion for the preparation of the 2022/23 financial statements, Grant Thornton carried out a full substantive test on the balance transfer. It was found that they had all been correctly entered in the new Oracle Fusion system. In addition, additional work had been completed to check user access controls as part of the work on journals and no issues had arisen.

County Councillor Singleton queried whether the significant weakness identified on page 113 of the agenda pack would be classed as ‘red’ or ‘high priority’. Georgia Jones explained that, as part of Value For Money work, a significant weakness had been identified and it would be classed as ‘red’ or ‘high priority’. Further information was contained in the Auditors Annual Report 2022/23 in the agenda pack.

Resolved: - That the Committee:-

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

ii)     Noted and endorsed the Action Plan set out in Appendix 1 within the Audit Findings Report.