Agenda item

Ying Li, Audit Manager 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 Value For Money (VFM) work had been completed. 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, subject to the below outstanding matters;

·       Completion of testing for creditor, grant income, employee benefits expenses, pension liabilities, cash and bank balance, land and building revaluation, journals, and financial instrument.

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

·       Final review of the audit file by the Engagement Lead and Audit Manager. Regular reviews of the file had taken place throughout the audit.

·       Update post balance sheet events review to the date of signing.

·       Receipt of the management representation letter.

·       Review of the final set of financial statements.

Some of the matters had been completed at the time of the Committee and some were still outstanding. Grant Thornton had worked closely with the Finance Team and thanks were given for their work and excellent communication.

Members noted that the Value For Money arrangements report would be presented at the next Audit Committee meeting.

The Audit Manager drew Members attention to Page 8 of the agenda pack which detailed that the materiality had been revised as the actual gross expenditure had changed significantly from that anticipated at the planning stage. This had resulted in a review of the appropriateness of the materiality figure.

The risks identified in the Audit Plan and corresponding commentaries were:

·       Improper revenue / expenditure recognition.

-        The substantive income and expenditure testing had not identified any material errors that were required to be brought to the Service’s attention.

·       Management override of controls.

-        From the review of all journals posted during they year, 41 higher risks or unusual journal had been identified that warranted detailed audit testing. Audit work to date had not identified any significant issues in respect of management override of controls. The work was subject to the final review by the Engagement Lead.

·       Valuation of land and buildings.

-        As part of the overall audit work, 25 asset valuations had been tested, including large assets or those with movements outside of expectations. In completing the work, Grant Thornton examined the accounting entries, data and assumptions used, and relevant asset indices.

·       Valuation of Pension Fund Net Liability

-        The pension fund net liability of £651.920m was made up of the Firefighters pension scheme (FFPS) net liability of £651.826m and Local Government Scheme net liability of £0.094m. For the LGPS pension scheme, the Authority had considered the potential impact of IFRIC 14 before audit challenge. The Authority obtained additional information relating to accounting surplus from its actuary which concluded the asset ceiling as £nil. The balance of £0.094m represented the unfunded liabilities only. The audit work was ongoing in respect of valuation of pension fund liability. The audit work could not be concluded until the IAS19 letter from the Pension fund auditor had been received and considered.

Ying Li advised that during the course of the Audit, two recommendations for the Authority had been identified as detailed on page 124 of the agenda pack. The recommendations had been agreed with management and progress would be reported during the course of the 2024/25 audit.

On page 129 of the agenda pack, on Note 6 Capital Expenditire Disclosure, a variance of £751k had been identified between the expected Capital Financing Requirement (CFR) and the CFR in the draft accounts. This variance was due to the omission of the capital financing element from the North West Fire Control’s (NWFC) accounts (Joint Operation) in the opening CFR balances. Since it was a disclosure error and had no impact on the main financial statements, the Capital Expenditure disclosure had been amended in the 2023/24 accounts with a foot note explaining the treatment.

Georgia Jones, Key Audit Partner, summarised that the two issues that needed to be completed were the review of land and buildings, with which no issues were anticipated, and the late guidance around pensions and the calculation for the Local Government Pension Scheme (LGPS) accounting surplus.

County Councillor Shedwick thanked Grant Thornton for the report, the information on asset valuations, and the recommendations on page 125 of the agenda pack where the management response stated that the issues raised had been addressed. He gave thanks to Grant Thorton and the Finance Team.

Resolved: - That the Committee: -

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

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