Agenda item

Mark Surridge, representing the Council’s external auditors, Mazars:

The Council’s external auditors presented the audit progress report which summarised the findings from the 2019/20 audit.

He advised that it was unlikely that his Audit report would be issued by 30 November 2020 due to a potential delay in the receipt of sufficient audit evidence supporting the judgements made in the valuation of property, plant and equipment. This was exacerbated by recent staff sickness in their audit team creating last minute capacity pressure.

The work on the financial statements and Value for Money conclusion for the year ending 31 March 2020 had been substantially completed. He  highlighted the following matters that were outstanding:

·         Property, plant and equipment and Investment Properties

·         Pensions

·         Income & Expenditure cut – off Debtors

·         Audit Quality Control Completion Procedures.

 As part of the audit, the internal controls in place relevant to the preparation of the financial statements had been considered, with three recommendations resulting from this work made as follows:

·         IT General Controls

·         Expected Credit Loss Model

·         Asset Valuation inputs

Further details of these recommendations were outlined in section 4 of the external auditors’ report at Appendix A.

In relation to misstatements in the accounts, there were a number of misstatements identified that were above the threshold level of £49,000, all of which were adjusted for as part of the audit process and had been reflected in the Statement of Accounts. Other thresholds for specific areas were highlighted in the report. Further details of these misstatements were provided in section 5 of the auditors’ report at Appendix A. It was reported that there were no unadjusted misstatements.

The Statement of Accounts included on the agenda for this meeting at item 5 reflected a fully amended version of the document.

It was reported that the Council had proper arrangements in place  for securing economy, efficiency and effectiveness . The external auditors therefore proposed issuing an unqualified opinion on the Council’s value for money arrangements.

As part of presenting this item, the external auditors took the Committee through each page of the report and highlighted any key issues, particularly with regard to:

·         the audit approach;

·         significant findings;

·         internal control recommendations;

·         summary of misstatements;

·         value for money conclusion.

·         Management Representation Letter

Question: Referred to the IT controls recommendation and asked if there had been any incidents of inappropriate access to the systems?

Response: Not that we were aware of, it was recommended as there was a risk that the systems could be accessed.

Question: Expressed concern that the Councils assets could not be used to borrow money against.

Response: Clarified that the Council could not borrow money against their assets and this did not affect the Councils ability to borrow money, instead it borrowed money from the Public Works Loans Board.

Comment: The Council could not continue to use money from its reserves without replacing it.

Response: There was a financial strategy in  place which identified the need to increase savings, work had already commenced on developing a comprehensive savings programme. Replenishment of any reserves used in the short term would be essential over the medium term.

Question: Referred to the appendix D of the report and commented that there were a lot of adjustments, was this unusual?

Response: Some of the adjustments were as a result of 1 item meeting multiple areas which visually overstated the number of adjustments. It was difficult to compare the number of adjustments year on year but there had been an improvement. The external auditors did not feel the need to make a formal recommendation.

It was RESOLVED:

(1)       That the financial statements be recommended to Council for approval.

(2)       That the draft letter of representation on behalf of the Council be approved, before the external auditors issue an opinion, conclusion and certificate, and that any further amendments to the letter, should any additional issues by raised by the external auditors prior to 30 November 2020 be delegated to the Chief Finance Officer and Chair of the Audit Committee, which any changes reported back to the Audit Committee.

(3)       That any further changes that may be required to the Statement of Accounts as identified during the conclusion of the audit, be delegated to the Chief Finance Officer and Chair of the Audit Committee, with any changes reported back to the Audit Committee.