Agenda item

Receipt of the External Auditor’s Audit Planning Report

Minutes:

Ernst and Young’s (EY) representative briefly introduced the report.

 

Councillor Curtis thanked EY’s representative for the report. He asked how the values of the Council’s properties, particularly those that were part of the capital projects, were accurately valued. He said that this was of high importance so that Members could make appropriate decisions.

 

EY’s representative said that the changes relating to property values were more to do with material uncertainty caused by the COVID-19 pandemic. The perceived risk for the Council was low, as buildings such as leisure centres were not as at risk as retail facilities, for example. The Council’s capital programme was also reviewed last year by EY as part of its value for money work.

 

Councillor Townsend pointed out a typo on page 92 of the report in the figures relating to performance materiality. EY’s representative said this would be corrected in the final report.

 

The Chairman asked the Head of Strategic Finance and Property to outline the risks caused by the delayed audit.

 

The Head of Strategic Finance and Property said that it was unclear what action the Ministry of Housing, Communities and Local Government (MHCLG) would take in relation to Business Rates. If the deadline was not extended for the audit, the money could potentially be withheld and problems with cash flow could be damaging to the Council. It would likely be necessary for an additional meeting of the Committee to take place or the establishment of a Sub-Committee to approve the statement of accounts at the end of the year.

 

The Chairman asked how much extra work the new fraud risks generated for EY. He also asked whether the group accounting was a complex area as the accounts for Millstream should be fairly straight forward. Finally, he asked whether the audit work would be completed remotely.

 

EY’s representative said the work relating to the Minimum Revenue Provision would be major and specialists would need to be engaged. The other areas could be included into standard testing. EY had not yet seen material relating to Millstream, but it was more the values of the properties the subsidiary owned which was considered complex. The audit would be completed remotely.

 

The Chairman asked about EY’s data analytics tool. He also asked how big the sample sizes were which were used.

 

EY’s representative said that the tool did compliance testing using data, for example by flagging unusual transactions within payroll. Sample sizes varied, using the example of payroll once again, 40 or 50 samples would be used and bank confirmations would also be sought.

 

The Chairman asked about the 2019/20 audit fee and whether Public Sector Audit Appointments (PSAA) had responded to the considerable proposed increase.

 

The Head of Strategic Finance and Property said that audit firms had consistently undercut each other and were now all struggling and seeking increases in fees. Comments from PSAA had yet to have been received.

 

The Chairman asked that the Committee’s concern over the delay to the audit and the considerable risks this posed to the Council be minuted. Whilst it was accepted that many other local authorities were in the same position, the Committee wished to place on record its disappointment at the situation.

 

RESOLVED - that (A) the report be received and considered;

 

(B) that the fact that Council would be unable to comply with the 30 September 2021 statutory deadline for publishing audited accounts as set out in the Accounts and Audit Regulations 2015 (as amended), as the audit work would not commence until October, be noted; and

 

(C) the risks that the late audit work exposed the Council be noted.

 

 

Supporting documents: