Agenda item

The attached report at Appendix A sets out the work that the Council’s External Auditor, Grant Thornton, plan to undertake for the audit of the Council’s Statement of Accounts in respect of 2020/21.

The External Auditor plans to give an opinion on whether the accounts give a true and fair view and whether the Council has made proper arrangements for securing economy, efficiency and effectiveness in its use of resources.

The attached report at Appendix B provides an update to Audit & Governance Committee on the External Auditor’s progress to date in delivering their responsibilities.

The report also includes a summary of emerging national issues and developments that may be relevant to the Council.

Peter Barber, Grant Thornton External Auditor, presented a report, a copy of which had been circulated to each Member and a copy of which appears as Appendix 'J' to these Minutes in the Minute Book.

Mr Barber referred the Committee to page 195 of the agenda pack which set out the work that the Council’s External Auditor, Grant Thornton, plan to undertake for the audit of the Council’s Statement of Accounts in respect of 2020/21 and the progress detailed on page 225. He referred to the Audit Plan and reminded the Committee of the external auditor’s responsibilities which were to provide an opinion on the Council’s financial statements and to issue a value for money conclusion.  He referred to the timing of the plan which had been delayed due to the time needed to complete the previous years audit. The Committee was advised that the approach to issuing the opinion and the VFM conclusion was summarised in the plan on page 200. 

Mr Barber reported on the opinion and explained that when the financial statements were signed off for 2021 later in the year, he would work to a materiality level that invariably within audit was based on a percentage of gross spend. The Committee was informed that the external auditor had opted for 1.4% of the Council’s spend for the year which at the planning stage equated to £11.56m for the Group and £11.5m for the Council.  Mr Barber explained the implications of this approach in particular the enhanced audit procedures for entries that exceeded £11.5m. The Committee was advised of entries of heightened risk that would be subject to more detailed testing as detailed in the report.  Mr Barber explained that the plan included provision for the proposed work on the accounting estimates.

Mr Barber referred to the VFM approach which was based on the criteria set by the national audit office.  He explained that this year was the first year of a new approach with three new criteria namely governance, economy, efficiency and effectiveness and financial resilience.  The Committee was advised that there were a number of risks that had been identified that the external auditors would focus on which were detailed at the bottom of page 200.  Mr Barber highlighted that they would be commenting on arrangements, identifying good practice and sharing best practice from elsewhere and where appropriate making recommendations and identifying areas for improvement and where appropriate issue key recommendations.  Mr Barber reported that if necessary, the auditors can issue statutory recommendations that require a formal response from the Council. He commented on the Council’s transformation programme which would also be considered and a focus on key partners and how the Council was working with subsidiaries to deliver appropriate services and proportionate governance.  The Committee was advised of the proposed timelines for the work that Mr Barber had set out, fees and the proposed increases in particular relating to the scale fee which reflected the additional work that had been undertaken last year and rolled forward for this year but also reflected increases in the value for money work and the requirement for a greater degree of challenge as a result of a number of new accounting standards. 

Councillor Brown asked a question on the audit fees and in particular relating to the subsidiary charities which quoted £37k.  Mr Barber confirmed that this work was to allow submission of the accounts to the Charity Commission and were independent of the audits undertaken for the Council.  Councillor Brown indicated that the fees seemed high.  The Chairman asked for comparable fees for previous years.  Sam Harding, Grant Thornton reported that this fee remained the same as it was last year and that there had been an increase in the 2019/20 audit to reflect it in more commercial terms.  She explained that the reason that they were fairly high was that the audits were complicated and the reason that the Council was keen that Grant Thornton undertook these audits was because the charities do not have their own ledgers or bank accounts and therefore were integrated within the Council and had substantial assets which created a significant risk.  The Chairman suggested that the Committee would benefit from having the view of a senior officer on the level of fees so that Members had a better understanding that it was fair value for the Council as the client. 

The External Auditor provided an update on the External Auditor’s progress to date in delivering their responsibilities against the current year’s audit and sector updates.  Mr Barber reported that overall, they were where they wanted to be at this stage of the audit with the completion of planning and interim work ahead of receiving the accounts.  The Committee was informed that detailed post statement visits would start in early August with a report back on the opinion by the end of November.  He commented on the certification of claims work in various areas which was undertaken at a later stage on a case by case basis.

RESOLVED that the Committee

·       notes the Grant Thornton External Audit Plan 2020/21 for the Council.

·       notes the External Auditor’s progress to date in delivering their responsibilities and the sector update provided.

Voting: Agreed