Issue - meetings

Report by the Chief Operating Officer

61.1     The Cabinet considered a report by the Chief Operating Officer.

61.2     It was RESOLVED – to approve the External Audit Plan for 2018/19

Reason

61.3     The External Audit Plan provides an overview of the planned scope and timing of the statutory audit of the Council’s 2018/19 accounts and identifies any significant risks

Report by the Chief Finance Officer.

39.1     Marcus Ward, Grant Thornton, introduced report. The key matters impacting the audit are summarised on page 4 of the Audit Plan (page 16 of the agenda pack) and more details are available on subsequent pages of the Plan.

Significant Risks

39.2     A risk assessment has been carried out to identify the significant risks that may affect the ability to provide an accurate audit (pages 6-8 of the Audit Plan). The first two risks (page 6) are ones that have to be included in the audit, which are the management over-ride of controls and the risk that revenue includes fraudulent transactions.

39.3     The Auditors have partly rebutted the risk of fraudulent recognition of revenue, as a large part of the Council’s income comes from Council Tax which is collected on behalf of the Council. The audit will however include an examination of revenue from fees and charges. The management override of controls is the key risk and the Auditors will look at journals and management estimates as part of their work on this part of the audit.

39.4     The other key risks identified are:

• Valuation of property, plant and equipment. Work in this area will examine whether the valuations are accurate, including the assessment and judgements used in arriving at a valuation.
• Valuation of the Pension Fund net liability, which represents a large sum in the accounts. Work will examine the actuarial valuations and the basis of assumptions used in the actuarial valuations.
• Private Finance Initiative (PFI) liabilities. The audit will examine the PFI contracts that the Council has for Waste Disposal and Newhaven schools. Work undertaken will examine the PFI accounting models used to test their accuracy and assess liabilities.

Other Matters

39.5     The Other Matters included in the audit are listed on page 9 of the Audit Plan. This work includes:

• Examining the Council’s Annual Governance Statement (AGS) and the financial statements to test that they are accurate and make sure the accounts accurately reflect what is happening in the Council;
• Considering elector objections if there are any; and
• Work to examine management’s assessment of the ‘going concern’ assumptions.

Materiality and Value for Money (VFM) arrangements

39.6     The level of materiality is derived from the gross revenue figure for the Council and is set at £20million. The Auditors will also report any incorrect statements over £1million. The audit will provide a Value for Money (VFM) statement, which includes an examination of identified VFM risks:

• Ongoing financial sustainability – which will look at the Council’s Medium Term Financial Plan (MTFP) and the Core Offer. This work will involve examining financial statements and talking to management.
• Partnership working with the NHS; and
• Brexit.

39.7     Marcus Ward outlined the timeframe for the audit which will provide the Audit Findings report to the Audit Committee in July 2019, and confirmed the independence of the Auditors.

39.8     The Committee discussed the content of the Audit Plan and asked questions or sought clarification on a number of points. It was clarified that the audit  ...  view the full minutes text for item 39