Agenda item

External Audit Plan 2020/21

Report by the Chief Finance Officer


36.1     The Committee considered a report by the Chief Finance Officer which presented the External Audit Plan of Grant Thornton in relation to their audit of the 2020/21 accounts.


36.2     The Committee discussed: the impact of the pandemic and how to assess it; the pension fund liability; changes to the Value for Money judgement; the triviality level of £700,000; PFI; methods and models used to generate accounting estimates.


36.3     The External Auditors confirmed that ESCC would be benchmarked against other public sector entities in assessing the response to the pandemic, and that a suite of tools is available to help with that assessment.  In respect of the Pension Fund liability, the key audit risk is whether the liability as stated in the accounts is materially correct.  GT have external pensions experts who assist with that assessment.


36.4     Darren Wells and Andy Conlan explained the background to the amended approach to the Value for Money judgement, which will provide a narrative judgement rather than a binary qualified or unqualified verdict.  The change is the product of a consultation by the National Audit Office.  Members expressed a desire to see the consultation and the NAO response.  The External Auditors set out that the report, when presented in September, will cover areas of strength of the authority, together with potential improvements, which it was hoped would add value from the audit process. 


36.5     The level of triviality for errors to be reported to the Committee is set by reference to the materiality calculation of 1.5% of prior year gross expenditure and as a percentage of materiality. The level is broadly used across the sector, and the Council has operating costs of £896 million.   Smaller errors are still recorded, but not individually reported to the Committee. In respect of PFI, the calculation is an estimate of the liability which is subject to a complex set of assumptions (including inflation and waste volumes).  The External Auditor’s role is to see if the assumptions are materially correct.


36.6     In respect of the models and assumptions used, the expectation of the External Auditors is for the Committee to rely on the assurances of the Finance Team and Chief Officers rather than undertaking analysis of the models.  It was suggested that the Committee be presented with a report on what the key estimates are, and the basis of the key assumptions and methods used to produce these. 


36.7     The Chief Finance Officer confirmed that ESCC had appointed a new valuer in respect of Property Plant and Equipment, and was undertaking a 100% assessment exercise, which will re-base the estimate underlying the accounting assumptions. A new actuary has also been appointed in respect of the Pension Fund, and the option to defer production of the pensions statement has been taken up, to allow for the most accurate figures attainable to be used. The timescales, even with the September deadline for final reporting, remain tight.


36.8     The Committee RESOLVED to note the report.


[Post meeting note – the National Audit Office consultation response was circulated by email to the Committee by the Chief Finance Officer – see minute 36.4]



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