Agenda item

To consider a report by the Chief Finance Officer which informs Members of Grant Thornton’s audit plan for the audit of the Council’s accounts and value for money arrangements. The report from Grant Thornton highlights the risk based approach to the audit and the main risks they have identified for 2018/19.

(Report attached)

The Chief Finance Officer submitted a report which informed Members of Grant Thornton’s audit plan for the audit of the Council’s accounts and value for money arrangements.

The report highlighted the risk based approach to the audit and the main risks the auditors had identified for 2018/19.

Gareth Mills, Engagement Lead, Grant Thornton attended the meeting and spoke on the key matters impacting on the audit which included:

·  Significant risk

·  Materiality

·  Value for money arrangements

·  Audit logistics

·  Independence

Members were informed that an Audit Progress Report would be prepared for the meeting in March, with the final opinion being delivered towards the end of July.

Commenting on the value for money arrangements and in particular the reference on the Authority’s arrangements and plans to mitigate any risks on Brexit, Members queried if there existed a basic Brexit checklist.

Members were informed there was no standard Brexit checklist. Brexit was a key value for money risk and an area for focus. It was understood that the Council already had in place a Members Cross Party Working Group together with various Officer Working Parties to monitor and plan for implications arising from Brexit. This was considered to be a reasonable course of action

Referring to the Members Cross Party Working Group, Members suggested that the Lead Officer who advised the Group be invited to attend a future meeting of this Committee.

The Head of Governance and Scrutiny Support suggested that a report on Brexit, seeking assurance that appropriate arrangements are in place to manage the impact of Brexit on City Council Services be scheduled for the next meeting in March, with the appropriate Lead Officer being invited to attend.

Members queried if Grant Thornton’s treatment of materiality differed from that used by the Council’s previous auditors and if so what impact that might have on the information presented to the Audit Committee?

In responding Mr Mills said that the materiality thresholds identified were similar to those used by KPMG in 2017/18. The planned materiality thresholds were based on the Council’s expected gross expenditure and would be reviewed at the year-end audit for any necessary changes. Grant Thornton would report to the Committee on any unadjusted audit differences which were not clearly trivial.

On a related issue Mr Sethi informed Members that on 26^th February 2019 Grant Thornton were running an event to explain how the external audit operates. An invitation to attend was extended to all Members of this Committee.

Reference was made to the recently published National Audit Office (NAO) report on local authority governance which commented that 30% of section 151 officers did not agree that sufficient time was allocated by External Auditors to Value for Money work.

In responding Mr Mills said that discussions with the Chief Finance Officer and the new external auditors had already taken place, as a consequence Grant Thornton were confident with their proposed Audit Plan. It was suggested that the requirements for local authority auditors may require revisions in the area of value for money work in the future.

Referring to the coverage on Independence & Non-Audit Services, page 50 of the submitted plan, Members noted that Grant Thornton had provided advice on funding and associated financial modelling for redevelopment of Headingley Stadium, and asked whether, as the new external auditors to the authority, Grant Thornton considered there was any conflict of interest.

In responding Mr Sethi said that Grant Thornton’s work on the Headingley Stadium had come to an end and as far as he was aware there were no other interests or ethical issues to be addressed.

The Chair thanked Mr Mills and Mr Sethi for their attendance and contributions.

RESOLVED –

(i)  To note the contents of the report

(ii)  To approve the nature and scope of the audit plan as presented by Grant Thornton

(iii)  To receive an Audit Progress Report at the next meeting

(iv)  That a report on Brexit and the implications that may impact on City Council Services be scheduled for the next meeting in March, with the appropriate Lead Officer being invited to attend