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 its value for money arrangements. The report highlights the risk based approach to the audit and the main risks they have identified for 2019/20.

(Report attached)

The Chair welcomed to the meeting Gareth Mills, Engagement Lead and noted apologies from Perminder Sethi, Engagement Senior Manager (Grant Thornton).

The Chief Officer Financial Services submitted a report which informed Members of Grant Thornton’s audit plan for the audit of the Council’s accounts and its value for money arrangements; detailed the outcome of the 2018/19 Housing Benefits Subsidy grant claim audit; and provided an update on 2018/19 audit fees and on PSAA’s process for approving them

The report from Grant Thornton highlighted the risk based approach to the audit and the main risks they had identified for 2019/20.

Addressing the reports Mr Mills (Grant Thornton) explained that two areas had been identified where there was a significant risk of material misstatement due to the scale of the assets and liabilities involved – the valuation of property, plant and equipment and the valuation of pension liabilities and assets.

In relation to their audit of the council’s arrangements for securing value for money, Grant Thornton had identified the key risks as being the council’s overall financial standing given the continuing significant pressures which it faces, and the potential for Brexit to impact on the council.

The Audit Plan proposed an audit fee of £198.9k. This included a fee variation of £20.3k, the reasons for which were explained in Section 10 of the Audit Plan. In addition to the information given in their audit plan, Grant Thornton had written to the Chief Finance Officer to provide more detail of the additional audit work proposed and the reasons for it. A copy of that letter was included as an appendix to the audit plan.

Members raised the issue of the 2018/19 Audit and the fee variation of £9k, noting that officers had contacted PSAA who had provided assurances that their fee variation process required that the agreement of the audited body was obtained before they confirm any agreement to an audit fee variation.

It was reported that in this case there had been a misunderstanding over whether the Council had agreed to the requested additional fees. PSAA had therefore reverted the 2018/19 fee variations to an undecided status and requested Grant Thornton to provide the council with additional information. Grant Thornton had subsequently provided more explanation of the reasons for the fee variation to the Chief Finance Officer.

Members were informed that the letter from Grant Thornton explaining the reasons for the fee variation was submitted to the Corporate Governance and Audit Committee for information, and the Section 151 Officer had the authority to approve any variation to the fee.

It was the wish of Members that the Section 151 Officer informs the Executive Member responsible and the Chair of the Corporate Governance and Audit before an increase in fees is agreed.

The Chair confirmed that he had met with the Section 151 officer and discussed the proposed audit fee variations for 2018/19 and 2019/20.

Members expressed the view that any additional work which was expected to result in a variation in fee should always be set out in detail in the audit plan.

Members queried what constituted additional work

In responding Mr Mills said that additional work was anything which had not been anticipated in the expected scope of works when the audit contracts had been awarded.

The Chair asked if an opinion on the 2019/20 Statement of Accounts would be available for 31^st July 2020.

Mr Mills explained that Grant Thornton would plan their work to aim to issue their opinion by 31^st July, but he could not provide an absolute assurance that this would be achieved. The opinion could only be issued once sufficient audit assurance had been obtained, and there was a potential for a delay if unexpected issues arose.

The Chair thanked officers for their attendance and contributions

RESOLVED –

(i)  To note and agree the nature and scope of the 2019/20 audit plan and to note the proposed audit fee presented by Grant Thornton.

(ii)  To note that following further discussions with Grant Thornton, the Chief Finance Officer had agreed their audit fee variations for 2018/19, and agreed in principle their proposed audit fee for 2019/20, subject to subsequent approval of the variation element within it by PSAA (Public Sector Audit Appointments Ltd).

(iii)  To note the outcome of the audit of the 2018/19 Housing Benefits Subsidy grant claim 2018/19.

(iv)  That the Section 151 Officer informs the Executive Member responsible and the Chair of the Corporate Governance and Audit before any future increase in fees is agreed.