Meeting documents

To consider the attached report.

Contact Officer:  Nuala Donnelly (01296) 585164

The Committee received a report and External Audit Plan which summarised the proposed approach and scope of work to be undertaken by the external auditors for the 2017/18 audit in accordance with statutory requirements and to ensure it was aligned with the Committee’s service expectations.

The Audit Plan had been prepared having regard to several key inputs including:-

·                    Strategic, operational and financial risks relevant to the financial statements.

·                    Developments in financial reporting and auditing standards.

·                    The quality of systems and processes.

·                    Changes in the business and regulatory environment.

·                    Management’s views on all the above mentioned issues.

As well as the financial statement risks and value for money risks, the auditors had to perform other procedures as required by auditing, ethical and independence standards, the Code and other regulations.

The auditors had assessed the key risks which would drive the development of an effective audit and the planned audit strategy in response to those risks and had identified four significant risks to the opinion of the financial statements. These were the risk of fraud in revenue and expenditure recognition, misstatements due to fraud or error – management override and property, plant and equipment – administration and valuation.

The external auditors had also identified Pension Liability Valuation as an important issue when considering the risk of material misstatements to the financial statements and disclosures, although it had not been classified as a significant risk.

The Audit Plan restated, as in previous years, that management had the primary responsibility to prevent and detect fraud.  The Plan detailed how the auditors planned to obtain reasonable assurance about whether the financial statements as a whole were free of material misstatements whether caused by error or fraud.  Work would also be undertaken to consider whether the Council had in place ‘proper arrangements’ for securing financial resilience at the Council, and to secure economy, efficiency and effectiveness on its use of resources, which would include an assessment against the requirements of the CIPFA/SOLACE framework for local government.  In due course this would be reported to the Committee through documents such as the Annual Governance Statement.

An update on the results of the audit work in these areas would be reported back to the Committee in September 2018.

As in previous years, the Internal Audit plans and resulting work would be reviewed.  The findings of audit reports, together with any other work completed in the year, would help to inform detailed external audit work, including on issues raised that had an impact on the year-end financial statements.

The indicative fee scale for the audit work was £56,785, although it was possible that this fee could increase in due course if additional testing or work was required in addition to that already identified within the Audit Plan.  The external auditors would be making use of third party specialists for work on the valuation of land and buildings and for Pensions disclosure and IAS 19 Liability work.

The fee for other non-audit services not covered by the audit work was £17,411 and related to the certification of Housing Benefits claims and returns annual report for 2016-17.

For the purposes of determining whether the financial statements were free from material error (i.e. the magnitude of an omission or mis-statement that, individually or in aggregate, could reasonably be expected to influence the users of the financial statements), the external auditors had determined that overall materiality for the financial statements was £1.96m based on 2% of gross expenditure. As such, any uncorrected audit mis-statements greater than £98,000 would be reported to the Audit Committee.

Members requested further information and were informed:-

(i)            on the assurance work that would be done relating to the Pension Liability Valuation.

(ii)           that the scope of work for the 2017/18 audit would provide an assessment on whether the financial statements of AVDC were a true and fair view position as at 31 March 2018 and of the income and expenditure for that year, as well as on the Council’s arrangements to secure economy, efficiency and effectiveness.  All of the conclusions would assist in any transitional arrangements to a unitary Council(s).

RESOLVED –

That the contents of the external auditors’ Audit Plan for 2018 be noted.