Meeting documents

To consider the attached report.

Contact Officer:  Nuala Donnelly (01296) 585164

The Committee had received a report on the current position with the draft Statement of Accounts for 2017-18 to the June meeting.  The Audit Commission’s Code of Audit Practice required the external auditors to report to ‘those charges with governance’ on the work carried out to discharge the external auditors statutory and audit responsibilities, together with any governance issues identified.

The Committee received a report summarising the auditors findings from the 2017-18 audit which had been substantially completed.  Subject to the satisfactory completion of the outstanding matters listed in the auditors’ report, it was expected to issue an unqualified audit opinion on the financial statements before the 31 July 2018 deadline.  The auditors had not identified any matters on the arrangements to secure economy, efficiency and effectiveness in the use of resources that needed to be reported to the Committee.  The report highlighted the following key findings:-

(i)            Scope Update – the audit had been carried out in accordance with the scope and approach that had been reported to the Audit Committee on 26 March 2018.  The planned materiality assessment had been updated based on gross expenditure on provision of services and was £2.290m (Audit Planning report - £1.959).  This resulted in updated performance materiality, at 75% of overall materiality, of £1.718m, and an updated threshold for reporting misstatements of £0.115m.

(ii)           Control Observations – a fully substantive approach had been adopted, so the operation of controls had not been tested.  A number of observations and improvement recommendations in relation to management’s financial processes and controls had been identified during the audit.

(iii)          Value for Money –  while the Audit Planning Report had identified a significant risk in relation to the sale of and circumstances leading to the disposal of Aylesbury Vale Broadband, there were no matters to report about the arrangements to secure economy, efficiency and effectiveness in the Council’s use of resources.

(iv)         Independence – the auditors had reported that there were no relationships from 1 April 2017 which might be reasonably thought to bear on their independence and objectivity.

(v)          Whole of Government accounts – an unqualified return would be made to the National Audit Office regarding the Whole of Government accounts submission.  It had been found that AVDC was under the threshold for detailed testing.

(vi)         Status of the audit – it was expected to issue an unqualified opinion, subject to the satisfactory clearance of any outstanding work. The audit results demonstrated that the Council had adequately prepared the financial statements.

(vii)        Areas of audit focus – the Audit Planning Report had identified key areas of focus for the audit of AVDC’s financial statements, that was summarised in the "Key Audit Issues" of the report.

(viii)       Audit Differences – a number of adjustments had been identified that had been under the reporting threshold and which had been corrected by management.  None of these adjustments needed to be brought to the attention of Members.  One unadjusted audit difference had been recently identified which related to a pensions estimate as at the end of March .  This information had not been available when the financial statements had been submitted for audit.

The areas that had been focussed on during the audit work included:-

·                    Revenue and Expenditure Recognition – testing had not identified any material misstatements, issues or unusual transactions that might indicate any misreporting of the Authority’s financial position.

·                    Management Override – audit work had not identified any material weaknesses in controls or evidence of material management override.  No other transactions had been identified which might appear to be unusual or outside the Authority’s normal course of business.

·                    Property, Plant and Equipment (PPE) – the audit work had focussed on the judgements applied by management /valuer which would impact asset valuations, asset classification and asset lives.  No material mis-statements had been identified in this area.  Specifically, it was noted that there had been a significant improvement in this area when compared to the previous year.

·                    Looking at the valuation methods applied to the IAS 19 Pensions Liability.

The audit findings also included a number of appendices which Members considered as part of their deliberations:-

·                    Appendix A – Required communications with the Audit Committee.

·                    Appendix B – Outstanding matters.

·                    Appendix C – Management Representation letter.

Members sought additional information and were informed that the position had improved in relation to the accuracy of PPE / asset valuations and in reclassifying existing financial instruments assets.  However, the position would still need to be monitored for future years.

(Action: add to Action Tracker).

RESOLVED –

(1)          That the matters raised in the external auditors’ report and raised by the auditors at the meeting be noted.

(2)          That Finance staff and the external auditors be thanked for their work in preparing and auditing the financial statements for 2017-18, particularly as the timetable this year required all work to be completed and agreed by the earlier deadline of 31 July.

(3)          That the Letter of Representation be agreed, and the Chairman of the Audit Committee be approved to sign it off on the Committee’s behalf.