Meeting documents

To consider the attached report.

Contact Officer:  Andrew Small (01296) 585507

The external auditors were required to issue an Annual Audit Letter (AAL) to AVDC following completion of their audit procedures for the year ending 31 March 2019.

The Committee received, for information, the external auditors’ AAL which provided an overall summary of the external auditors’ assessment of the Council. The letter drew on the findings of audit work carried out on the Council’s financial statements for 2018/19.  These covered the key findings on the Financial Statements audit, the Value for Money conclusion, Whole of Government Accounts, Annual Governance Statement, and control themes and observations had already been reported to the Audit Committee, so were very briefly summarised in the AAL.

The external auditors had been anticipating issuing the Annual Certification Report of grant claims and returns for 2018/19 in January 2020.  In addition to the Annual Audit Letter, the Council’s external auditors had historically prepared an annual summary of grant certification works.  With the raising of Audit certification thresholds, this had meant that only Housing Benefit certification work had been reported for the last few years.  For 2018/19 the requirement for external audit to report on this work had been removed.  Given some of the historic issues around this grant claim, the external auditors had provided a letter (Appendix 2 with the agenda report) confirming that the Council had received a clean bill of health for 2018/19.

Members attention was also drawn to the Executive Summary which listed the results and conclusions on the significant areas of the audit process.  This detailed that an unqualified opinion had been given that the financial statements gave a true and fair view of the financial position of the Council as at 31 March 2019 and of its expenditure and income for that financial year.  There were no other matters from the areas of work that needed to be reported to those charged with governance of the Council.

The key issues identified as part of the external audit work had been as follows:-

·                    Misstatements due to fraud or error – the work had not identified any material weaknesses in controls or evidence of material management override, or instances of inappropriate judgements being applied.  The auditors had not identified any other transactions during the audit which appeared unusual or outside the Council’s normal course of business.

·                    Risk of fraud in revenue and expenditure recognition – the work had not identified any material misstatements in controls or evidence of material management override, or instances of inappropriate judgements being applied.  The auditors had not identified any other transactions which appeared unusual or outside the Council’s normal course of business.

When establishing the overall audit strategy, it had been determined that planning materiality was £2.14m, which was 2% of Gross Revenue Expenditure, with any unadjusted audit differences in excess of £0.107m reported to the Committee.  Further information on the strategy for reporting was included in the Committee report.

The auditor’s report also included summary information on the Value for Money conclusion and on data analytics done to help identify specific exceptions and anomalies which could then be focussed on during substantive audit testing.  The Auditor’s report had included reference to consideration around one identified potential significant risk as a result of the 1 November 2018 announcement that a unitary authority for Buckinghamshire would be instituted from 1 April, 2020.  There was a possibility that the announcement would impact on the Council’s capacity to manage its operations as well as planning a smooth transition to the unitary authority.  The external auditors had regularly monitored this during the year and concluded that there was no significant risk or matters to report about the Council’s arrangements to secure economy, efficiency and effectiveness in the use or resources.

Areas of focus for the future reporting would include the revised IASB Conceptual Framework for Financial Reporting (Conceptual Framework) that would be applicable for local authority accounts from the 2019/20 financial year.  However, it was not anticipated that this change would have a material impact on Local Authority financial statements.

The Committee was informed that the external audit fees for 2018/19 for the Housing Benefit certification work had been £3,580 less than the planned fee.  The total audit fee for other work had been varied up by £6,437 in relation to additional work carried out:-

·                    to assess the impact and audit of the revised IAS 19 balances after the McCloud judgement and GMP considerations.

·                    on the valuation of investment properties and PPE.

Members asked that Finance staff be thanked for their work in preparing the financial statements for 2018-19, particularly as there had been a number of planned audit work timing issues and, it was –

RESOLVED –

(1)          That the contents of the External Auditor’s Annual Audit Letter for 2018/19 be noted.

(2)          That the contents of the external auditor’s certification letter relating to AVDC’s Housing Benefit Assurance Process (HBAP) report 2018-19 be noted.