Meeting documents

To be presented by Mr S Turner, Engagement Manager, and Mr Iain Murray, Engagement Lead, Grant Thornton.

The Chairman welcomed colleagues from Grant Thornton to the meeting.  Mr S Turner, Engagement Manager and Mr I Murray, Engagement Lead, Grant Thornton provided a verbal summary of the report which highlighted the following points:

• Staffing changes were highlighted due to a standard rotation process.
• The main two responsibilities of Grant Thornton were to provide Buckinghamshire County Council (BCC) with a true and fair opinion on the financial statements and a value for money conclusion. 
• Key areas of significant risk from an audit perspective included revenue recognition and management override of controls. 
• Risks associated with evaluation of land and buildings and evaluation of pension fund liabilities were areas of high estimation. None of the areas posed new risks, and would have been examined in previous years.  It was highlighted that the areas were consistent with what would ordinarily be examined in a local authority organisation of this scale.
• Work in relation to the external audit was driven by materiality which helped to identify the areas of accounts and plan audit procedures.  This would also help to carry out the audit procedures and assess the impact of any errors or findings with the financial statement. 2% of the gross annual statement was used as a bench mark.  A number of considerations were taken into account such as performance materiality and trivial threshold.
• There were three considerations taken into account when materiality and triviality were applied.   Areas that fell below the threshold of £12 million would not be tested, with some exceptions due to specific reasons. If errors were found below the trivial threshold then they may not be addressed. 
• It was highlighted that the process was closely monitored, and that materiality was a useful guidance but could be fluid if required. 
• Findings from last year that continued to impact the financial statement would affect where the bench marks were set. The thresholds would be brought down if necessary.
• The majority of income was derived from grants and formula based income.  Anything material would be tested by audit procedures. 
• The auditing process in quarter 1 would ensure that governance arrangements were followed and there was an appropriate level of scrutiny.
• Part of BCC’s role was transparency to residents.  There was an increased scrutiny and challenge process under which local government and county councils were operating under.
• Internal audit processes were key in mitigating that risk.  BCC were required to provide a statement to Grant Thornton annually which would highlight any "hidden" activity.
• Electors would be given the opportunity to raise questions in terms of the 2018/19 annual statements.  The Chairman stated that any suggestions for improving transparency within the organisation would be welcomed.  
• Work regarding value for money arrangements involved ongoing conversations with Grant Thornton and BCC management and continual monitoring by the Business Assurance Team.
• Members asked for assurance that considerations had been made for the future of scrutiny with other external auditors with the formation of the unitary organisation.  It was highlighted that Mr Murray had previously been involved with advisory work around the formation of different authorities and work was being done to identify the potential issues.

Following the report, the following points were highlighted and discussed in response to questions raised by Members of the Committee:

• There were four significant risks around Children’s Services and Communities, Health and Adult Social Care (CHASC) due to the fluid nature of both programmes. Could assurance be given that the programmes were value for money and it could be audited?  It was highlighted that the arrangements would be analysed to decide if the programmes were delivering against milestones and gaining value for money as opposed to the service itself. 
• The appointment of external auditors for the new unitary authority would be made by Public Sector Audit Appointments.   Mr R Ambrose, Director of Finance & Procurement, BCC had been involved in conversations to establish time frames for this. The recommendation for the process would be brought to the Committee at the earliest possible opportunity.  Mr A Rush, Interim Deputy Director of Finance, BCC would provide updates on the process.

ACTION: Mr Rush

RESOLVED: Members of the Committee NOTED the points presented in the report.