To consider the attached report.
Contact Officer: Andrew Small (01296) 585507
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 2017 in accordance with statutory requirements and to ensure it was aligned with the Committee’s 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, the risk of management override, the pension liability valuation and the complexities regarding property valuations.
The Audit Plan restated, as in previous years, that management had the primary responsibility to prevent and detect fraud. Section 2.1 of the Plan detailed how the auditors would 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 2017.
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.
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 £1.962m based on 2% of gross expenditure. As such, any uncorrected audit mis-statements greater than £98,100 would be reported to the Audit Committee.
That the contents of the external auditors’ Audit Plan for 2017 be noted.