To consider the report attached as Appendix C coloured green.
Contact Officer: Evelyn Kaluza (01296) 585549
The Committee received a report on the progress made by the external auditors, Ernst and Young, on their audit plan for 2014/15.
It was reported that the external auditors had completed all of their walk throughs and controls testing, including their review of the work of Internal Audit. To date this work had not identified any issues considered necessary to bring to the attention of the Committee.
As part of the external auditor’s planning procedures, they would consider the significant risks of giving a wrong conclusion in relation to their value for money assessment. As much work as was considered appropriate would be carried out to enable a safe conclusion to be reached on arrangements to secure value for money. This might identify other risks which might require the external auditors to focus additional attention during the course of the audit.
Due to the continuing financial pressures on local government, this had been reassessed as a significant risk. This did not reflect any particular concerns at this stage about the Council’s processes, but rather reflected the environment within which the Council was working.
The Council continued to face financial challenges, with a savings requirement of£0.6m in 2016/17. The Medium Term Financial Plan (MTFP) had a cumulative budget gap of £2.5 m in 2017/18 and a savings gap of at least £1.8m per year beyond 2017/18. The MTFP set out the Council’s strategic approach for closing the budget gap and key deliverables that were critical to the financial stability of the Council.
The external auditors would focus on reviewing the achievement of the planned savings in 2014/15 and reviewing the Council’s on-going identification of savings or alternative income streams to reduce the budget gap in 2016/17. They would also review the Council’s MTFP and the assumptions up to 2017/18.
It was reported that the Committee would be provided with formal reports throughout the audit process and the report submitted summarised the proposed timeline. In addition to this formal reporting, the external auditors would seek to give practical business insights and updates on regulatory matters via sector briefings.
Members sought clarification around several issues, including:-
· The arrangements for ensuring that sufficient funding was available to meet any obligations that might arise as a result of the Government’s recent announcements concerning a National Minimum Wage.
· Whether the proposed value for money assessment was particular to this Authority or of a generic nature. It was confirmed that the latter was the case.
· The work undertaken in relation to the Corporate Risk Register and mitigation actions.
· The period over which the value for money risk assessment would take place. It was confirmed that it was not possible at this stage to give an exact end date. Members were reminded that the MTFP anticipated the loss of Government Grant and Retained Business Rates by 2019/20.
· It was confirmed that major capital projects were subject to their own individual risk registers.
That the external auditors’ report be noted and it be confirmed was aligned with the Committee’s expectations.