To consider the attached report.
Contact Officer: Nuala Donnelly (01296) 585164
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 2018.
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 2017/18. 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 were anticipating issuing the Annual Certification Report of grant claims and returns for 2017/18 in January 2019. Members attention was also drawn to 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 2018 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 or unusual transactions to indicate any mis-reporting of the Council’s financial position.
· Property, Plant and Equipment – the work had not identified any material misstatements and some non-material misstatements.
· Other Risk: Pension Liability Valuation: one uncorrected misstatement had been identified in relation to a difference in the estimated value of the fund assets attributable to Aylesbury Vale and the actual outturn position. The value of this difference had been £1.328m.
When establishing the overall audit strategy, it had been determined that planning materiality was £1.959m, which was 2% of Gross Revenue Expenditure, with any differences in excess of £0.114m reported to the Committee. Further information on the strategy for reporting was included in the Committee report.
The Auditor’s report had included reference to the un-adjusted Pension valuation error, which had been brought to the attention of the Audit Committee immediately prior to its Accounts Certification meeting. The report highlighted that this figure is material and requires significant estimation. It was also highlighted that it was the early estimation of this number and a subsequent recalculation by the scheme Actuary that resulted in the difference. The Auditor had report concluded that this was within acceptable tolerances.
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. Analytics had been done in areas including journal entries and payroll. Areas of focus for the future reporting would include looking at the impact of the introduction of new accounting standards for IFRS 9 Financial Instruments, IFRS 15 Revenue from contracts with customers, and IFRS 16 leases.
The Committee was informed that the external audit fees for 2017/18 were in line with the scale set by the PSAA and reported in the March 2018 Audit Plan. Non-audit work outside of the PSAA requirements had not been undertaken during the period.
In response to a question Members were informed that when the Commercial Property Investment Strategy had been approved by full Council in September 2017 it had been agreed that reports would be brought to Cabinet, the Finance and Services Scrutiny Committee, Council and, where appropriate, in the Quarterly Finance Digest on the progress of the strategy.
(1) That, this being Adrian Balmer’s last Audit Committee meeting, Members thanked him for the external audit work he had done over the past few years.
(2) That the contents of the External Auditor’s Annual Audit Letter for 2017/18 be noted.