Agenda item

The Council’s External Auditor will submit a report summarising the key issues identified during the audit of the Financial Statements for the year ended 31st March, 2015 for the Authority and on the assessment of the Authority’s arrangements to secure Value for Money.

The Committee considered the report of the External Auditor (KPMG) which had been submitted in accordance with International Standard on Auditing 260, the External Audit Annual Governance Report for 2014/15.  John Cornett (Director) from KPMG presented the report which incorporated, amongst other things, the following:

·        the Headline findings

·        the proposed opinion and audit adjustments

·        the key financial audit risks and areas of audit focus

·        the Accounts Production and audit process

·        the current position with regard to the completion of the audit of the financial statements

·        the Value for Money Conclusion including the specific Value for Money Risks

·        Audit differences

·        the Declaration of independence and Objectivity

·        Materiality and reporting of audit differences

·        the KPMG Audit Quality Framework.

He indicated that he anticipated issuing an unqualified audit opinion on the Authority’s Financial Statements by 30^th September, 2015 following consideration by the Council on the 24^th September.  He would also report that the Annual Governance Statement complied with guidance issued.

The Audit had identified one audit adjustment relating to the reclassification of a grant between creditors and grants received in advance, therefore, the net impact of the adjustment was nil.  The appropriate adjustments had been made to the financial statements.  In addition, one presentational adjustment had been identified and this matter had been addressed by the Authority.

No significant risks had been identified specifically to the Authority during 2014/15 with regard to the financial statements, however, Local Authority Maintained schools had been an area of focus during the year.  The External Auditor had reviewed the accounting treatment for Local Authority Maintained Schools and confirmed that there were no significant matters arising as a result of this work.

The Authority continued to have good processes in place for the production of the accounts and good quality supporting working papers.  Officers dealt with queries efficiently and the audit process had been completed within the required timescales.  The Finance Team, Mr N Copley, Service Director Finance, and Mrs F Foster, Director of Finance, Assets and Information Services and their staff were thanked for their assistance and support.

All work on the financial statements was substantially complete subject to the receipt of approved financial statements and signed management representation letter.

The External Auditor had identified financial resilience as a Value For Money risk in the external audit plan for 2014/15 and work had continued with officers throughout the year to discuss this risk.  Information about this was contained within the report but there were no matters arising as a result of this work.  It had been concluded that the Authority had made proper arrangements to secure economy, efficiency and effectiveness in its use of resources.  In the circumstances it was anticipated that an unqualified VFM conclusion would be issued by 30^th September, 2015.

The presentation engendered a full and frank discussion during which matters of a detailed and general nature were raised and answers were given to Members questions where appropriate.

The following issues were referred to:

·         There was a discussion of the financial resilience in terms of Value For Money risk, with reference to the level of reserves and whether or not this was appropriate within the context of the Authority’s medium Term Financial Plan.  The External Auditor confirmed the view that reserves were in line with the assumptions based in the Medium Term Financial Plan and, therefore, appropriate

·         Arising out of the above the Leader of the Council specifically  referred to the Council’s financial commitments particularly in relation to the funding of the Town Centre improvements, to the use of reserves and to the long term financial implications for the Authority in the light of potential future government decisions in relation to grant aid which was likely to raise significant challenges

·         In response to detailed questioning the Service Director Finance confirmed that there were no significant issues arising from the financial adjustments which had been required and that this merely related to the reclassification of  grants received

·         Reference was made to the changing approach to risk management, to the classification of risk and the manner in which this was addressed.  It was noted that this was a significant issue for all authorities within the current financial climate and local authorities were likely to be challenged as financial reductions impacted on service provision

·         The liaison arrangements between Internal Audit and Risk Management to ensure appropriate compliance and support were outlined. 

·         In response to detailed questioning, the Head of Internal Audit referred to staffing levels and to action taken to ensure they remained appropriate. 

·         Mr J Cornet gave details of the three levels of Quality Assurance undertaken by KPMG

RESOLVED:-

(i)        that the External Auditor’s Report 2014/15 be received and referred for consideration by the Council to be held on the 24^th September, 2015;

(ii)       that the Auditor’s findings on the effectiveness of the Council’s internal controls and his conclusion on the Council’s arrangements for securing Value for Money be noted;

(iii)      that the Committee place on record their thanks and appreciation to the hard work of the External Auditor and the Director of Finance, Assets and Information Services and their respective Teams in this process.

RECOMMENDED TO FULL COUNCIL ON THE 24^th SEPTEMBER:-

(i)        that the External Auditor’s Draft Annual Governance Report 2014/15 be approved;

(ii)       that the findings on the effectiveness of the Council’s internal controls and his conclusions on the Council’s arrangements for securing Value for Money be noted; and

(iii)      that the findings from the audit work in relation to the 2015/16 financial statements be noted and accordingly, the final accounts 2015/16 be approved.