Agenda item

T De Zoysa (representing the External Auditor) presented to Members the External Audit Plan for the financial year ending 31 March 2023.

The following key points were highlighted:

·       The Safety Valve Agreement (SVA) agreed with the Department of Education to eliminate the DSG deficit was an important milestone for the Council.

·       The Council had received national recognition such as the Council of the Year nomination from the LGA. The winner would be announced in June 2023.

·       It was noted whilst other Local Authorities had experienced delays with audits and preparedness of statements of account, Barnsley MBC had closed the last 4 years audits on time which was a testament to the hard work of the finance team and External Audit.

·       The initial risk assessment regarding VFM had identified one potential continuing risk of significance, which was regarding the implementation of SEND reform in Barnsley. External Audit would continue to review this issue as part of the 2022-23 VFM work and would be reported to the Audit Committee at the end of the year in the Auditor’s Annual Report.

·       One significant area of change was the surplus of the South Yorkshire Pension Fund which would be reflected in the financial statement. Grant Thornton were liaising with the NAO on the auditing reporting for the pension fund.

·       The new auditing standards were referenced within the report, which included ISA 315 (identifying and assessing the risk of material misstatement) and ISA 240 (External Audit responsibilities relating to fraud in an audit of financial statements).

·       The audit fees for the year had not changed.

In the ensuing discussion, the key points were as follows:

·        It was noted that practioners and auditors had provided feedback to regulators regarding the complexity of the valuation of Council assets, and it had been suggested to CIPFA that account requirements could change to relieve pressure and time for both External Audit and the Council. Different assets had different methodologies, with the Council employing valuers who justify their valuations to the External Audit team, who in turn employ valuers who support the work of challenging the Council’s valuers.

·       Further to specific questioning regarding the valuation of the Council’s assets, it was noted that one of the methodologies used was based on rental value in the commercial market. However, this methodology was mainly used for investment properties, of which the Council only had a small number of.

·       Members queried the increased yield of the pension fund and what implications this had for the Council. It was explained that this money was contained within the unusable reserves and that the pensions authority had an investment strategy that sets out the approach to asset classes to de-risk the portfolio which could lead to a continuing surplus. In response to whether pension fund managers engaged in futures trading to protect the fund, it was explained that this is something that the Council would not do however investment managers were outsourced.

It was agreed that an awareness session on the pension fund should be arranged to take place in the near future.

RESOLVED:-

(i)            That the report be noted.

(ii)          That a Member awareness session regarding the pension fund be arranged.