This report contains the plan of the Council’s external auditor, KPMG, for the audit of the 2017/18 Statement of Accounts.
Hitesh Jolapara (Strategic Finance Director) introduced the report which detailed the plan of the Council’s external auditor, KPMG, for the audit of the 2017/18 Statement of Accounts.
Andrew Sayers (KPMG) addressed the Committee and noted that the plan described how the auditor would deliver the financial statements audit opinion. The audit would take place during June and July 2018 and the final accounts will be presented to the Committee in July 2018 to meet the earlier statutory deadline of 31 July 2018.
Andrew Sayers then drew the Committees attentions to those risks requiring specific audit attention:
· Valuation of land and buildings – due to their size and the judgements involved.
· Pension liabilities – again due to their size and the judgements involved.
· Managed Services – due to the history of control issues.
· The faster close of accounts – now that the deadline for the sign-off of the accounts was 31 July 2018 the increased pace of work required to meet that earlier deadline represented a risk.
· Value for money – there were no significant risks but the auditor would focus on financial resilience and contract monitoring.
Councillor Nicholas Botterill questioned the rigour of the audit of the teachers’ pension contribution return – given that the auditor was charging just £3,750 to cover contributions in the millions. Andrew Sayers noted that this was an area with agreed upon procedures and the fee reflected the work required.
Councillor David Morton asked what the consequences of not completing the audit by the agreed deadline were for the authority. Andrew Sayers said the Government publicised authorities that didn’t meet the date so there was potential reputational damage. Hitesh Jolapara added that, last financial year, H&F closed its accounts early as a trial run and he was very confident that the authority would close its accounts by the end of May. Andrew Sayers agreed and said he was confident that KPMG would be able to deliver their audit by 31 July.
Councillor PJ Murphy noted that this was the last year of KPMG’s contract and asked if the Council would be going out to tender for a new contract shortly. Hitesh Jolapara noted the Council had used Public Sector Audit Appointments to procure Grant Thornton to auditing the following year’s accounts. Councillor Murphy asked what their fees would be and how they compared to the current fees, and to fees in other comparable London boroughs. Emily Hill (Head of Corporate Finance) noted that next year’s fees represented a reduction of 23 percent compared with this year’s fees – and further information would be provided after the meeting.
ACTION 1: Emily Hill
The Chair (Councillor Iain Cassidy) asked what the additional non-audit fee of £7,000 on page 20 related to. Andrew Sayers said this was H&F’s element of the fee for an on-site visit to the BT managed services centre and additional control work carried out there. The Chair suggested BT should pay that fee.
Councillor Donald Johnson asked if very Council had to have the same risk around land valuation or if it was just H&F. Andrew Sayers said all Councils with significant housing stock should have that risk due to the size of the balance involved and the complexity of the area.
Councillor Nicholas Botterill, referring to the risk around management override of controls, asked if cost assessment should also be a risk. Andrew Sayers said the auditor did look at year-end invoices and levels of accruals etc.
That the Committee noted the 2017/18 Audit Plan as put forward by KPMG in Appendix 1 of the report.