Agenda item

External Audit Plan and Progress Update

This item will cover the external audit plan and an external audit progress report.

Minutes:

Emily Hill (Director of Finance) introduced the item. She was also joined by Paul Dossett and Ellen Millington from the auditor Grant Thornton.

 

Emily Hill noted that due to Covid-19 there would be a delay to the statutory timetable and the accounts didn’t need to be signed off until November. However, the Council had already been assured that there were no major issues.

 

Ellen Millington (Grant Thornton) took the committee through the audit plan and Covid-19 update. She highlighted the following points:

·       There was a risk around medium term financial planning due to the uncertainty for whole local government sector and increases in demand for services.

·       Covid-19 had been added as an additional significant risk.

 

The Chair asked what the delay in the timetable meant for future audits – would they return to the previous timetable? Paul Dossett (Grant Thornton) said the Redmond Review recommended local government move to sign off their audits at the end of September. He expected the Government to plan to move to the September deadline in 2021. Ellen Millington added that Grant Thornton were still planning to do the audit to the same standards as in previous years despite remote working.

 

Councillor Alex Karmel asked for clarification on the difference between IFR 15 and IFR 16.

Paul Dossett said it related to property leases. IFR 16 meant all material leases were on the Council’s balance sheet.

 

Councillor Karmel asked if the effect of IFRF 16 was positive or negative. Paul Dossett said in theory it was negative because it brought extra costs onto the balance sheet, but they were still awaiting detailed guidance on its application. Emily Hill said she expected the change to be neutral due to the way capital was accounted for in local government and statutory smoothing mechanisms.

 

Councillor PJ Murphy, noting the additional work placed on the Finance team due to Covid-19, asked if the audit was still on track. He also asked what the impact on the team would be if and when things went back to normal. Emily Hill said she was pleased with the statutory deadline extension. The Council and auditors could have met the earlier deadline but the extension gave officers more time to focus on Covid-19 priorities. She was confident that the Council could meet next year’s deadline.

 

Councillor Murphy asked if the audit fee variation for additional PPE experts etc. were billed at cost or a ‘cost plus’ model. Paul Dossett said they were billed at cost.

 

Councillor Murphy asked what the £5k improvement costs were spent on. Paul Dossett said Grant Thornton had employed more staff to work on the audits – including an ‘engagement quality review partner’ to judge the audit work. Some additional costs had been imposed

by the regulator and were reflected in the fee proposal.

 

Councillor Murphy felt that Grant Thorton should bear the improvement costs. Paul Dossett said the additional fees reflected the extra work required by the regulator.

 

Councillor Jonathan Caleb-Landy asked what the potential impact on fees would be of the three potential scenarios modelled in the report. Paul Dossett advised that if Council’s could maintain a stable position and a good set of accounts then that kept fees down. The Redmond Review recommended a different level of fees with additional fees only for extreme events.

 

The Chair thanked Paul Dossett and Ellen Millington from Grant Thornton for attending the meeting.

 

Supporting documents:

 

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