The report was introduced by Jonathan Wilson, Assistant Director Finance. The report covered the audit for the 2019/20 financial statements and had assessed the Council’s arrangements on security economy, efficiency and effectiveness. The plan had also set out the audit process with the auditors reporting back to committee in July 2020. Members were briefed on the key financial statement risks identified and the steps taken to address them. These were Management Override of Controls, Revenue (and Expenditure) recognition, Valuation of Property Plant and Equipment and Pension Liability Valuation.
Jonathan Wilson also highlighted the current delivery risk inherent in the delivery of external audit deadlines in the sector currently. The key issues were the early closure timetable and the ability of external audit firms to recruit quality staff to positions. Many 2018/19 deadlines had been missed in the sector and there remained a higher risk to the Council in 2019/20.
The BDO Representative, Lisa Clampin, walked the Committee through the audit planning report and provided Members with an overview of the key audit matters identified when reviewing the planned audit strategy for the Council for the year ending 31 March 2020; that BDO strategy had been predicated on a risk based approach and would continue to be updated through the assessment of the audit; the risks identified alongside the risk rating, fraud risk present, the test approach and the impact of any significant judgements or estimates. Members were informed that a BDO member of staff had declared that they had a family member employed by the Council and that individual had not been involved in the audit. Members were advised that any impact on fees would be brought back to committee.
Councillor Collins questioned the £120,000 figure on page 113 of the agenda to which Lisa Clampin stated this was an error and should have read £140,000.
Councillor Rice referred to Valuation of Pension Liabilities and whether the Corona Virus would have any significant funding problems in the long term for pension funds. Lisa Clampin stated this would not be driven that way it was a longer term scheme with liabilities having the potential to go up and down. Jonathan Wilson stated that the triennial valuation had been recently undertaken but this would had not included this impact. However each annual reassessment of the Pension Valuation was made by the actuary and it was expected the initial assessment of the impact would be included in the final valuation figures for 2019/20.
Councillor Rice referred to the Valuation of Pension Liability and asked for some clarity on how the risk to membership data and cash flows provided to the actuary at year end may not be accurate. Lisa Clampin stated that this was audit risk and thinking about “what could go wrong” scenarios. That when the audit was undertaken they were trying to gain reassurances through the testing and the procedures being undertaken that financial statements are free from material mistakes. That looking at what could go wrong to reduce that risk and what could impact the valuations.
That the Standard and Audit Committee noted the report.