Issue - meetings

Janet Dawson from Ernst & Young attended the meeting to provide the update regarding the Annual Audit Letter from the external auditors.

The Committee noted that the Council’s external auditors were required to issue an annual audit letter to the Council following completion of their audit procedures for the year ended the 31st of March 2019.

Ms Dawson referred to Ernst and Young's Annual Audit Letter and the relevant key points contained therein and explained that this related to the audit undertaken for year ending 31st of March 2019. The letter outlined the work that had been undertaken and the key points and issues raised. The main findings of the audit had been reported back to the General Purposes & Licencing Committee .

The Chairman referred to page 22 of the agenda which was Ernst and Young's executive summary. This highlighted issues that could impact on Ernst & Young’s risk assessment--being defined as ‘disclosures on going concern.’ The commentary indicated that financial plans for 2020/21 and medium-term financial plans would need revision because of the impact of COVID-19. Ernst and Young considered that the unpredictability of the current environment could give rise to a risk that the Council would not appropriately disclose the key factors relating to ‘going concern’. The Chairman asked for more clarity on what this meant. Ms Dawson explained that Ernst & Young were reporting on the accounts ending in March 2019, but approval for those accounts was not signed off until August 2020. Ms Dawson said that as the accounts had been signed off late, then they had to note a possible impact that Covid 19 may have had on the Council’s accounts and financial position.

The Chairman enquired, (with respect to the matter of ‘going concern’), if Ernst & Young would treat the Council differently from a private sector company, as the Council may have access to funds that would not be available to a private company. Ms Dawson responded that the requirements for auditors were set out in the International Auditing Standards—they applied equally to the Council as they would to a corporate entity. The Government had issued guidance known as ‘practice note 10’ which outlined the fact that councils should be treated as going concerns unless there were any planned legislative changes that could alter that position by ceasing the existence of a Council within the next 12 months.

Ms Dawson stated that the auditors were obligated to examine a council's financial resilience and cash flow position to assess if they were still able to undertake the various services that they were expected to undertake. The auditors also had to satisfy themselves that councils had sufficient financial resilience and cash flow to satisfy and fulfil their various financial obligations without having to borrow money or take out any loans.

The Vice Chairman referred to the problems highlighted by E&Y with the valuation of Strategic Property. He asked Ms Dawson what the situation was regarding the valuations undertaken in the previous audit by KPMG.

Ms Dawson answered that  ...  view the full minutes text for item 54