Agenda item

EXTERNAL AUDIT ANNUAL AUDIT PLAN 2016-17

Minutes:

Report FSD17038

 

The Audit Sub-Committee considered a report which provided a review of the External Auditor’s plan arrangements for 2016-17.

 

The Sub-Committee noted that the audit fee of £119,076 had remained unchanged from 2015-16.

 

The Annual Plan set out Materiality limits. For the Authority, Materiality for planning purposes had been set at £10m, which equated to 1.58% of gross expenditure.  For the Pension Fund, Materiality for planning purposes had been set at £7.4m, which equated to 1% of net assets.  Any unadjusted misstatements of lesser amounts, to the extent that they were identified by the work of the External Auditors, were reported to the General Purposes and Licensing Committee.

 

The Local Audit and Accountability Act 2014, supported by the Code of Audit Practice, required auditors of local government bodies to be satisfied that the authority ‘has made proper arrangements for securing economy, efficiency and effectiveness in its use of resources’.  The value for money (VFM) approach was fundamentally unchanged from that adopted in 2015/16.

 

Hannah Andrews, Senior Manager, KPMG, attended the meeting and introduced the External Audit Plan 2016-17.

 

The Annual Audit Plan identified six significant risks.  These were:

 

  • Risk of fraud in revenue recognition
  • Management override of controls
  • Valuation of property, plant and equipment
  • Valuation of pension assets, and liabilities
  • Mears SPV (Special Purchase Vehicle)
  • Pension Fund Investments

 

Ms Andrews highlighted that KPMG’s risk assessment concerning LBB’s arrangements to secure value for money had identified the following VFM significant risks:

 

·  Findings from regulatory bodies

·  Overspends in Children’s Services

·  Financial Resilience

 

Councillor Onslow asked if the three significant risks relating to VFM had been listed in any particular order of priority. Ms Andrews clarified that this was not the case, and that some work had already commenced. A report would be drafted for the GP&L Committee for its September meeting.

 

The Director of Finance stated that LBB had achieved a good VFM score overall for 2015/16, but that the VFM scores pertaining to the Youth Offending Service and Ofsted resulted in a qualification. A key consideration of the VFM score was the ability of the Council to balance its budget in the medium and longer term, given a budget gap of over £20m per annum by 2020/21. The key to resolving this was long term planning. 

 

Councillor Dunn referenced the risk from regulatory bodies and asked how LBB could reverse the affect of the Ofsted report. Ms Andrews responded that the key issue now was for LBB to make positive responses to the Ofsted report.

 

Councillor Wells noted the reference to overspends in Children’s Services. He felt that it was important that the relevant PDS Chairman be informed that this was occurring.

 

RESOLVED: That

 

1.  the External Auditor’s arrangements for the Audit Plan 2016-17 be noted;

2.  the Materiality limits set out in the Annual Plan be noted;

3.  the value for money arrangements set out in the Annual Plan be noted;

4.  the six significant risks identified in the Annual Plan be noted;

5.  the no increase in the audit fee be noted

6.  the PDS Chairman for Children’s Services be notified of the overspend in Children’s Services as outlined in the External Audit Plan

Supporting documents: