Agenda item

(External Auditor) International Standard on Auditing 260 requires the External Auditor to report to those charged with governance certain matters before they give an opinion on the Statutory Statement of Accounts. The External Auditor has indicated that their audit of the Council’s Statutory Statement of Accounts for 2012/13 is nearly complete and that they wish to present their ISA260 report to this meeting (AGC-016-2013/14).

The External Auditor presented the Annual Governance Report for 2012/13, the purpose of which was to advise the Committee of the significant findings arising from the audit of the Council’s financial statements and arrangements to secure economy, efficiency and effectiveness in the use of resources.

The External Auditor advised the Committee of the key audit findings. No material misstatements had been identified from the audit of the Council’s Financial Statements and it was anticipated that an unqualified “true and fair” opinion would be issued. A number of unadjusted audit differences had been identified, which would result in a reduction of the deficit for the year by £116,000. No significant internal control deficiencies had been identified although some areas for improvement had been highlighted with the Council’s management. The Annual Governance Statement was not considered misleading and complied with the guidance issued by CIPFA. It was also intended to conclude that the Council had adequate arrangements in place to secure value for money, based upon the results of risk-based audit work and consideration of the Council’s use of resources.

The Council’s key financial systems were considered generally adequate as a basis for preparing the financial statements, with no significant deficiencies in the Council’s internal controls identified. No material misstatements had been identified from the audit, but some uncorrected non-trivial but non-material errors had been identified relating to Housing Revenue Account Income, small pieces of Council land which had not been included on the Asset Register, possible liabilities for the settlement of claims relating to Mesothelioma, and the use of the total depreciation figure rather than dwelling depreciation figure for charges to the Major Repairs Reserve. A revised Appendix B had been circulated to show the effect of the uncorrected misstatements, which totalled £116,000.

The Committee were advised that the External Auditor anticipated issuing an unqualified “true and fair” opinion upon the Council’s accounts. One recommendation had been identified by the audit and had been included in an action plan for the future. It was expected to complete the work on the Whole of Government Accounts by 5 October 2012. The draft Letters of Representation had been attached to the report, and these were due to be signed by the Director of Finance & ICT, and the Chairman of the Audit & Governance Committee accordingly.

In response to queries from members of the Committee, the External Auditor did not anticipate any problems in the future with the transfer of asset information to the new Asset Register, although this issue would be kept under review. It was pointed out that the fees listed in the report for the audit totalled £117,579 – however, the Statutory Statement of Accounts for 2012/13 to be considered later in the meeting had listed the audit fees as totalling £147,000? The External Auditor undertook to reconcile the differing figures and report back to the Committee.

The Committee was informed that the review of pieces of land which belonged to the Council but had not been included on the Asset Register would begin very shortly. The Director of Finance & ICT stated that he was satisfied with the quality of work and service provided by BDO LLP, and also felt that the Accountancy team had liaised with the External Auditors in a professional and timely manner.

The External Auditor opined that 95% of the Local Councils in the their portfolio would have their accounts approved by the 30 September deadline.

Resolved:

(1)        That the Annual Governance Report for 2012/13 presented by the External Auditor be noted.