To consider the attached report.
The representative from Deloitte the Council’s External Auditor, Craig Wisdom, introduced their planning report to the Committee for the 2019 Audit. Assuming that the report had been read he gave a brief synopsis of the key points of the report. The audit would be carried out in accordance with the requirements of the Code of Audit Practice and supporting guidance published by the National Audit Office.
The plan had been developed based on planning work and a preliminary risk assessment and all the work was carried out in accordance with the code of Audit Practice. The key thing would be materiality, a judgement for him to make. They had determined a materiality of 2% which translated to £1.9 million. They would also report back any misstatements above £96k. However, as materiality was based on a forecast they may revise it once final numbers were known.
Key risk areas were identified such a valuation of properties, which were complex and required judgement, and it was where they would use their own real estate team. They would also be focusing on the Capitalisation of Expenditure to make sure that it was appropriate; and thirdly, would be considering the Management Override of Controls, an assumed risk by international auditing standards and was not something that was actually happening in this Council. He also noted that last year BDO had as a significant risk the Council’s pension scheme, he had not identified this as a significant risk in the current year but it would be an area he would focus on through the year.
He also commented on the arrangements that the Council had in place for economy, efficiency and effectiveness; at the moment the risk assessment on that was ongoing. There was nothing that he had put into the significant risk category at the moment but that was an ongoing assessment, as was all their work through the year.
Councillor Mohindra asked about risk 2, capital expenditure, capitalising the corporate capital expenditure and if we reclaimed any of the VAT. Mr Maddock noted that we would be able to reclaim it in the normal way but that was not particularly related to this risk.
A Jarvis asked if they audited any similar council to this one and if so could they share insights gained there. He was told that as a firm they audited various different councils and collated their knowledge to pass on the benefit of their experience.
Councillor Whitehouse asked about property evaluation; this being quite complex, could they expand on what the potential impact of getting this wrong would be. He was told that from a valuation perspective it had an impact on depreciation if it was wrong. This was a big number on the Council’s balance sheet and if it was wrong it could have an impact. A lot of this was based on judgement which was why it was flagged up as a significant risk and why they used their in-house valuation team.
The Chairman asked that the Committee note the proposed plan and that there would be a slight change in the reporting arrangements. The Committee were content to note this.
That the Audit and Governance Committee noted and were content with the proposed Deloitte proposed plan for the year ahead.