Agenda item

Cabinet Report: Accounts and ISA 2014/2015

Meeting of Audit Committee, Monday, 7th September, 2015 5.30 pm (Item AR45)

The Committee are invited to consider the report and make any appropriate recommendations to Cabinet.

The Council’s External Auditors, Ernst and Young will be present for this item.

Minutes:

The Group Accountant presented the report which introduced the Statement of Accounts (SOA) 2014/2015 – essentially the Statement was the final accounts set out in a format which included the Council’s balance sheet and associated notes. The Committee was informed that the report also considered the report from the Auditor on the Audit of the Accounts 2014/2015 – the International Auditing Standard (ISA 260).

Councillor Devereux referred to the pension liability and recommended that it be recorded in the Corporate Risk Register as being a significant risk. In response, the Chairman, Councillor Humphrey explained that the pension fund was evaluated every three years and steps were taken to address the liability.

Mr R Murray, Ernst and Young presented the ISA 260 report and advised that Ernst and Young would issue an unqualified opinion on the financial statements and that the audit results demonstrated that the council had prepared its financial statements adequately.

Members’ attention was drawn to the following pages of the report:

Page 10 – Progress of Audit

The following areas of Ernst and Young work programme remained to be completed:

· Verification that the agreed audit amendments had been made to the final version statement of accounts. Mr Murray advised that the amendments had been made and Ernst and Young had confirmed acceptance of the amendments.

· Response to group instructions and conclusion on agreed procedures from AML’s auditors. Response yet to be received within the next week or so.

· Receipt of a Letter of Representation. It was noted that it was expected that this would be reported to Cabinet on 9 September 2015 and Council on 24 September 2015.

Page 18 – Independence and Audit Fees

Mr Murray outlined the three areas relating to the fees as set out below:

· The actual fee was yet to be confirmed, but was likely to be different from the scale fee due to the introduction of the group in 2014/15 and the additional procedures that Ernst and Young had needed to undertake to gain assurance over the group financial statements. Ernst and Young would agree any proposed variation with management and this would also need to be approved by Public Sector Audit Appointments. It was reported that this element of the audit would be on a recurring basis each year.

· Ernst and yet were yet to complete work on the certification of claims and returns but the actual fee was likely to be in line with the agreed fee.

· Ernst and Young had not undertaken any non-audit work outside of the Audit Commission’s Audit Code requirements.

The Chairman, Councillor Humphrey invited the Committee to ask questions/comment on the ISA 260 report.

There were no questions from the Committee.

The Chairman, Councillor Humphrey referred to the Uncorrected Misstatements and the Audit Committee being asked to consider approving management’s rationale as to why those corrections had not been made and, if approved, include this in the Letter of Representation. In response, the Assistant Director explained that this point was raised in the ISA 260 report on an annual basis. The Committee was advised that it related to the sale of a piece of land in Hunstanton subject to a 99 year lease. The Council had received the total amount as a capital receipt, but in accounting terms it should appear in the accounts as £4,500 per year for a period of 99 years.

The Chairman, Councillor Humphrey referred to pages 17 and 18 of the report and commented that he was pleased to learn that audit risks identified had been corrected and the Council had gained audit assurance over those issues.

RESOLVED: That the Committee support the recommendations to Cabinet and Council as set out below, with the following comment:

The Audit Committee approve management’s rationale as to why the corrections had not been made and to be included in the Letter of Representation.

It is recommended that Cabinet:

1) Approve the authority for any changes required to the Statement of Accounts is delegated to the Assistant Director (designate Section 151 Officer), in consultation with the Leader of the Council, to authorise amendments and if necessary present an updated Statement to Council.