Agenda item

The Committee are invited to submit any specific questions to the Assistant Director, Resources by midday on 17 November 2022.

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The Committee was informed that provisional Audit Plan for FY 2020/21 had been prepared before the 2019/20 audit had been concluded and it was noted that a date in February 2023 had been allocated to undertake this work.

M Hodgson, Ernst and Young presented the External Audit Plan for 2021/2022 and drew the Committee’s attention to the following sections:

·         Pages 5 to 8:  No change in risk or focus highlighted in yellow.

·         Pages 5 to 8:  New risk and area of focus highlighted in red which were wholly in relation to the global Pandemic and impact on financial reporting.

·         Page 9:  Materiality level. Based on the draft statements on the council’s website £1.43m was set at 2% of gross expenditure which was the maximum level allow with tolerable errors set at £718,000.

·         Value for Money – there was a new code requirement for the audit year 2020/21 where EY would report by exception rather than provide a fully detailed conclusion.  A commentary was provided on the underlying arrangements the Council had which supported reporting by exception.

·         Pages 32 and 33:  The Audit will focus on the consolidated Group Accounts for the Council with a limited scope on the interactions with its three subsidiaries, Alive West Norfolk, West Norfolk Housing and to a lesser extent Alive Management Ltd.

In response to questions regarding materiality from the Chair and Councillor Ryves, M Hodgson explained that gross expenditure was the standard metric used for public sector auditing for all the money which went through the comprehensive income and expenditure account which did take into account council tax received and elements of the collection fund accounting. EY chose gross expenditure rather than asset base as the council was a service based organisation.  Members were informed that if the external auditors wished to vary the material level from the standard by increasing or reducing the percentage a report would be brought back to the Audit Committee to explain the rationale for doing this.

Councillor Rust commented on performance materiality and scope for flexibility and concurred with the comments made by Councillor Ryves.

In response to questions from Councillor Morley, M Hodgson provided responses as set out below:

Risk Identification

What was the criteria for identifying risks?

In response, M Hodgson explained that risk identification related to the ability to issue an unqualified opinion on the true and fair impact on the financial statements.  It was noted that KLIC would be value for money risks which had not been considered at this point in time but would be considered at the appropriate time during the audit process.

Resource Planning

In response to the comments made by Councillor Morley, M Hodgson advised that  discussions had been held with the Assistant Director, Resources and officers and a date of March 2023 had been identified to conclude the 2019/2020 audit.

Cost

M Hodgson advised that the fee was set by the regulator and that EY had questioned the audit fee.  It was noted that the audit would be an ISA compliant audit to issue an audit opinion which met all the requirements of international standards of auditing.

Following questions from Councillor Ryves regarding the Council’s investment and repayment of the NWES loan, M Hodgson advised that it was the balance sheet as at the 31 March 2021 that EY was interested in and any information that followed that would be a post balance sheet event.

In response to further questions from Councillor Ryves on post balance sheet event in 2022 was the agreement to underwrite the funding application for the Guildhall, the Assistant Director, Resources explained that there were no transactions that had gone through the Council’s account at this point in time but that EY would pick that up at the appropriate time during their audit.

Following further questions from Councillor Ryves on the KLIC lessons learnt and the role of the Member Major Projects Board (MMPB) the Assistant Director, Resources explained that Ernst Young would look at this as part of their remit in due course.  The Committee was advised that for a period in 2020/2021 the MMPB had been paused whilst the council responded to Covid and resources were diverted.  It was noted that the Assistant Director, Resources would pick up the points raised directly with M Hodgson, Ernst Young.

In response to a question from the Chair regarding lessons learnt and the risk register, the Corporate Performance Manager explained that there was an entry in the Corporate Risk Register relating to major projects and outlined the work which was ongoing by and undertook to relay back the comments made by the Committee.

The Assistant Director, Resources and M Hodgson responded to questions from Councillor Morley regarding the pension fund.

In response to questions from Councillor Ryves in relation to audit fees, the Assistant Director, Resources explained that discussions had been held with M Hodgson to look at the preparation of estimated cost to date.  The Committee was advised that the 2018/2019 Audit a budget cost of £100,000 had been allocated..  It was noted that a contingency had been built in the budget for 2019/2020 onwards.

The Chair thanked M Hodgson for attending and present the draft External Audit Plan for 2021/2022.

RESOLVED:  The Committee noted the External Audit Plan for 2020/21.