Agenda item

The report provided an update to Member on the preparations for the 2021/22 closing of accounts and statutory external audit processes; provided Members with the management action responses to the auditor recommendations made as part of the 2020/21 external audit; discussed the key risks for the 2021/22 accounts; and discussed the 2021/22 Audit Plan produced by Grant Thornton.

The Chief Accountant presented this item and discussed the report as follows:

Statement of Accounts update

The Council are working to prepare draft accounts by 30 June 2022 and publishing audited accounts by 30 November 2022. Once submitted, they will also be published on the Council website and the statutory public inspection period will be between July and August. The final audit is scheduled to take place between July and November 2022, with publication of the final accounts by 30 November 2022.

Recommendations as part of the Audit Findings Report

This section of the report was summarised in Appendix A. A lot of the actions were proposed to be closed, subject to an external audit review later in the year. the following recommendations were discussed: the bank reconciliation work done for schools, which had vastly improved this year and the recommendations were met; unpresented cheques-a regular review is required to ensure that all cheques over 6 months are stopped as part of business as usual; section 106 grants- there was an issue last year regarding the classification of those and work had been undertaken to ensure that there is reconciliation between the Section 106 recording system (Exacom) to the ledger on an agreement by agreement basis; starters returning signed contracts; lastly, the set up of the general ledger is not conducive for financial reporting and Northern Trust t have agreed to amend the data they provide so that it is in line with the Oracle coding structure which would result in far less manual adjustments being required.

Audit Risk Assessment and Audit Plan

This section of the report was included in Appendix B. the Grant Thornton representative summarised the report findings highlighting the risks identified for the audit of the financial statements. He discussed the following:

He discussed the two mandatory risks of every audit; the presumed risk of fraud in every revenue recognition which is limited in nature and the risk of management override of controls- the work to be done on the Council’s journals, will address this risk in the Audit.

The valuation of land and buildings is an inherently risky item because it is significantly material and subjective in terms of informed estimates. The Plan in the report also covered the pension fund with the biggest risks being the valuation of level 3 investments. They are not publicly listed and therefore more prone to inherent risks of misstatements. Grant Thornton will undertake work to ensure they are materially accurately stated, as they have in previous years.

The value of infrastructure assets within the financial statements was also discussed. There will be a follow-up this year of what the requirements for assessing the significance of this risk and Grant Thornton will document their understanding of the management process for derecognising infrastructure assets.

The materiality for the Council this year is £17.2m, slightly lower than last year. triviality is £0.86m- this means that any error that is under this figure would be considered trivial, but anything between these two figures would be reported to the Panel. The materiality for the Pension Fund remains stable at £16m.

It was asked what Grant Thornton’s opinion was on cut-off test, and whether the Council is in a position where they are comparable to other authorities. Grant Thornton responded that they are still a little behind other local authorities but can offer an update after the cut-off testing work in the summer.

RESOLVED the report was noted.