Agenda item

The Committee considered the External Audit - Audit Progress Report and Sector Update.

Peter Barber and Helen Lillington from Grant Thornton, the Council’s external auditors attended the meeting and made the following points:

·         Grant Thornton were currently on site and good progress was being made with the audit of the Council’s accounts

·         Significant progress had been made in addressing concerns about Property, Plant and Equipment although more work was needed to be done

·         There remained challenges resulting from the information provided by the Council’s E5 financial system. More testing was necessary which would add to the external audit fee although this additional work would be kept to a minimum

·         It was important to get the draft accounts ready by the end of May deadline so that everything was in order for the interim visit by the external auditor

·         Work was being focused on the valuation of the Pension Fund investments. In the light of Brexit, the market was volatile therefore the external auditor was keen to understand how the Pension Fund satisfied itself that the valuation at year-end was materially accurate.

In the ensuing debate, the following points were raised:

·         In response to a query about the usefulness of financial forecasting tools given the bleak financial position facing councils, Peter Barber commented that the Financial Foresight Platform tool developed by Grant Thornton supported the Council’s existing arrangements to look at demand-led services. The tool enabled access to data from other councils and allowed managers access to all the necessary information to make decisions

·         In response to a query about the Pension Fund’s relationship with LGPS Central, Helen Lillington advised that Grant Thornton undertook audit work for a number of pension funds who were part of the pooling arrangements. The key issue was for the Council to gain a level of assurance that the information received from the Pool was accurate. A particular issue was Level 3 investments. As the pooling arrangements developed, it was hoped that a clearer understanding of the progress of other funds would emerge. Michael Hudson added that the there was still time before the first transition of emerging markets funds in September

·         In response to a query about the quality of information provided to the external auditor, Michael Hudson commented that the initial configuration of the E5 financial system had made the audit work more complex and increased risk. The key challenge now was to reconfigure the system but this needed to be done at the right time. Jenni Morris added that there had been issues with the linking of codes in the system which had led to the correction of miscoding errors

·         Helen Lillington indicated that the normal substantive approach to auditing the accounts might not be appropriate with the Council’s E5 financial system. In future years it might be appropriate to undertake some control testing as part of the interim visit. It would be appropriate to undertake some control testing at the interim visit. Jenni Morris indicated that Quality Assurance work was being carried out to ensure that the paperwork supplied to the external auditor was higher quality. Helen Lillington responded that, although queries remained, the standard of the paperwork received to date had improved

·         Michael Hudson indicated that a report on Financial Resilience following CIPFA guidance would be brought to a future meeting

·         Did the Council have access to Grant Thornton’s new Financial Foresight Platform (FFP) through the existing external audit fee? Peter Barber responded that discussions would be held with the Chief Financial Officer to explain the fees associated with this new platform. Michael Hudson added that the Council had a three year contract for the use of the CFO Insights platform. Helen Lillington indicated that any additional fees would be disclosed in the audit findings report

·         In response to a query, Peter Barber commented that the Council would be informed if any reference was made to it in the FFP.

RESOLVED thatthe External Audit – Audit Progress Report and Sector Update be noted.