Agenda item

Report of the External Auditors, Grant Thornton

The Audit and procurement Committee considered a report of the External Auditors, Grant Thornton, detailing the Audit Plan for year ending 31^st March 2018.

The External Auditors were responsible for forming and expressing an opinion on the: financial statements (including the Annual Governance Statement) that had been prepared by management with the oversight of those charged with governance (the Audit & Procurement committee); and Value for Money arrangements in place at the Council for securing economy, efficiency and effectiveness in its use of resources.

The audit of the financial statements did not relieve management or the Audit and Procurement Committee of their responsibilities. It was the responsibility of the Council to ensure that proper arrangements were in place for the conduct of its business, and that public money was safeguarded and properly accounted for. The External Auditors considered how the Council was fulfilling these responsibilities and their approach was based on a thorough understanding of the Council's business and was risk based.

As required by the Code and International Standards on Auditing (ISAs) (UK), the Audit Plan set out the scope and timing of the audit to be carried out by the External Auditors in relation to Coventry City Council for the year ending 31st March 2018 and included:

·  Significant Risks :Valuation of Property, Plant and Equipment; Valuation of Pension Fund Net Liability; Management Override of Controls

·  Materiality

·  Value for Money Arrangements

·  Audit Logistics

·  Independence

·  Audit Report

A document headed ‘Informing the Audit Risk Assessment for Coventry City Council’ was appended to the report, the purpose of which was to contribute towards the effective two-way communication between the Authority's external auditors and the Authority's Audit and Procurement Committee, as 'those charged with governance'. The report covered some important areas of the auditor risk assessment where they were required to make inquiries of the Audit and Procurement Committee under auditing standards.

Under International Standards on Auditing (UK and Ireland) (ISA(UK&I)) auditors had specific responsibilities to communicate with the Audit and Procurement Committee. ISA(UK&I) emphasised the importance of two-way communication between the auditor and the Committee and also specified matters that should be communicated. This two-way communication assisted both in understanding matters relating to the audit and developing a constructive working relationship. It also enabled the auditor to obtain information relevant to the audit from the Committee and supported it in fulfilling its responsibilities in relation to the financial reporting process.

As part of the risk assessment procedures the External Auditor was required to obtain an understanding of management processes and the Audit and Procurement Committee's oversight of the following areas:

·  Fraud

·  Laws and Regulations

·  Going Concern

·  Accounting Estimates

·  Related Parties

The report included a series of questions on each of these areas and the response received from the Authority's management. The Audit and Procurement Committee were asked to consider whether the responses were consistent with its understanding and whether there were any further comments it wished to make.

In relation to the fees, the Committee noted that the total audit fees for the Council Audit and Grant Certification would be no less than £173,460.

The Committee expressed their concern about the difficulties of financial planning given the many variables and unknowns that the City Council may face. The External Auditor clarified the process for financial planning which involved them working closely with the City Council’s Director of Finance and Corporate Services to gain a thorough understanding of the Council's business and to make a judgement after careful consideration of known factors, proposed savings programmes, revenue streams, levels of reserves, past behaviours and service performance. 

The Committee referred to the National Audit Office Report on Financial Sustainability. The Council’s Finance Manager – Corporate Finance would provide Members with a link to a summary of the report, should Members wish to investigate this further.

RESOLVED that the Audit and Procurement Committee notes the Audit Plan for year ending 31^st March 2017.