Agenda item

Report of the External Auditor, Grant Thornton (to follow)

Further to Minute 15/19, the Audit and Procurement Committee considered a report of the External Auditor, Grant Thornton, on the Audit Findings for the City Council for the year ending 31^st March 2019.

The report indicated that when carrying out the audit procedures on school assets which were not revalued in year, the External Auditors had identified through their indexation calculations that there was potentially a difference between the value of school assets shown in the financial statements and those compared to the External Auditors indexations.  As a result, the Council had instructed its valuers to do a detailed revaluation of school assets in line with RICS and DfE guidance.  This resulted in a £1m difference between the value in the financial statement and the valuations.  This was significantly below the External Auditors materiality level and the Council made no adjustment to the financial statements.  The External Auditors concluded that they were satisfied that the valuation of Other Land and Buildings in Property Plant and Equipment was not materially misstated.

The External Auditors had completed the audit of the financial statements of the Council for year ending 31^st March 2019 and had identified an overal adjustment of £11.8m to the Total Comprehensive Income and Expenditure, with a fall from £60.1m per the draft accounts to £48.3m per the final audited financial statements.  This was due to the Council making an adjustment in relation to the pensions liability as a result of the McCloud judgement.  However, this adjustment to the financial statement had no impact on useable reserves or the financial resilience of the Council.

The report indicated that there were no matters of which the External Auditors were aware that would require modification of their audit opinion.  However, as a result of their findings there were areas of outstanding work that the audit team would need to complete before an audit opinion could be issued.  These included: receipt of management representation letter; and receipt of the final approved signed financial statements.

Recommendations had been raised for management as a result of the audit work in respect of the lack of reconciliation between the property database and the asset register; valuation of investment properties; and valuate of PPE – School Assets.  These were set out in full in Appendix A to the report.  Appendix B of the report set out the follow up of recommendations from the previous year’s audit.

The External Auditors had concluded that the other information to be published with the financial statements was consistent with their knowledge or the Council and the financial statements they had audited.  The anticipated audit report opinion would be unmodified.

The report also set out the External Auditor’s opinion in relation to Value for Money.  Under the National Audit Office Code of Audit Practice (the Code), the External Auditors are required to report if the Council has made proper arrangements to secure economy, efficiency and effectiveness in its use of resources (the Value for Money conclusion).  The risk based review of the Council’s value for money arrangements was completed and the External Auditors concluded that the Council has proper arrangements to secure economy, efficiency and effectiveness in its use of resources.  The External Auditors therefore anticipated issuing an unqualified value for money conclusion.

The External Auditors had not exercised any of their additional statutory powers or duties, had completed the majority of work required under the Code and would be issuing the audit completion certificate on completion over the Whole of Government Accounts.  

RESOLVED that the Audit and Procurement Committee notes the Audit findings, as presented by the Council’s External Auditor.