Agenda item

Agenda item

Audit Results Report 2014/15

 

To consider a report from Ernst & Young LLP which sets out the results of its 2014/15 audit.

Minutes:

 

Members considered the Audit Results Report from Ernst & Young LLP.  The report informed the Committee of the work carried out by the Company in order to discharge its statutory audit responsibilities together with any governance issues identified.  The report summarised the findings from the substantially completed 2014/15 audit and also included the messages arising from the audit of the Council’s financial statements and the results of the work Ernst & Young had undertaken to assess the Council’s arrangements to secure value for money in the use of its resources.  The Ernst & Young Manager explained that the audit of the Cash Flow Statement, Note 28 (Segmental Reporting of Amounts Reported for Resource Allocation Decisions) and Whole of Government Accounts was still in progress.

 

The Ernst & Young Manager worked through the Audit Results Report highlighting various matters of note.

 

In response to a Member’s query on Section 4 (Financial statements audit – issues and findings) and in particular the item on planning materiality and tolerable error the Ernst & Young Director explained the approach taken to determining this.  Following further Member comment regarding the size of the planning materiality figure (£9.8m or 2% of gross expenditure) the Chief Finance Officer assured the Committee that there was definitely not a complacent attitude towards reducing errors but he stressed that the planning materiality figure of £9.8m needed to be seen in the context of total gross expenditure of £490.9m.

 

In connection with Section 5 (Arrangements to secure economy, efficiency and effectiveness) a Member referred to the impact of changes in staffing.  In response, the Chief Finance Officer explained how the departure of the former Financial Controller coupled with sickness and other issues within the Financial Control team had caused additional pressures in producing the Council’s Annual Statement of Accounts within the reporting deadline.  Nonetheless, the Head of Financial Control and his team had risen to this challenge.

 

Arising from consideration of Section 6 (Independence and audit fees) the meeting noted the additional audit work undertaken by Ernst & Young on the teachers’ pensions return.  The Ernst & Young Manager advised that historically this work had been undertaken by the Audit Commission but local authorities were now free to choose who they wished to do it and the Council had appointed Ernst & Young.  As it was outside its core work it had been disclosed and charged separately.  The Chief Finance Officer advised that the work undertaken was an audit function and not consultancy.  

 

With regard to Section 7, Appendix A, the Ernst & Young Manager drew Members’ attention to the misstatements in respect of Council Tax that had not been amended.  She explained that officers’ reasons for not amending the accounts were set out in the Letter of Representation and the Chief Finance Officer’s report accompanying the revised Statement of Accounts (minute AUD/15/20 below refers.

Also with regard to Section 7 (Appendices) and specifically under  ‘Appendix B – corrected audit misstatements’, the Ernst & Young Manager drew Members’ attention to the overstated business rates appeals provision following a change in legislation setting a deadline for appeals to be lodged.  She then explained that three additional errors had been identified; these being:

 

·         Capital financing misclassified between direct revenue contributions and capital grants and contributions

·         Grant income previously recognised in the Comprehensive Income and Expenditure Statement (CIES) as grant income with no conditions had been included in the Capital Grants Unapplied reserve and not applied for a number of years

·         Errors made in accounting for monies received in respect of the Sundon landfill site.

 

The Ernst & Young Manager stressed that none of these errors had an impact on the General Fund bottom line for 2014/15.

 

In response to a query by the Chairman the Head of Financial Control stated that there was a specific earmarked reserve of £441k to fund future reinstatement costs at Sundon Landfill site rather than, as previously accounted for, as a contribution receipt in advance.  In response to a query from a Member the Head of Financial Control confirmed that the funding identified was to meet the costs of future reinstatement works at the Sundon site including removal of the existing temporary road to the site within the next 18 months as was scheduled.

 

In conclusion the Ernst & Young Director stated that the impact of the various corrections was to improve the Council’s overall financial position.

 

NOTED

 

the Audit Results Report from Ernst & Young LLP setting out the results of its 2014/15 audit.

 

RESOLVED

 

that an updated version of the Audit Results Report setting out additional information, as reported in the preamble above, be attached to the minutes of the meeting.

 

(Note: A copy of the updated Audit Results Report is attached at Appendix A).

 

 

Supporting documents: