Agenda item

To receive a report from KPMG on the external audit plan and strategy for the year ending 31^st March 2024.

The KPMG representative introduced the report. The vast majority of planning and risk assessment work in relation to the financial statements was now complete and outstanding work related to a handful of procedures and controls performed  after year end. KPMG had started testing the draft accounts. The proposed backstop date for the 2023/24 audit was 28 February 2025 and the audit was progressing well. The 2022/23 audit did not need to be signed off before work started on the 2023/24 audit and the 2022/23 proposed December backstop should not have an impact on progress for the audit.

Audit Committee had been presented with the indicative audit plan in March 2024 and KPMG advised it was not appropriate to present a final version of the audit plan until most of the planning and risk assessment work was complete, which was now the case. The two versions were very similar and changes included:

-        A change of the In Charge Auditor.

-        Significant risks in relation to fraudulent expenditure had been removed as during risk assessments KPMG had found no issues to date based on the value and explanations provided by the finance team.

-        KPMG had added in its methodology for testing value for money, which aligned with NAO guidance, focusing on financial sustainability, governance, and improving economy, efficiency and effectiveness. The value for money work, which was extensive, was not quite complete; it was noted nothing had come to light to date that indicated any kind of significant risk or weakness. Given the next committee meeting was not until January 2025, KPMG would send its value for money risk assessment findings to management who would share it with committee members as appropriate.

-        It was noted that on page 6 of the agenda pack the date should read 5 September 2024 (rather than 5 March 2024).  

The following points were made during the discussion:

-        Valuation of land and buildings was noted in the report as a significant risk and a member asked if the Council could take action to mitigate that. KPMG did not think this was realistic and advised this was a similar documented risk with other local authorities. Asked about the practical implications of the Council carrying that risk, KPMG said this would be an impact on the balance sheet because a very small difference in a percentage being applied, for example, or the misuse of a floor area multiplied across the size of a building could lead to a significant impact on the balance sheet.

-        A member noted the Council did not particularly borrow against the property portfolio and asked about the practical implications if a risk was to crystallise. Officers replied that the Council borrowed from the PWLB rather than the market so the impact would be minimal; even if the balance sheet was to significantly change, this would not have a material impact on the financial position. The only caveat would be the Housing Revenue Account where there was a direct charge for depreciation of assets.

-        A member asked why, in the year ending March 2024, the value of buildings had gone down. Officers believed this was due to a reduction in property values, particularly dwellings, and would confirm this outside of the meeting.   

The Committee noted the External Audit progress report on the External Audit Plan 2023/24.