Members received an urgent item from Ernst and Young.
The Chairman agreed to accept this as an urgent item as, to delay its inclusion to the next meeting, would mean that Ernst and Young could not consider the risks for the forthcoming year and prepare and agree the Audit Plan in a timely manner.
Neil Harris, Engagement Partner for Ernst and Young, introduced Carol Ryan as the new External Audit Manager for the Council. He explained that there had been a restructure and the previous External Audit Manager, Kay Storey, had been reassigned to another area of work. He thanked Kay for her work. He also thanked the Chairman for accepting the report as an urgent item.
Kay presented the Certification of Claims and Returns Annual Report 2015/2016 which summarised the results of the work on the Council’s 2015/16 claims and returns.
Members were informed that there had been a major piece of work on Housing Benefits Subsidy Claims. There had been a very minor error of 50 pence for which there was no materiality. It was noted that the Housing Benefits Team had provided very good support with this work. The team had also performed well.
As a result of the work that had been undertaken, it was anticipated that there would be a reduction in “40+” testing that would need to be carried out in the next year. This reduction would be reflected in the fee charged.
Members asked whether there were any systemic issues and if there was any consequence on the contract if there was additional expense for greater testing. Kay responded that Housing Benefits were very complicated and that the errors were human not system. She pointed out that £2,569 paid as overpayments was a small amount.
Neil Harris then presented the second half of the report which detailed the Audit Plan. He explained that there were two parts to the Plan, financial for which Ernst and Young would provide an opinion on whether the Council’s financial statements gave a true and fair view of the financial position as at 31 March 2017 and of the income and expenditure for the year then ended; and the economical, effective and efficient use of resources.
Two significant risks had been identified (risk of fraud in revenue recognition and risk of management override) and there was a risk that financial statements might not reflect the impact from the reintegration of housing services into the Council’s operations.
Changes to the Income and Expenditure statement would have an impact and Ernst and Young would work with the Finance Team to consider this impact.
There were no significant concerns regarding Value For Money risks.
Materiality would be at a level of 2% but would be reviewed throughout the audit.
The timetable showed that draft accounts were expected by the end of May and that the final accounts would be signed off by the end of July.
Members were advised that the interim work should be completed by 3 April, the date of the next Audit Committee meeting. If anything of significance had been identified, it would be reported to that meeting. However, if there was nothing of significance to report, then no report would be forthcoming.
Members queried whether it was felt that independence was maintained between the arm of Ernst and Young that was dealing with the audit and the one dealing with the liquidation of the Housing Trust.
Neil Harris stated that he felt the independence could be maintained and that comments on the liquidation could be provided.
Officers also pointed out that the housing Trust had Grant Thornton as its own external auditors. Also that there would be no final accounts, only details of the assets and liabilities.
To note the report, so allowing Ernst and Young to consider the risks for the forthcoming year and to agree the Audit Plan in a timely manner.