Agenda item

Report Attached

Members considered the External Audit Plan for 2020/21 presented by Mark Hodgson from Ernst &Young (EY).

Members asked questions, made comments and received responses as follows:

·         Councillor Booth referred to the report highlighting and identifing the audit risks associated with the Council’s work and projects and expressed the opinion that with regard to the new commercial investment initiative that the Council is embarking on, he did not feel that the element of work was adequately captured within the risks shown. Mark Hodgson stated that consideration was given last year to the arrangements as part of the setting up of that entity under the value for money conclusion and the governance structure around it and as part of last year’s audit is was concluded that there were no issues to bring to members attention. He added that in terms of this year’s audit, it would become an audit issue where the transactions of the subsidiary company reached such a level where they needed to be consolidated into the Council’s accounts and based on the information up until the 31 March 2021 that level had not been reached and, therefore, does not appear as an audit risk in 2020/2021. Mark Hodgson stated that this is reviewed and as the level of transactions increases it may then be noted as a group audit risk. Councillor Booth stated that it is, therefore, likely that in a years’ time it will be included within the list of risks and Mark Hodgson stated that considering the trajectory of the transactions that is the potential.

·         Councillor Booth stated that concerns have been raised regarding the structure of the newly formed Audit and Risk Management Committee following the decommissioning of the Corporate Governance Committee and he asked Mark Hodgson to clarify that, as there will be potentially a decision making body that will report into the committee, would the governance arrangements form part of his audit work and would an audit opinion be provided on its suitability. Mark Hodgson stated that it will form part of the deliberations for the value for money conclusion and a risk assessment will be brought back to a future committee meeting. He added that one aspect underpinning that value for money conclusion and the criteria for it will be the arrangements for an Audit Committee against how the Council’s committee has been set up and whether it is appropriate and in line with good practice and standing guidance for the sector.

·         Councillor Booth asked whether assurances would be given with regard to resourcing and asked that, if there are going to be changes, the information is communicated to the Finance Team. Mark Hodgson stated that there are no plans to come onto site due to Covid restrictions and the audit will be carried out remotely in the same way as it was completed in 2019/20. He added that it has been discussed and agreed with Peter Catchpole, the Section 151 Officer, an appropriate timescale, which is agreeable to all parties and there is a timed window in which to carry out the work, which is not expected to change. However, he gave assurances that if something did occur which meant work could not be carried out, then a further discussion would be held. Councillor Booth stated that an early conversation if work cannot proceed would be appreciated.

·         Peter Catchpole stated that he is in constant dialogue with Mark Hodgson and his team and, therefore, everything is expected to take place as has been agreed, however if anything was to change then the members of the Audit and Risk Management Committee will be advised.

·         Councillor Booth questioned the remote access arrangements to the Council’s finance systems and information. Mark Hodgson stated that Peter Catchpole, Mark Saunders, the Chief Accountant, and Neil Krajewski, the Deputy Chief Accountant, have access to the repository at Ernst and Young and they input the information of the accounts onto their system and the audit work can then be carried out. Councillor Booth stated that he would prefer to see the auditors being able to interrogate the Council’s systems rather than the other way around.

·         Peter Catchpole stated that when Ernst Young carry out audit testing, they do come on site to look at the Council’s systems to agree base data and to gain assurances that the data is not fabricated. Councillor Booth stated that in modern working practices remote access can be given so the auditors can interrogate and have full access to systems. Peter Catchpole stated that time limited read only access is available to the auditors to enable them to do that and Mark Hodgson stated that they also have 100% download from the Council’s finance system to enable interrogation to take place and from there they can refer to their audit questions and supporting information.

The Committee considered and noted the External Audit Plan for 2020/2021.