Agenda item

To receive the independent external auditors, Ernst &Young (EY), Annual Audit Letter for 2017/18.

Members considered the Annual Audit Letter 2017/18 report, presented by Kamal Mehta.

Councillor Clark introduced Mark Hodgson from Ernst & Young (EY) to members. Mark Hodgson confirmed that Neil Harris had moved to another area within the company and explained that he would now be the Council’s External Auditor and will be attending future meetings. He said he was looking forward to working with members over the coming years.

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

1.    Councillor Clark asked if Flo Barrett and Amalia Valdez Herrera from EY would still be assisting with the Council’s audit. Mark Hodgson explained that Flo Barrett is relocating due to a career opportunity however Amalia Valdez Herrera would continue working on the Council’s audit.

2.    Councillor Hodgson asked if information should be included in the report in relation to the new Leisure Centre contract with Freedom Leisure. Mark Hodgson confirmed that the current audit reports a valuation of the Leisure Centres as of 31 March 2018 and as the transfer to Freedom Leisure will not take place until December 2018, this will form part of the audit plan for 2018/19.

3.    Councillor Booth highlighted that the valuation of the Leisure Centres should remain fairly static as the Council are still retaining ownership of them. He added that Freedom Leisure are intending to improve and invest in the Leisure Centres which may make a nominal difference to the valuation. Mark Hodgson agreed that this is EY’s working assumption and the effect of this will depend on Freedom Leisure’s capital input into the centres as to whether this will affect the value of the physical assets.

4.    Councillor Clark asked if the Council’s asset could increase in value if Freedom Leisure decides to improve the Leisure Centres. Mark Saunders said this would be dependent on the type of improvements they choose to undertake. Councillor Booth highlighted that this will depend on the agreement the Council have with Freedom Leisure in relation to the ownership of any new assets.

5.    Kamal Mehta confirmed that any improvement on the physical structure of the Leisure Centres would be reported on the Council’s balance sheets, as the Council have retained ownership.

6.    Councillor Sutton asked for further information on the presentational and disclosure issues referenced on page 25 of the Agenda Pack. Mark Saunders highlighted that members were provided with an explanation regarding these at the Corporate Governance meeting on 27 July 2018. Councillor Booth added that as they were under the threshold for reporting it was not necessary to include them in the report.

7.    Mark Hodgson confirmed that the reference in the Annual Audit Letter to presentational and disclosure issues which have been adjusted by management, not being detailed in EY’s report related to non-monetary disclosures.

8.    Councillor Booth asked if the audit fees charged by EY will change in light of the recent staffing changes. Mark Hodgson confirmed that the fees are set by the regulator and any staffing changes within EY will not affect the fee to the Council. Councillor Clark highlighted that the fees charged by EY have reduced.

9.    Kamal Mehta clarified that if there is any additional work required by EY as a result of the Council not reporting something correctly, then discussions would take place in relation to the charges associated with the additional work they have undertaken. Kamal Mehta said that he was confident that this will not happen.

10.Councillor Clark thanked Kamal Mehta for the clarification and said he had complete confidence in Mark Saunders and his team.

Councillor Clark thanked Mark Hodgson for his attendance at today’s meeting.

The Corporate Governance Committee considered and noted the Annual Audit Letter 2017/18.