Issue - meetings

Members considered a report on the 2019/20 External Audit Strategy, presented by the External Auditors to West Lindsey District Council, Mazars.

Mike Norman and Mark Dalton from Mazars introduced this item, and highlighted the following sections of the report:

·         The report described the approach taken by the external audit and highlighted the work proposed to be undertaken, along with the audit risks;

·         The fees for the external audit were in line with the scale fees set by the Public Sector Audit Appointments (PSAA).  These fees were continually reviewed, with regard given to additional work required by the regulators around the valuation of property, plant and equipment, and the pensions liability;

·         The report highlighted the independence and objectivity of the external audit team;

·         There had been no changes to the scope of the audit from the previous year, and it continued to be carried out under the Code of Practice on Local Authority Accounting.  This would be the last year under the current Code of Practice, which was currently under review by the National Audit Office (NAO);

·         The timescale for the external audit remained broadly the same as previous years.  The planning stage had been completed, with an interim visit scheduled for early February.

The bulk of the substantive testing would take place in June and July.  West Lindsey District Council (WLDC) had a requirement to produce draft accounts by the end of May, with final publication by the end of July;

·         The two standard inherent, significant audit risks across all organisations were:

o   Management override and controls – management at various levels within an organisation were in a unique position to perpetrate fraud because of their ability to manipulate accounting records;

o   Fraudulent revenue recognition – this risk was more of an issue for the private sector.  Across local government, these risks were not as prevalent; it was hoped that this risk could be rebutted at the Audit’s planning stage;

·         The two main areas of significant audit risk for WLDC remained:

o   Valuation of property, plant and equipment;

o   Valuation of net defined benefit liability;

·         The ‘concept of materiality’ was built into the normal, standard approach to the audit.  At this stage, materiality levels were broadly similar to those set for last year.  One area of judgment was the ‘concept of performance materiality’;

·         Broadly the risk profile was similar to that seen last year.  The June and July period will be busy’ however the team will endeavour to deliver the work by that point;

·         The 2018/19 audit delivery across the country was patchy; non-delivery of the audit was around 40%.  There were still two ongoing audits within Lincolnshire.  Regulators across the sector were mindful of this.

Following this introduction, Members asked questions of the External Auditors.  Further information was provided:

·         If issues arose which led to the audit being delayed, WLDC would still have to publish their accounts at the end of July.  However, these accounts would be classed as ‘unaudited’;

·         If issues emerged during the audit process which required  ...  view the full minutes text for item 36