Issue - meetings

Members considered the External Audit Strategy Memorandum (Plan) for 2022/23. In presenting the report the Audit approach as detailed on page 46 of the agenda pack was highlighted.

Significant audit risks highlighted by the External Auditor included the management override of controls; the Valuation of Property, Plant and Equipment, Investment Properties and assets held for sale; and the Valuation of Net Defined Benefit Liability (Pensions).  Key judgements highlighted being the Minimum Revenue Provision (MRP), and Group Accounts.

Materiality was an expression of the relative significance or importance of a particular matter in the context of financial statements as a whole. Misstatement in financial statements were considered material if they could reasonably be expected to influence the economic decisions of users taken on the basis of the financial statements. Initial materiality levels were:

·       Overall Materiality - £955,000;

·       Performance Materiality - £715,000; and

·       Triviality - £ 28,000. This was about 2% of the growth register.

Debate ensued, and in response to a query about the transition to the new auditors for the Authority, KPMG, it was explained that regular meetings were held between the two audit organisations and PSAA, and there was frequent collaboration between them. Members were reminded that most of the transition work was during the finalisation and completion of the audits.

In response to a question about the protections in place concerning the significant risk of overriding controls, the material fraud in accounts went through regular sample testing, with everything in the general ledger receiving a chance to be audited. Members also heard that any transactions above the Overall Materiality level were considered, with the holistic response being to consider the appropriate control environment.

Regarding a query about whether specific audit results for improvement were fed back to the Council, the Director and Engagement Lead for Mazars explained that qualified actuaries regularly reviewed how senior management challenged the estimates and checks, and Management took ownership and responsibility for the recommendations.

Members were also appreciative of the updated reports and the clarity of the External Auditors’ presentation and comments.

Having been moved and seconded, on being put to the vote, it was unanimously

RESOLVED that the External Audit Strategy Memorandum (Plan) for 2022/23 be accepted.