Issue - meetings

The External Auditor presented the draft External Audit Plan and Strategy for the Year Ending 31 March 2024 and highlighted the following points:

§  KPMG had been newly appointed as the External Auditor by Public Sector Audit Appointments (PSAA) and had drafted the plan in line with the NAO Code of Audit Practice.

§  The materiality for the financial statements was 2% of gross expenditure, £900k which was in line with other local authorities.

§  In terms of valuation of land and buildings, the last revaluation was reported at £31.5m. The Council had 7 investment properties, commercial and industrial units which were required to be valued on an annual basis.

§  There was a requirement to consider the Council’s post-retirement benefit obligations and the auditors would review the Lincolnshire Pension Scheme, its assets and liabilities, net position, and appropriateness of the actuarial data.

§  Management override controls would be tested as a standard audit to determine the risk of fraud. The external auditor assured there had not been any issues identified but they would review the ledgers used to produce financial statements and run analytic testing for anomalies.

§  The audit fees were contained in the report and were set by the PSAA, and the external auditor concluded the independent opinion of KPMG.

The Chairman thanked the external auditor for his report and invited members to make comments and ask any questions.

Members asked a question relating to the materiality rate of 2% and asked how this was determined. The external auditor responded that they had considered the outcome of the previous audit and other factors to inform their judgement as the new External Auditors.

Members asked for assurance relating to management controls and journal entries. The external auditor explained that corrections or other entries could be made to revise journals and the accounting systems did allow for this but there were no concerns, and this was a normal testing process as part of the External Audit.

Members questioned the audit fees and the Section 151 Officer explained to members that the new value had been imposed by the PSAA and had been included in the budget which was approved by Council in February.

Members asked a question relating to financial risks associated with geopolitics. The External Auditor explained that geopolitical factors would impact the value of the Pension Scheme and their investments.

Members asked if the Council would be required to do climate related reporting as part of the External Audit process. The response was that it was envisioned that it would be required in the future and metrics relating to climate reporting would form part of the audit.

RESOLVED that the External Audit Strategy Memorandum for 2023/24 be approved.