Agenda item

Members considered a report on accounting policies, actuary assumptions and materiality levels in preparation of the 2018/19 accounts.  Also included was an explanation of the External Audit from the External Auditor, and the approach to the Value for Money audit 2018/19.

There was a new accounting standard for 2018/19, called IFRS 9 financial instruments.  This would have an impact on how the Council accounts for, and classifies its financial investments.  It could also have an impact on the general fund.  There was a statutory override in place for the next 5 years to mitigate this, and enable the Council to review its investment decisions in the future.

The External Auditor highlighted the following points for their section of the report:

·         The areas of responsibility were the same as the previous audit regime, and were set by the National Audit Office (NAO).  These were:

o   Audit opinion;

o   Reporting to the NAO;

o   Value for money;

o   Electors’ rights;

·         Main outputs from the external audit were the audit plan, the audit strategy memorandum, the audit completion report and the external audit report given in July to Committee;

·         There were three significant risks around:

o   Management override and control; an inherent risk that external audit were obliged to take into account;

o   Plant property and equipment;

o   Defined benefit liability evaluation;

These were key because the figures were highly material, and were subject to a high degree of estimation and uncertainty;

·         It was an auditing standard to consider the risks of revenue recognition.  This was usually rebuttable as a risk as revenue streams were relatively static and predictable;

·         The business rates provision was subject to estimation;

·         The risk assessment on Value for Money (VfM) highlighted broad commercialisation activities underpinning governance arrangements, as well as themes related to the Minimum Revenue Provision (MRP);

·         There were no other issues needing reporting under auditing standards.  The audit fee was set by public sector audit appointments; currently there were no additional issues requiring a variation on this fee;

Following this introduction, Members gave their opinions on the report and asked questions of officers.  Further information was provided:

·         The accounts closedown should be completed by the end of March 2019, but April 2019 was the final deadline;

·         The Finance department had budgeted for a 2% increase in inflation rates; this was not a material change to the valuation of the scheme;

·         Information returned from an external valuation was compared to previous years.  If the variation was significant, the valuers would be challenged;

·         There was a mistake in the External Audit report; the 2017/18 fee and the 2018/19 fee in the report were in the wrong part of the table.  The fee for core audit work in 2018/19 was £33,420k.

With the proviso that the change in audit fee was noted by Members present, it was:

                                    RESOLVED:

(1)  To approve the proposed Accounting policies;

(2)  That the pension assumptions had been considered;

(3)  That the risk assessment had been considered;

(4)  To approve the proposed materiality levels and revisions;

(5)  That the key closedown dates had been considered;

(6)  To accept the main accounting changes for 2018/19 and onwards;

(7)  To note the External Audit information.