Agenda item

To present for consideration and agreement the External Auditor’s Audit Planning Report for the year ended 31 March 2021.

The Committee had before it a report submitted by the Council’s Assistant Director (Finance & IT) (report A.1) which presented for consideration and agreement the External Auditor’s Audit Planning Report for the year ended 31 March 2021.

It was reported that the plan was set against a risk based approach in order to provide a focus on areas of the financial statements where the risk of material misstatement was higher or where there was a risk that the organisation had not made proper arrangements for securing value for money in its use of resources.

Members’ attention was drawn to the new approach to the use of resources assessment following a change in the associated code and guidance. The outcome from the work of the External Auditor was now moving to a commentary on the Council’s value for money arrangements rather than a conclusion or opinion.

The commentary would cover the following 3 headings:

A)        Financial Sustainability: how the body plans and manages its resources to ensure it can continue to deliver its services, including:

1)    how the Council ensured that it identified all the significant financial pressures that were relevant to its short and medium-term plans and buildt these into them;

2)    how the Council planned to bridge its funding gaps and identify achievable savings;

3)    how the Council planned finances to support the sustainable delivery of services in accordance with strategic and statutory priorities;

4)    how the Council ensured that its financial plan was consistent with other plans such as workforce, capital, investment, and other operational planning which might include working with other local public bodies as part of a wider system; and

5)    how the Council identified and managed risks to financial resilience, e.g. unplanned changes in demand, including challenge of the assumptions underlying its plans.

B)      Governance: how the body ensures that it makes informed decisions and properly manages its risks, including:

1)    how the Council monitored and assessed risk and how it gained assurance over the effective operation of internal controls, including arrangements to prevent and detect fraud;

2)    how the Council approached and carried out its annual budget setting process;

3)    how the Council ensured effective processes and systems were in place to ensure budgetary control; to communicate relevant, accurate and timely management information (including non-financial information where appropriate); supported its statutory financial reporting requirements; and ensured corrective action was taken where needed;

4)    how the Council ensured it made properly informed decisions, supported by appropriate evidence and allowing for challenge and transparency. This included arrangements for effective challenge from those charged with governance such as the audit committee; and

5)    how the Council monitored and ensured appropriate standards, such as meeting legislative/regulatory requirements and standards in terms of officer or member behaviour (such as gifts and hospitality or declarations/conflicts of interests).

C)        Improving economy, efficiency and effectiveness: how the body uses information about its costs and performance to improve the way it manages and delivers its services, including:

1)    how financial and performance information had been used to assess performance to identify areas for improvement;

2)    how the Council evaluated the services it provided to assess performance and identify areas for improvement;

3)    how the Council ensured it delivers its role within significant partnerships, engaged with stakeholders it had identified, monitored performance against expectations, and ensured action was taken where necessary to improve; and

4)    where the body commissioned or procured services, how the body ensured that this was done in accordance with relevant legislation, professional standards and internal policies, and how the body assessed whether it was realising the expected benefits.

The Committee was informed that, given the broad areas of governance that the new use of resources assessment would cover, there was, unsurprisingly, a large overlap with the existing Annual Governance Statement activities, where many of the aforementioned issues were already being addressed or were planned to be addressed or strengthened. Although the Council was therefore in a strong position to respond to the new assessment, it was proposed that the outcomes from the work of the External Auditor would be brought together and monitored via the existing Annual Governance Statement processes going forward. The outcome of the External Auditor’s work would be set out in the Auditor’s Annual Report that would be presented to the Audit Committee later in the year.

Members were made aware that the External Auditor’s planned ‘base’ fee totalled £45,205 (excluding certification of claims and returns), which could be met from within existing budgets. However, additional work would be required in order to respond to the new use of resources reporting requirements. That additional cost would be considered within the quarterly financial performance reports during the year as an on-going cost pressure.

The Committee noted that no allowance had been made within the overall fee for additional work that might be required such as that associated with additional requirements placed on the Council or unforeseen circumstances, which would be the subject of further reports when necessary.

Having fully considered and discussed the External Auditor’s proposed Audit Planning Report for the year ended 31 March 2021:-

It was moved by Councillor Placey, seconded by Councillor Fairley and:-

RESOLVED that the External Auditor’s Audit Planning Report for the year ended 31 March 2021 be approved.