Agenda item

Consideration was given to a report presented by Derek Gaffney, Chief Accountant, and Rashpal Khangura and Debra Chamberlain, KPMG, describing the KPMG External Audit Plan (included as an appendix to the submitted report) which set out the proposed external audit work to be undertaken to form an opinion on the Council’s financial statements and to conclude on whether the Council has arrangements in place to secure value for money in the use of its resources.

Section 3 of the External Audit Plan summarised the key stages KPMG would carry out in their audit of the financial statements and Section 4 set out the areas of focus during the audit in forming their opinion on the Financial Statements.  The 4 areas to be reviewed were:-

-          Child Sexual Exploitation claims

-          Accounting for school assets used by Local Authority maintained schools

-          Digital Region closure costs

-          The Council’s new banking arrangements

KPMG’s approach to reaching their Value for Money conclusion was set out in Section 5 with the 2 key themes being:-

-          The Council’s financial resilience to manage effectively its financial risks and opportunities and sustain a stable financial position

-          How effectively the Council challenged its arrangements to secure Value for Money and prioritise resources by , for example, improving productivity and efficiency and achieving cost reductions

At the present time, KPMG had yet to complete their initial risk assessment for the Value for Money conclusion as they had not yet concluded their work on the 2013/14 Value for Money conclusion.  Their Value for Money audit approach required them to consider findings from other inspectorates and review bodies.  The independent inquiry into Child Sexual Exploitation and the Corporate Governance Inspection reports were currently being reviewed to ascertain how they might impact on the Value for Money conclusion for 2013/14.  The initial risk assessment for the 2014/15 Value for Money conclusion would then be undertaken. 

It was hoped to report the outcome to the next meeting of the Committee. 

The 2014/15 audit fee of £186,300 was based on KPMG’s assessment of the level of risk.  However, changes to the Plan and the fee may be necessary if significant new audit risks emerge or KPMG’s expectations were not met.

The Audit Commission had confirmed the re-appointment of KPMG for a further 2 years (2015/16 and 2016/17) which may be extended by a further 3 years to 2020.  The DCLG had indicated it would make a decision on whether or not to extend in the Summer of 2015.

Discussion ensued on the future of the Audit Committee and the role of the Commissioners.  From KPMG’s perspective they would be seeking an understanding of entity level controls in that their audit was based on a Local Authority with Financial Regulations, Standing Orders etc. If that situation changed, there needed to be an understanding of the environment and any risks identified.

Resolved:- (1) That the report be received and its contents noted.

(2) That KPMG’s External Audit Plan 2014/15, as now submitted, be approved insofar as the Audit Committee is concerned and the proposed areas for audit, now identified, be noted.