The Chairman welcomed Trevor Greenlee from Grant Thornton to the meeting, who proceeded to summarise the External Auditors’ Audit Completion Report for the year ended 31 March 2019. 

Grant Thornton had been unable to conclude the audit due to resource constraints. In line with the Accounts and Audit Regulations, the following notice had been placed on the website with the latest accounts:

“As at 31 July our auditor, Grant Thornton, has been unable to conclude the audit.  This is due to resource constraints resulting from a peak period of work during June and July when all local government accounts are audited.  Grant Thornton has confirmed that it takes full responsibility for this. The Council is continuing to work closely with the audit team as they complete their work. In line with the Accounts and Audit Regulations 2015, the Council has published a set of draft accounts. The Council will publish a final set of accounts as soon as the audit is concluded and the Audit Report issued.”

Members raised concerns that the Council’s legal obligation to publish the 2018/19 Statement of Accounts by 31 July 2019 had not been met and it was agreed that a letter be submitted to the relevant regulatory body by the Chairman of the Audit and Standards Committee and the Assistant Director Resources.

Audit Scope and Objectives

Grant Thornton had substantially completed their audit procedures in accordance with the planned scope and objectives, subject to the completion of outstanding work as detailed in the report. 

At the time there were no issues or errors to report.  The accounts and working papers were of a high standard.  The migration of the enterprise resource planning system was successful even though in Grant Thornton’s experience this area was of high risk. There were no unadjusted errors.

Adjustments to the accounts

When the IAS 19 report on pensions was commissioned, the actuaries were only able to provide an estimate of the asset values as at the 31 March 2019 of £91.9m.  At that time a report was also commissioned showing the actual values of the assets which was made available late June after the statutory deadline for publishing the accounts.  The report showed the actual asset values were £89.1m.  As the difference was £3m and was a material difference, the accounts were adjusted.

Judgement on a recent legal challenge by the Government against a ruling by the Court of Appeal in December 2018 that provisions in some public sector pension schemes were discriminatory on the basis of age (the ‘McCloud’ judgement), was likely to give rise to additional pension scheme liabilities for the Council.  After the draft accounts had been published, the McCloud judgement was decided in court and the contingent liability that the Council had made at 31 May became a provision and the accounts were adjusted appropriately. 

There were no unadjusted misstatements to report. A few presentational changes had been made to the financial statements as a result of the audit.

No additional significant audit risks were identified during the course of the audit and Grant Thornton concluded that the continued use of the going concern concept to prepare the financial statements remained appropriate. 

Key Audit and Accounting Matters

The Council reported a surplus of £631,000 for the general fund in 2018/19 and had total useable (cash-backed) reserves of £22,137,000 as at 31 March 2019.  Grant Thornton were satisfied that the Council had a comprehensive medium term planning framework.

Audit Opinion

Grant Thornton anticipated issuing an unqualified audit opinion on the financial statements for the year ended 31 March 2018 subject to the completion of outstanding work.  Grant Thornton had no exceptions to report in relation to the consistency of the Annual Governance Statement with the financial statements to their knowledge.

Once completed, the External Auditors’ Audit Completion Report would be circulated to all Committee Members. 

RESOLVED: That:

1)         the report be noted; and

2)         concerns about the incomplete audit be raised with the appropriate regulatory body by the Chairman and Assistant Director Resources.