Agenda item

To consider the Head of Financial Services’ Report No. FIN1606 (copy attached) which introduces the following reports which have been prepared by the Council’s external auditors, Ernst & Young:

(1)        Annual External Audit Plan for 2015-16

(2)        Sector Briefing

(3)        Value for Money Update

Mr. Adrian Balmer (Manager, Government and Public Sector) and Mr. Andrew Brittain (Executive Director) of Ernst & Young LLP will be in attendance for this item.

The Committee received the Head of Financial Services’ Report No. FIN1606, which explained that the Council’s appointed auditors, Ernst & Young, would be undertaking the audit of Rushmoor’s financial statements for 2015/16 in order to give an audit opinion on those statements and to provide a value for money conclusion on the Council’s arrangements to secure economy, efficiency and effectiveness.

The Chairman welcomed to the meeting Mr. Andrew Brittain (Executive Director) and Mr. Adrian Balmer (Manager, Government and Private Sector) of Ernst & Young, who provided the following updates:

(1)        Value for money –

Mr. Brittain advised that, as external auditor, Ernst & Young was required to consider whether the Council had ‘proper arrangements’ to secure economy, efficiency and effectiveness on its use of resources. For 2015/16 this would be based on the overall evaluation criterion:

“In all significant respects, the audited body had proper arrangements to ensure it took properly informed decisions and deployed resources to achieve planned and sustainable outcomes for taxpayers and local people.”

In considering the Council’s proper arrangements, the auditor would draw on the requirements of the CIPFA/SOLACE framework for local government to ensure that its assessment was made against this framework and to carry out this work taking into account a variety of sources of evidence, including internal audit reports, key financial information and reports, risk registers and the Annual Governance Statement and Annual Report. The auditor would be required to determine whether there were any risks that could be considered significant and this would determine the nature and extent of any further work. Examples of potential significant risks included: organisational change and transformation; significant funding gaps in financial planning; legislative and policy changes; and, repeated financial difficulties or persistently poor performance.

The Committee was advised of the process to be followed by Ernst & Young in reporting to the Council on the audit work.

Mr. Brittain then answered Members’ questions on the level of balances to be maintained by the Council and the Business Rates Retention Scheme.

(2)        Audit Plan 2015/16 –

Mr. Balmer reported to the Committee on the Audit Plan which set out the proposed audit approach and scope for the 2015/16 audit and summarised the auditor’s assessment of any key risks to be considered as part of the opinion work. The Audit Plan would cover the following areas:

·         financial statement risks

·         value for money risks

·         the audit process and strategy

·         independence

·         audit fees for the 2015/16 audit

·         communications required with those charged with governance

It was noted that the Committee would receive a progress report in June and that the audit results and value for money conclusion would be presented to the Committee in September.

(3)        Local government audit committee briefing paper -

The Committee received a copy of the latest edition of the quarterly briefing paper which had been produced by Ernst & Young for local government audit committees.

The Committee’s attention was drawn to the article regarding the closing of accounts. Currently, the Council’s accounts had to be signed off by the end of September each year. From 2017/18 this would change to the end of July. This would impact on governance processes at the Council for receiving the auditor’s report and approving the accounts.

RESOLVED: That the Head of Financial Services’ Report No. FIN1606, together with the appended reports from Ernst & Young, be noted.