Chichester District Council
Agenda item

Agenda item

Audit Planning Report for year ending 31 March 2018 - EY

The committee is requested to consider and note Ernst & Young LLP’s Audit Planning Report for the year ending 31 March 2018.

Minutes:

The committee considered the report attached to the agenda.

 

Mr Suter and Mr Jones of Ernst & Young LLP (EY) presented the report.

 

Mr Suter advised that the Ernst & Young LLP audit teams had recently been rotated and that he had taken over as the council’s new Engagement Lead and that Mr Jones would be the council’s new Audit Manager. The rest of the team remained which would provide continuity.

 

Mr Suter drew members’ attention to points in the report, particularly the risk related to the earlier timeline for this year’s audit.

 

The committee made the following comments and received answers to questions including the following:

 

·         Requested clarification of the 75% performance materiality. The figure was 75% of 2%. A view was taken by EY as to what level of error would be acceptable without changing the interpretation and understanding of the financial statements and this is determined to be 2% of gross revenue expenditure which would be £1.4m. EY then applies the lower figure to ensure that the audit is conducted having identified as many potential issues as possible so as not to breach that 2% of £1.4m.

·         Is the revenue gross of our collections for other authorities as there is concern that it gives a higher materiality than the reality of the operations of this council?  The basis was set upon our gross expenditure so, unless an element of collection on behalf of West Sussex County Council for example was going through our Income & Expenditure statement, it would not be included. This was based on £71.1m as stated on page 23 of the report. This was high because housing benefit was going through our account however it did not include precepting authorities.

·         The Audit Plan was a generic document which applied to most local authorities. Any differences would include whether there were new, novel or unusual transactions going through the accounts for the first time, the use of PFIs or group accounting etc. The council was not undertaking those arrangements and so it was a standard Audit Plan.

·         Concern that sufficient resources were being allocated to mitigate the risk to the council of the accounts not being finalised according to the new timeline?  As reported to the committee in the past dry runs had been put in place to identify where the processes could be streamlined to meet the earlier closedown deadline. A period of two weeks needed to be shaved off the cycle based on last year’s performance. Service champions were recently identified to drive the process in the service teams to ensure that information was received back from them in a timely way and this had been successful. Learning had been noted from past lessons. Earlier preparation with the auditors had taken place to provide them with information in good time. A portal had been launched by EY to list information that was outstanding which was considered a useful tool. The service was fully staffed and funding would be available if further resources were required.

 

The committee noted the report.

Supporting documents:

 

Top of page