Agenda item

Andrew Smith of Grant Thornton presented the Annual Audit Letter for the year ended 31^st March 2020.  The Letter summarised the key findings arising from the work carried out by Grant Thornton; the detailed findings had been considered by the Committee on 9^th November 2020.  Grant Thornton had also given an unqualified opinion on the Council’s financial statements on 27 November. 

Andrew drew attention to the audit fees in the sum of £59,822.  This was an increase from the original sum and the reasons for the increase were outlined and included the impact of the Covid-19 pandemic.  Any variations in fees were subject to PSAA approval.  For comparison, the audit fee of 10 years earlier had been considerably higher.  It was also reported that the Redmond Review had suggested audit fees were too low and as such could compromise the quality of the work.  Fees for the forthcoming audit would also increase as there would be increased requirements for future audit work. 

In discussing the report, Members raised queries and issues as below:

-       In relation to audit fees, Members noted the responsibility the Council had for managing public money.  Was it relevant to compare current fees with those from 10 years ago and was this a breach of contract?  In response, the Committee was advised that the audit content from 10 years ago was similar to current audits and there was now a requirement to report on more matters than previously.  The fee was not a fixed fee within the contract and any increase would be reviewed by the PSAA who would either authorise or reject it.  If the Council wished, there was the option to remove itself from the PSAA contract and tender the audit process on the open market.  Members discussed the option to include additional audit costs as part of their overall Covid related increased costs that would be submitted to the Ministry for Housing, Communities and Local Government. 

Members asked for more detail on how the increased costs had been arrived at and it was explained that Grant Thornton used a timesheet system for recording time allocated.  There were specific increased costs due to Covid-19 which had meant both the audit planning and risk assessment had to be revisited which had resulted in extra work; there had been additional work in relation to land valuations and pension liabilities; there was also a general impact on all audits due to remote working which had meant slower progress was made.  There were no issues with the working papers supplied by the Finance Team to Grant Thornton.  It was expected that some of these issues and extra workload would also relate to the next audit.  There would also be additional workload to take account of the requirements of the Code of Audit Practice which meant measuring the Council against 15 key lines of inquiry and this would also result in fee increases.  The implications were currently under discussion with the PSAA.  The Audit Plan would be brought to the April meeting and would include the planned fee. 

-       A question was raised about the recommendation to review the useful lives of the Vehicles, Plant, Furniture and Equipment Assets to ensure they more accurately reflect the actual lives.  The Head of Finance confirmed that this predominately related to the lives of Waste Vehicles and additional reviews were now built into the year-end processes and a specific automated system was being used to improve processes and enable better transparency. 

Resolved: that

(a)  The Annual Audit Letter be received;

(b)  The PSAA be contacted to review the increased fee and the amount be paid in accordance with their advice; and

(c)  The increased costs of the Audit fee arising from the Covid-19 pandemic be included in the submission for financial support that the Council submits to the Ministry for Housing, Communities and Local Government.