Agenda item

REPORT OF ERNST AND YOUNG

To receive the External Audit 2020/21 Update Report.

RESOLVED: That the Committee note the External Audit 2020/21 Update Report

REASON FOR DECISION: to update the Committee on the progress of the External Audit 2020/21.  

Audio Recording: 33:02

N.B This item was considered once the representatives from Ernst & Young joined the meeting, at around 8PM.

Debbie Hanson, Ernst & Young, presented the External Audit 2020/21 Update Report and highlighted points including:

·                This report was brought in view of changes to the audit timetable and to clarify the closing fee for the audit 19/20

·                The Outline Audit Planning Report had been presented in March 2021 at which point not all of the audit procedures were complete, and so Ernst & Young had committed to bringing a report to this Committee to update if there were any additional risks identified;

·                No additional risks had been identified to those previously included

·                There was one error; the audit plan had included the risk of misstatement due to fraud as a new risk where it is actually a risk included in all audit plans every year.

·                There had been significant changes in staffing and team structure due to staff leaving the organisation but they were confident the current team had the experience and skills necessary to deliver the audit planned;

·                Due to ongoing delays in the 18/19 and 19/20 audits the team had made the decision to reschedule the 20/21 audit in order to deliver it in a reasonable timeframe. This change was discussed with the Council’s finance teams over the summer and the final plan was not confirmed.

·                Final work on the audit was to be completed in the new year and they would seek to sign off the audit early in 2022.

·                The rationale for the increased audit fee in 19/20 was as a result of a protracted period of submissions to PSAA about the base scale and issues relating to the 19/20 financial year, in that the base scale had not increased in line with the increase in audit work and the fee had not taken into consideration the additional risks to be considered during 19/20 including but not limited to COVID-19.

·                Similar submissions would be made to PSAA about the fee for 2021.

·                Full details of the proposals made and the response from PSAA were included in the report for transparency for Members.

The following Members asked questions:

·                Councillor Keith Hoskins

·                Councillor Terry Hone

In response to questions, Debbie Hanson advised:

·                Ernst & Young were expecting to make similar submissions to PSAA on an increase to the audit fee as they had regarding the 19/20 audit to reflect the increase in workload and in the expectations from an audit, and the increase in ingoing concerns going in to 20/21 and beyond.

·                Ernst & Young maintained rotation periods at the partner level, and the contract with PSAA instituted a rotation period of 5 years for most audits. Managers would usually be rotated on a longer timetable.

·                Rotation was important for maintaining independence and if they wished to extend beyond the 5 year period required by PSAA they had to apply for permission to do so.

The Chair thanked Ernst & Young for their update.

It was:

RESOLVED: That the Committee note the External Audit 2020/21 Update Report

REASON FOR DECISION: to update the Committee on the progress of the External Audit 2020/21.