Agenda item - AUDIT RESULTS REPORT 2020/21

REPORT OF ERNST & YOUNG

To consider the Audit Results Report 2020/21.

RESOLVED: That the Audit Results Report 2020/21 presented by Ernst & Young be noted.

N.B Councillor Phil Weeder joined the meeting during this item.

Audio Recording – 4:19

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

· This report provided is a bridging document between the provisional audit results report brought to the committee on 16 March and provided an update on those areas that were not fully complete at that point;

· The audit was in its final stages and EY were preparing to issue their final opinion in the coming week pending the receipt of final documents including financial statements, subsequent letters of representation and a response from the Hertfordshire Pension Fund Actuary in relation to the calculation of a particular figure;

· EY would not be able to issue an audit certificate at the same time as their final opinion as the National Audit Office had not yet issued instructions;

· It was anticipated that North Herts would fall below the threshold to be included in a whole-of-government accounts submission but until the NAO confirmed its instructions EY would not be able to issue a final certificate;

· All local authorities were in the same situation until the NAO issued its instructions;

· No issues to report were identified related to the risk of misstatements due to fraud and error;

· No issues to report were identified related to the risk of incorrect capitalization of revenue;

· No issues to report were identified related to the risk of revaluation of investment properties and EY was satisfied that of the sample examined all valuations were supportable;

· Regarding ‘specialised assets’ where there isn't a readily available market and which therefore were valued at depreciated replacement cost EY took the view that values for land proposed by the Council’s valuers were significantly lower than expected;

· The overall valuations of land and buildings combined were within the expected range due to different assessments to the impact of building;

· EY estimated the maximum potential impact of that range could be a £1.33 million under valuation of the council's land; offset by the higher valuation of the buildings than EY would use in their estimates;

· Overall EY was satisfied this posed no material impact on the Council’s accounts;

· In the area of pension liability valuation and disclosures EY was satisfied there was no general issue but had been made aware of an error on the ICE-19 provided by the actuary in relation to the incorrect treatment of assets related to Hertfordshire Building Control; the error had been identified this year and the actuary had calculated an impact on North Herts at around £454,000 for 2021, and slightly less than that for 2020;

· EY was conducting work to assess the accuracy of that figure and would confirm by the end of the week;

· There were no issues with Going Concern Disclosures;

· There were no issues in account for new COVID-19 grants;

· There were two unadjusted variances with the audit relating to pension liability and land valuation as previously mentioned, and while EY did not consider them material they did require a letter of representation from the Council to account for the fact they were unadjusted;

· EY found the accounts to be well prepared and thanked Officers for their assistance throughout the Audit process.

The following Members asked questions:

· Councillor Terry Hone

In response to questions the Service Director – Resources advised he was happy with the content and presentation of the audit report and with EY’s conduct throughout the audit.

It was:

RESOLVED: That the Audit Results Report 2020/21 presented by Ernst & Young be noted.

N.B Councillor Phil Weeder joined the meeting during this item.