Agenda item
EXTERNAL AUDIT PLAN AND STRATEGY 2025-26
REPORT OF KPMG
To receive the Audit Plan and Strategy for the year ending 31 March 2026.
Decision:
RESOLVED: That the Committee noted the External Audit Plan and Strategy 2025-26.
Minutes:
Audio recording – 3 minutes 11 seconds
The Director (KPMG) presented the report entitled ‘External Audit Plan and Strategy 2025-26’ and highlighted that:
· The report presented was covering two areas, rebuilding assurance and the audit risks identified for the year end 31 March 2026.
· Details on the rebuilding assurance process were outlined at page 19 of the reports pack.
· Due to a backlog of audits in the public sector, the government introduced new measures in 2024 to address this and a cut off was introduced for all audits up to 31 March 2023 to be completed by December 2024 or be disclaimed.
· Due to the backlog, North Herts Council received a disclaimed audit for 2022/23 and 2023/24 and, because of this, also received a disclaimed audit for 2024/25.
· Guidance has now been developed to build back assurance which meant auditors would look at the disclaimed audit period, identify any risks in this period and an audit would be conducted on these areas.
· As part of the North Herts Council 2025/26 audit, the rebuilding assurance work would be conducted alongside the audit process.
· KPMG were required to report on the outcomes of the risk assessment element of the build back assurance to the Council management by 31 July 2026. This would identify the additional audit procedures that needed to be performed as part of the build back work.
· The rebuilding assurance work would include speaking to management about actions during the disclaimed period, auditing specific account balances and reviewing reserve movements identified from the risk assessment work for the disclaimed periods.
· This work was currently ongoing and would be reported back to this Committee at a later meeting.
The following Members asked questions:
· Councillor Ruth Brown
· Councillor Vijaiya Poopalasingham
In response the questions, the Director (KPMG) advised that:
· For some authorities the disclaimed audit had been removed for 2025/26, and it was possible this could be the case for North Herts Council, but that was not known at this stage. This would form part of the risk assessment work looking at the disclaimed period.
· The timeline provided in the report was for the 2025/26 audit, rather than the rebuilding assurance work, which was hoped to be completed sooner and within the timeframe set by MHCLG. Following this, the substantive work on the 2025/26 audit would begin.
· There would be a need to balance management availability to ensure work is completed, but this would be discussed with the Accounts Team at the Council.
The Director (KPMG) further highlighted that:
· This report also provided the Financial Statement audit for 2025/26.
· The materiality thresholds, which were applied when conducting audit work, were outlined at page 20 of the reports pack.
· A summarised view of the work conducted by KPMG was included at page 21 of the reports pack. As part of the external audit, KPMG use their specialist pension team.
· A summary of the significant risks was provided at page 22 of the reports pack, which included the Valuation of Land and Buildings, the Valuation of Investment Property, the Valuation of post-Retirement Benefit Obligation and the Management Override of Controls.
· Due to a change in the Code of Practice, the risk applied to Valuation of Land and Buildings had been split between those assets valued in year and those which are not going to be valued but were subject to indexation.
· Details of the four significant risks were outlined between pages 23 and 27 of the reports pack.
· There was ongoing work to assess Value for Money, so there was no update to report at this meeting, but the process to be followed was outlined within the report. A risk assessment for this area would be provided to a future meeting of the Committee.
· The timeline for audit, the audit fees and the confirmation of independence was included in the appendices to the report.
· Whilst KPMG did provide one non-audit service for the Council, this was a separate team and did not interfere with the audit process.
The following Members asked questions:
· Councillor Chris Lucas
· Councillor Paul Ward
In response the questions, the Director (KPMG) advised that:
· Local Government Reorganisation (LGR) would not impact the 2025/26 or 2026/27 audits, as the Council would still exist in these periods.
· However, for audits after that consideration would be given to the delivery of audits post-LGR. This had been included in the Value for Money risk assessment and would develop as the future plans became clearer and governance processes to manage the change were in place.
· An outline of the other services provided by KPMG to the Council were outlined at page 39 of the reports pack. This was not an unusual practice as this service was normally completed by an external auditor, but this was a separate team from the audit team.
· There were safeguards to ensure the audit and other service provided by KPMG did not interfere with each other and these were outlined within the report.
· The work conducted was completed by the Council, with KPMG providing the service to review and confirm the position presented.
Councillor Sarah Lucas proposed and Councillor Alistair Willoughby seconded and, following a vote, it was:
RESOLVED: That the Committee noted the External Audit Plan and Strategy 2025-26.
Supporting documents:
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