The report provides members with a basis to review EY’s proposed audit approach and scope for 2018/19.  The Provisional Audit Plan summarises the initial assessment of an effective audit for the Council and outlines EY’s planned audit strategy in response to those risks.

Maria Grindley and Adrian Balmer, EY, presented the Provisional Audit Plan summarising the initial assessment of the key risks driving the development of an effective audit for the Council and outlining EY’s planned audit strategy in response to those risks.  The planning procedures were ongoing and the Audit & Governance Committee would be updated, if there were any significant changes or revisions at its next meeting.  The Committee received an assessment of the audit risks and key areas of focus for the external auditors, which included:

• Risk of fraud in revenue and expenditure recognition – incorrect capitalisation of revenue expenditure;
• Qualified Accounts 2017/18 – Corporate Support Services, income; Economic Growth and Neighbourhood Services, income and expenditure; Short-term Creditors; IAS19 pension liability, employer costs and actuarial adjustments;
• IAS 19 Assurance Process, Pension liabilities and other related amounts;
• Valuations of Property, Plant and Equipment and Investment Property, PFI Long-Term Liabilities and Deferred Income;
• IFRS 9 and IFRS 15 implementation - IFRS9 (Financial Instruments) and IFRS15 (Revenue from Contracts) had come into effect for Local Authority Accounts in 2018/19. At the time of the 2017/18 final audit work, the Authority had not conducted any preliminary work to position itself for either standard and the impact was therefore unclear. A detailed impact assessment would therefore be needed for both new standards;
• Group accounts: differences in accounting policies of the components - all the subsidiaries follow FRS102 for their accounts preparation, while the Council’s group accounts follow the CIPFA Code, supported by IFRS, which created a higher inherent risk that the consolidated figures might not be harmonised to comply with the Group accounting policies;
• Going concern disclosures - the unpredictability of the current environment had given rise to a risk that the Council would not appropriately disclose the key factors relating to going concern, underpinned by management’s assessment with particular reference to Covid-19 and the Council’s actual year-end financial position and performance.

Resolved:     That the Provisional Audit Plan summarising the initial assessment of the key risks, be noted and further reports be presented to the Committee as necessary.