To receive from BDO (external auditors) the Annual Audit Letter summarising the key issues arising from the work carried out by BDO during the 2016/17 audit.
RECEIVED from BDO (external auditors) the Annual Audit Letter 2016/17.
1. The report was introduced by Andrew Barnes (BDO), highlighting the following:
a. This was BDO’s Annual Audit Letter, which is a requirement of the National Audit Office (NAO) which will also be available on the NAO web site. This was a distillation of the report that was bought to the last Committee meeting on 28 September 2017 and is flagging up a few issues that arose in reporting the audit, how those issues were addressed and what BDO’s overall conclusions are.
b. The overall findings, are detailed at page 2 of the report, and confirms that BDO had now issued their true and fair opinions on both the Council’s accounts and Pension fund financial accounts. This had been discussed at the last committee meeting, which was late, but had now been completed. Within the financial accounts there were some uncorrected mistakes, but as they were of such small magnitude and not material to the financial statements, they were not required to be adjusted.
c. As reported previously, BDO did have some difficulties with the evidence to support the valuation of housing stock, but are now happy that the reporting position is materially accurate and therefore adjustment wasn’t required as was previously reported.
d. In terms of the use of resources opinion, BDO gave a clean opinion. From comments made in this report and the previous one, the committee had been made aware about the financial challenges the Council is facing. Work was in place to meet the requirements needed by the council, to keep the balance partnership and to deliver the savings the council needed to deliver.
e. BDO also looked at the council’s regeneration projects where challenges are being dealt with and BDO were happy with the evidence seen to take these forward.
2. The following issues raised in response to the report:
a. Councillor Simon referred to page 13 of the report and the fact that BDO were unable to issue the audit certificate to close the audit, until work in respect of objections to the 2015/16 accounts were completed. Councillor Simon asked if this work was still outstanding and the fact that an audit opinion could be provided but not the certificate. David Eagles (BDO) clarified that external audit have to consider whether the issues raised by the objections could materially influence the accounts or materially influence the conclusion in respect of use of resources. None of the three objections that are being looked at are considered to have an impact on the accounts or use of resources.
b. Councillor Simon asked what the issues were in respect of the objections. David Eagles clarified the following:
· Objection relating to the Council’s non-use of Compulsory Purchase Orders (CPO) in respect of Meridian Water scheme land, which had been concluded by means of a written statement of reasons to the objector.
· Objection relating to the purchase of land on/around the Chase Farm site, connected to the education provision. Where feedback had been recived, there were some additional questions to resolve but BDO’s current view is that this will be rejected aswell.
· Objection relating to car parking in Palace Gardens.
BDO clarified that none of the above issues had a material impact on the accounts or use of resources.
c. Councillor Savva questioned where the objections came from and if there was a deadline by which that objections cannot be accepted. David Eagles clarified that the objections all related to the 2015/16 accounts and they had to be received by 11 August 2016, which they were. The deadline for objections relating to this year’s audits was 11 August 2017, where BDO did receive 2 potential objections but were received after this date and therefore missed the deadline. BDO considered that they had no impact to the accounts at all. Objections to accounts are completed as quickly as possible. The PSA contract (Production Sharing Agreement) states that objections should be sorted out within 9 months of receipt, however, BDO still have issues with 2 of the objections and both were related to the Meridian Water Scheme. These were complicated and significant areas to look into by external audit.
d. James Rolfe also clarified that when the Council had received objections in the past, of a similar complex nature, it had taken a similar amount of time to look into by external auditors as it meant burrowing into quite a lot of detail to resolve the issues.
e. Councillor Simon asked if the cost of dealing with objections a separate fee or included in the scale fees and if there would be a report on the cost of these objections. David Eagles clarified that there would be a separate cost and this would be reported.
f. The Chair reported that discussions had taken place with BDO regarding next year’s audit and that an action plan would be drawn up so that the audit is finished on time.
3. The Chair thanked Andrew Barnes for his report.
AGREED that the Annual Audit Letter 2016/17 be noted.