To receive from BDO (external auditors) a progress report on the external audit 2018/19.
RECEIVED from BDO (external auditors) the 2018/19 External Audit Progress report to 11 June 2019.
1. The report was presented by Lucy Trevett (BDO).
2. This is BDO’s progress report and where they are, having completed the interim audit back in February/March 2019. As detailed on page 113 of the report, the table illustrates BDO’s progress, where work has been completed and previously reported to the Committee. The key completion and reporting dates are also noted within the table.
3. As detailed on pages 114-115, the Audit progress 2018/19 which details the planning letter, Audit plan, Interim visit and the final audit visit.
In terms of the interim visit by BDO in March 2019, the vast majority of work had been completed with a few parts of work outstanding.
In terms of BDO’s final audit visit, they had received the draft final statements by 31 May 2019. However, it did not include the group accounts and therefore received a rag rating of amber. Although BDO had not started the work on the group accounts they did need the accounts to re-calculate the materiality levels.
4. BDO had also identified a number of material adjustments which will be made to the accounts and which will impact on the materiality calculations and level of work BDO have to do.
5. Although BDO had completed most of the work at the interim visit, there were a number of documents, BDO had requested, they had not received particularly around IT general controls work. A number of key working papers were requested 3 June 2019, which had not been provided. Most of these had now been provided albeit a week late.
6. In terms of the Whole of Government Accounts, this work would be done, and a review undertaken during the financial statements audit at the final audit visit.
8. The following questions and queries raised in response to the report:
a. Councillor David-Sanders asked for confirmation that the Audit Letter would be received at the 25 July 2019 Committee meeting but no sooner than that. Lucy Trevett clarified that BDO would be presenting the Audit Letter at the 25 July 2019 Committee meeting. BDO would know at that meeting all work that is outstanding.
b. Members questioned if the deadline of 31 July 2019 for the Audit Certificate will be achieved despite an amber rating. Lucy Trevett clarified that they are hoping to achieve that and were working closely with Tim Harlock (Interim Chief Accountant) in order to quickly resolve any issues BDO find.
c. Members reiterated that there seems to be a repeat of last year’s issues causing considerable delays. Have BDO now got everything available i.e. resourcing issues from last year, consolidation issues, etc. The committee wanted some assurance that the 2018/19 Statement of Accounts would be signed off by 31 July 2019. Lucy Trevett clarified that BDO did not have all the documents they need from Finance at present i.e. valuations documents. Although they had received valuation reports. Questions had been sent to the valuers and BDO are awaiting responses from them and arranging a meeting with them. All BDO’s work was in progress. Matt Bowmer further clarified that one of the major elements of the audit is the balance sheet and Council assets which was a problem last year. A 3-way meeting with BDO, the valuers and officers would resolve any queries this year.
d. Members requested if there were completed sections of the accounts that members could scrutinise if the accounts are delayed. Lucy Trevett clarified that nothing could be distributed until its reviewed by partners. No conclusions could be drawn if the accounts were distributed earlier.
e. Fay Hammond (Interim Executive Director of Resources) commented that, as new members of the committee could not visualise what it is, they will be reviewing (statement of accounts) it may be helpful to look at last year’s accounts as part of the training session using ISO260. Officers could show members the kind of issues that were encountered last year and talk about what has been done this year.
f. Peter Nwosu (Independent Member) reminded the committee that there were a lot of problems last year as regards the accounts with BDO producing a detailed plan and an additional committee meeting being arranged. He was trying to understand why the rating for sign off was not green and why, have BDO now received the requested documents from finance, if not, had a date been set when would they receive the documents. Had BDO gone to this level of detail to give the committee a degree of comfort that would assure members that the sign off deadline would be met or were there still open-ended questions and what was the process to close any open-ended questions.
Lucy Trevett clarified that her team had weekly progress meetings. For the past 2 weeks, discussions had been had regarding the team’s progress and going through that in detail, all the requested documents since 31 May 2019, ticking off what we have received. BDO’s understanding is that they have virtually now received all the requested documents. The BDO team now must calculate what their sample size is going to be and pick their samples. However, it was not a case of these are all the documents requested, there are still many more documents that BDO would need to receive over the next few weeks.
Tim Harlock (Interim Chief Accountant) further clarified that for example if there is an expenditure figure of £30M listed in the accounts, auditors will tend to say is that there is £30M in total and there are 851 items that make up that figure. Can we see the sample size of these items i.e. a random sample. This request is then transferred to Finance who send onto Council services asking officers for particulars of invoices and why the invoice was raised. The problems that Finance encounter is that some officers are on annual leave which leads to delays in receiving those documents and information. BDO also now face a shorter time frame in which to complete the ISO260, It used to be 3 months but is now 2 months.
Peter Nwosu commented that the planning cycle should bear these issues in mind and that officers should be on the front foot by identifying the larger items that cover 60% of the 851 items and be prepared for that.
AGREED to note BDO’s 2018/19 Progress report to 11 June 2019.