Ms Tina James, accompanied by Mr Paul Dossett, presented the External Auditor’s Audit Plan for delivering the audit of the 2019/20 financial statements and value for money conclusion.  The report included details of the significant risks identified, the concept of materiality and the revised audit fee.

Ms James advised the Committee that the Council would be preparing group financial statements for the first time that consolidate the financial information of Maidstone Property Holdings Limited and the External Auditor would be auditing that consolidation.  Also, a lot of work was required to prepare for the new accounting standard which would be effective from 2020/21.

In response to questions, Mr Dossett explained that:

·  The additional fees related to a number of issues that had emerged over the last twelve months from the regulatory environment particularly involving the Financial Reporting Council and the requirements they were putting on auditors both in the corporate sector and the public sector, and also the complex new accounting standard.  The fee variation proposals had to be agreed with Public Sector Audit Appointments Limited.  In terms of the timeliness and resourcing of the audit, the audit had been planned to address some of the issues raised last year.  Given the resources that would be available this year, the External Auditor expected to be able to complete the audit by the end of July in accordance with the Audit Plan.

·  The External Auditor had limited control over the way that materiality was calculated.  Materiality at the planning stage of the audit was £1.9m for the group and £1.8m for the Authority financial statements which equated to 1.9% of the Council’s prior year gross expenditure for the year.  If the level was set lower, then it would be necessary to undertake more work and the audit fee would increase.

RESOLVED: 

1.  That the External Auditor’s Audit Plan for the year ending 31 March 2020, attached as Appendix 1 to the report of the Head of Finance, be noted.

2.  That the revised audit fee of £46,366 for 2019/20 be noted.