The Committee considered the report of the Chief Executive concerning the Audit Commission’s Annual Audit and Inspection Fee Letter for 2010/11.  It was noted that since the Letter had been received, the new Government had abolished Comprehensive Area Assessment (CAA), and this would have an impact on the proposed fee. 

Mr Mack, the District Auditor, confirmed that the increase in the financial statements element of the audit fee reflected the additional work arising from IFRS.  In recognition of the financial pressures that public bodies were facing in the current economic climate, the Audit Commission had decided that it should rebate the “one-off” element of the cost of transition to IFRS that would arise in 2010/11, the year of transition.  For Maidstone Borough Council, this rebate would amount to £7,357.  He could not say what impact the abolition of CAA would have on the proposed fee at this stage, but the planned inspection fee would reduce or be deleted.  Work on Use of Resources would continue, but the scoring element had been taken out.  The Audit Commission would be consulting the Department for Communities and Local Government and local authorities about what might replace the scoring system and CAA (if anything), but whatever arrangements were introduced would be lighter touch and lower cost, focusing on value for money, efficiency, data quality and financial management.

In response to questions by Members, Mr Mack explained that, in general terms, given the current economic climate, the risk associated with the change in policy, was that the basic principles of good corporate governance might be allowed to slip.  However, no specific risks had been identified for Maidstone which was recognised as a strongly performing Council.  The proposed fee would be updated to reflect the change in arrangements.

RESOLVED:  That the position with regard to the annual audit and inspection fee for 2010/11 be noted.