External Auditor's Audit Plan 2015/16
- Meeting of Audit, Governance and Standards Committee, Monday 21st March, 2016 6.30 pm (Item 72.)
- View the background to item 72.
The Committee considered the External Auditor’s Audit Plan for 2015/16. It was noted that:
· The Plan covered the External Auditor’s understanding of the environment the Council was operating in, the challenges and opportunities the Council was facing, the concept of materiality and how the audit would be undertaken against that concept, the significant and other risks identified and the work which would be undertaken to mitigate those risks, the External Auditor’s responsibility to reach a Value for Money conclusion and the basis on which that would be reached, the need to undertake a risk assessment and then confirm the significant risks that the External Auditor would respond to (and the Audit Plan would be updated to reflect this in due course) and the results of interim audit work.
· The anticipated audit fee was £64,385 which covered the audit of the financial statements and the grant certification work.
In response to questions, the Head of Finance and Resources/representatives of the External Auditor explained that:
· It was understood that discussions regarding the devolution agenda in Kent were taking place at the Kent Leaders’ Group supported by the Chief Executives.
· The External Auditor (Grant Thornton) would be undertaking testing of key controls in relation to the valuation of the Pension Fund net liability through the County Council. There was an agreement in place that the auditors of the district councils in Kent could rely on that work and doing it once on behalf of all involved was the most effective way of undertaking the exercise. The actuary employed by the County Council was an expert and Grant Thornton employed their own expert in that field to undertake an assessment to evaluate once only the professionalism, scope, reasonableness and assumptions made by the actuary. It was a requirement of the International Standards on Auditing that this work be undertaken each year.
· The External Auditor was not required to investigate the Pension Fund, but undertook the work to provide assurance that the valuation of the Pension Fund net liability was appropriate and that the actuary’s assumptions and approach were reasonable and in line with industry practice. That was why they engaged their own expert in that field to do the work. There was no suggestion of past errors or issues in the Pension Fund/scheme operated in Kent. The External Auditor did not look at the policy on investments.
· The level of materiality used in planning and performing the audit was about 2% of the gross revenue expenditure of the Council. The concept of materiality to provide a level of assurance was well established and 2% was the standard maximum used for local government clients. The application of the concept of materiality allowed the External Auditor to focus on key areas. As well as focusing audit effort, it also influenced the way in which the findings were reported to the Council. If the External Auditor did identify some errors in the financial statements that were cumulatively or individually above the materiality level set out in the Audit Plan, and the Council decided not to amend the statements for those errors, the External Auditor would have to qualify the accounts.
The Head of Finance and Resources then provided a brief overview of the Chancellor’s business rates proposals, and said that a report on the implications for the Medium Term Financial Strategy would be submitted to the Policy and Resources Committee in due course.
RESOLVED: That the External Auditor’s Audit Plan 2015/16, attached as Appendix A to the report of the Head of Finance and Resources, be noted.
Note: During the discussion on this item, Councillor Daley stated that he was the Vice-Chairman of the County Council’s Superannuation Fund Committee.
- External Auditor's Audit Plan 2015/16, item 72. PDF 56 KB View as HTML (72./1) 43 KB
- Appendix A - External Auditor's Audit Plan 2015/16, item 72. PDF 547 KB