MAIDSTONE BOROUGH COUNCIL

Audit Committee

Monday 30 March 2015

REPORT OF Head of Finance & Resources

Report prepared by Ellie Dunnet 

1.           External Audit - Understanding how the Audit Committee gains assurance from management

1.1        Issue for Decision

1.1.1   To consider the responses prepared by management and the Audit Committee Chair to the external auditor’s enquiries.

1.2        Recommendation of Head of Finance And Resources

1.2.1   That the Audit Committee notes and comments on the responses prepared by management and the Audit Committee Chair, attached at Appendix A and Appendix B to this report.

1.3        Reasons for Recommendation

1.3.1   To comply with International Auditing Standards the external auditor needs to establish an understanding of the management processes in place to detect fraud and to ensure compliance with laws and regulations.  The external auditor is also required to make enquiries of management as to their knowledge of any actual, suspected or alleged fraud.  International Auditing Standards also place certain obligations on auditors to document management’s view on some key areas affecting the financial statements.

1.3.2   In addition to the above, the external auditor also needs to gain an understanding of how the Audit Committee maintains oversight over these processes.

1.4        Alternative Action and why not Recommended

1.4.1   No alternative action is recommended.  The Audit Committee are required to approve the Statement of Accounts and therefore need to be assured that the information submitted to the external auditor is sufficiently robust and can be relied upon.

1.5        Impact on Corporate Objectives

1.5.1   None.

1.6        Risk Management

1.6.1   Failure to achieve an unqualified audit opinion by the statutory deadline represents a reputational risk to the council.  The committee therefore needs to seek assurances from officers that there are adequate controls over the key financial systems to ensure that the Statement of Accounts is materially accurate.

1.7        Other Implications

1.7.1    

1.8        Relevant Documents

1.8.1   Appendices

1.8.2   Appendix A - Management Response

1.8.3   Appendix B – Response of the Audit Committee Chair

1.8.4   Background Documents

None.

IS THIS A KEY DECISION REPORT?                  THIS BOX MUST BE COMPLETED   X     Yes                                               No     If yes, this is a Key Decision because: ……………………………………………………………..   …………………………………………………………………………………………………………………………….     Wards/Parishes affected: …………………………………………………………………………………..   ……………………………………………………………………………………………………………………………..