MAIDSTONE BOROUGH COUNCIL

AUDIT COMMITTEE

25 MARCH 2014

REPORT OF HEAD OF FINANCE & RESOURCES

Report prepared by Paul Holland

Senior Accountant (Client) 

1.              EXTERNAL AUDITOR’S ENQUIRIES OF MANAGEMENT AND AUDIT COMMITTEE AS THOSE CHARGED WITH GOVERNANCE

1.1           Issue for Decision        

1.1.1      To consider the draft responses from the Head of Finance & Resources and the Chairman of Audit Committee to the external auditor’s enquiries.

1.2           Recommendation of Head of Finance & Customer Services

1.2.1      That the Committee note the contents of the draft responses.

1.3           Reasons for

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 law and regulation.  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      The external auditor also needs to gain an understanding of how the Audit Committee maintains oversight of the above processes.

1.3.3      At this stage these are still draft responses as it is not yet the end of the financial year.  There will be formal responses made in due course once it is confirmed that no new issues or changes in circumstances have arisen.

1.3.4     The draft response from the Head of Finance & Resources is shown at Appendix A and the draft response from the Chairman of Audit Committee is shown at Appendix B.    

1.4           Alternative Action and why not Recommended

1.4.1      The requirement to approve the Statement of Accounts is a statutory requirement and therefore no alternative action is recommended as the Committee needs to be assured that the information submitted to the External Auditor is sufficiently robust for their purposes.

1.5           Impact on Corporate Objectives

1.5.1      None.        

1.6           Risk Management         
 

1.6.1      Failure to achieve an unqualified Audit Opinion represents a reputational risk to the Council, therefore the Committee needs to seek assurances from officers that the information in key financial systems is adequate for the purposes of the Statement of Accounts.

1.7           Other Implications

1.7.1    

                  
Relevant Documents

1.7.2     Appendix A – Draft Response of the Head of Finance & Resources   

1.7.3     Appendix B - Draft Response of the Chairman of Audit Committee

1.8        Background Documents

1.8.1    None.        

IS THIS A KEY DECISION REPORT? X     Yes                                               No     If yes, when did it first appear in the Forward Plan?   …………………………………………………………………………………………………………………………..     This is a Key Decision because: ………………………………………………………………………..   …………………………………………………………………………………………………………………………….       Wards/Parishes affected: …………………………………………………………………………………..   ……………………………………………………………………………………………………………………………..