Auditor question

Response

What do you regard as the key events or issues that will have a significant impact on the financial statements for 2013/14?

2013/14 is the first year of the Business Rates Retention scheme; there are key issues around the provision for backdated appeals and changes to Collection fund accounting.

Have you considered the appropriateness of the accounting policies adopted by the Council? Have there been any events or transactions that may cause you to change or adopt new accounting policies?

Accounting policies are kept under review throughout the year. There are no material changes in accounting policies for 2013/14.

Are you aware of any changes to the Council's regulatory environment that may have a significant impact on the Council's financial statements?

There are no known changes.

How would you assess the quality of the Council's internal control processes?

The quality of the Council’s internal control processes is assessed in the Head of Internal Audit’s annual report on the effectiveness of the Council’s governance framework governance, risk management and control. The most recent report to the Audit Committee on 15 July 2013 contained the Head of Audit Partnership’s opinion that substantial reliance can be placed on the overall adequacy and effectiveness of the Council’s framework of governance, risk management and control.

How would you assess the process for reviewing the effectiveness of internal control?

The Corporate Leadership Team undertakes an annual review of internal controls and this is reported in the Annual Governance Statement. Internal Audit reviews the effectiveness of internal control on an ongoing basis and reports the results to senior management and the Audit Committee.

How do the Council's risk management processes link to financial reporting?

A risk assessment on the Council’s 2014/15 Budget Strategy was considered by the Audit Committee. Quarterly budget monitoring reports to the Corporate Leadership Team and Cabinet identify financial risks.

Auditor question

Response

How would you assess the Council's arrangements for identifying and responding to the risk of fraud?

Procedures are in place to ensure compliance with financial regulations and contract procedure rules. These elements of the Council’s constitution formally identify the procedures required in relation to financial transactions to reduce the risk of fraud.

All financial systems maintained by the Council are subject to an annual review by Internal Audit and are monitored by the Head of Finance & Resources who takes responsibility for approving all contractual commitments greater than £50,000 and all payments greater than £40,000.  A dedicated fraud team is in place to identify and respond to fraud relating to Benefits and Council Tax fraud.

What has been the outcome of these arrangements so far this year?

No specific fraud risks have been identified in respect of internal Council business. The dedicated fraud team has identified and investigated a considerable number of Benefit fraud and improper applications for Council Tax Single Person Discount.

What have you determined to be the classes of accounts, transactions and disclosures most at risk to fraud?

Benefits and Council Tax.

Are you aware of any whistle blowing potential or complaints by potential whistle blowers? If so, what has been your response?

None have been identified.

Have any reports been made under the Bribery Act?

No.

As a management team, how do you communicate risk issues (including fraud) to those charged with

governance?

Regular consultation between the Director of Regeneration & Communities (S151 Officer), the Head of Finance & Resources and the Head of Audit Partnership on actions taken to identify and respond to fraud. Strategic Risk Register in place. There is a regular agenda item at Corporate Leadership Team meetings via the Corporate Governance Group.

As a management team, how do you communicate to staff and employees your views on business practices and ethical behaviour?

These matters are communicated to staff through the policies and other documentation on the Council’s intranet and through staff briefings and team meetings. The Council has adopted a Code of Conduct for employees, which forms part of the Staff Handbook.

What are your policies and procedures for identifying, assessing and accounting for litigation and claims?

Is there any use of financial instruments, including derivatives?

No.

Are you aware of any significant transaction outside the normal course of business?

No.

Auditor question

Response

Are you aware of any changes in circumstances that would lead to impairment of non-current assets?

No.

Are you aware of any guarantee contracts?

No.

Are you aware of allegations of fraud, errors, or other irregularities during the period?

Only in relation to Benefits and Council Tax.

Are you aware of any instances of non-compliance with laws or regulations or is the Council on notice of any such possible instances of non-compliance?

None have been identified.

Have there been any examinations, investigations or inquiries by any licensing or authorising bodies or the

tax and customs authorities?

No.

Are you aware of any transactions, events and conditions (or changes in these) that may give rise to recognition or disclosure of significant accounting

estimates that require significant judgement?

None have been identified.

Where the financial statements include amounts based on significant estimates, how have the accounting estimates been made, what is the nature of the data used, and the degree of estimate uncertainty inherent in the estimate?

Estimates are made taking into account historical experience, current trends and other relevant factors. The areas where there is a significant risk of material adjustment are:

·         Property, Plant & Equipment

·         Pensions Liability

·         Arrears

·         Financial Instruments.

Details of accounting estimates, nature of data used and the degree of uncertainty will be provided in the financial statements and supporting working papers.

Are you aware of the existence of loss contingencies and/or un-asserted claims that may affect the financial statements?

The Council has been notified of a number of potential claims arising from former employees exposed to asbestos during their period of employment with the Council. The Council’s previous insurers MMI are reviewing these claims and settlement figures will be calculated if liability is established.

Auditor question

Response

Has the management team carried out an assessment of the going concern basis for preparing the financial

statements? What was the outcome of that assessment?

A risk assessment of the 2014/15 budget strategy was undertaken; this report was considered by the Audit Committee and recommended to Cabinet for acceptance.

Although the public sector interpretation of IAS1 means that the financial statements should be prepared on a going concern basis, management is still required to consider whether there are any material uncertainties that cast doubt on the Council's ability to continue as a business. What is the process for undertaking a rigorous assessment of going concern? Is the process carried out proportionate in nature and depth to the level of financial risk and complexity of the organisation and its operations? How will you ensure that all available information is considered when concluding the
organisation is a going concern at the date the financial statements are approved?

The Council has adopted a five year budget strategy which sets out both revenue and capital projections. A major review of the budget strategy is planned for 2014/15 alongside the Strategic Plan review in time for 2015/16. This will involve projecting the level of resources available alongside growth pressures; there will be a risk assessment of the level of savings required to achieve a balanced budget without reducing General Fund balances below an acceptable level.

Can you provide details of those solicitors utilised by the Council during the year. Please indicate where they are working on open litigation or contingencies from prior years?

Pinsent Mason

DACBeechcroft

Eversheds

Trowers and Hamlyn

Can you provide details of other advisors consulted during the year and the issue on which they were consulted?

Capita Asset Services provides treasury management advisory services.

Have any of the Council's service providers reported any items of fraud, non-compliance with laws and regulations or uncorrected misstatements which would affect the financial statements?

No specific issues have been reported.