To receive the 2020/21 Audit Results Report (report of EY enclosed).
Consideration was given to the South Holland District Council Audit Results Report for the year ended 31 March 2021, produced by Ernst Young.
The Associate Partner (EY) provided the following update:
· The report provided assurances in order that the financial statements could be approved at the next agenda item.
· The main points of the report were:
· The materiality level being worked to was £1.133million – anything above this amount that was wrong would impact on the ability to issue an unqualified audit opinion, and any audit differences above £57,000 were being reported;
· Updates to the risk assessment following release of the Audit Plan in July 2021 were around pension risk, which had increased to ‘significant’ due to a change in actuary at the pension fund (the risk was that the actuary was not providing a full and complete data set upon which it could make liability judgements – EY had undertaken some checks to ensure that this data transfer was in order and satisfactory responses had been received).
· Outstanding items – Fraud letters were received on 15 March (there was nothing further for EY to do upon receipt of these); responses to Value for Money queries were received on 7 March (follow up questions had been issued and responses received yesterday) – as a result there were no significant risks to the Value for Money conclusion and no additional work was required. No further items had to be raised for attention within the audit report and an audit results addendum had been issued today to this effect.
· Areas of audit focus were summarised and the conclusion to this was that all procedures had been completed and all required assurances had been provided. There were a limited number of disclosure differences identified through performance of these procedures, and there were three audit differences. Sufficient information had been received to provide an audit assurance.
· With regard to audit differences, these were detailed within Section 4 of the report – 1) There were two unadjusted audit differences (totalling £375,000, below the materiality level and would not impact the audit opinion, but was above the reporting threshold), and these were detailed within Section 4 of the report. The Committee would need to agree with management’s decision not to alter the financial statements, and the rationale would need to be included in the Letter of Representation; and 2) There was an adjusted audit difference of £1.216million resulting from the audit of the Lincolnshire Pension Fund.
· In conclusion, the draft Financial Statements were robust and supporting information received throughout the audit was equally as good – the Committee could therefore take assurance from this. An Unqualified Audit Opinion had been given and further information on this was provided at Section 3 of the report.
· The Associate Partner (EY) thanked the Assistant Director Finance and Deputy Chief Finance Officer (Corporate) for their support with the audit.
· The Associate Partner (EY) advised the Audit Certificate could not be issued alongside the Audit Opinion because HM Treasury and the National Audit Office had not issued guidance on the thresholds for who and who not to audit for that. All auditors were awaiting this guidance before the Audit Certificate could be provided.
The following points were raised:
· Was the £1.216 million difference in liability because of assets (audit difference with regard to the Lincolnshire Pension Fund) reviewed every three years, or annually?
· In response, members asked whether future contributions would be affected.
· Members noted that within Section 7 of the report, EY had been unable to complete the audit, and asked for some indication regarding the fees.
· Appendix A referred to an opinion of doing the accounts as a ‘going concern’ - what was the alternative, and did most councils run their finances as a going concern?
That the 2020/21 Audit Results report be received.