The EY (Ernst and
Young) Audit Manager introduced the Initial Audit Plan by
confirming the upcoming timeline of delivery - South Holland
District Council were in the process of closing the accounts for
2021/2022 to be followed by EY’s execution of work in
September and October 2022. The Initial Audit Plan covered
the following areas:
- overview of the 2021/22 audit
strategy;
- audit risks; a summary of risks were
included within the EY report - the new ‘red’ level
significant risk had been attributed to the ‘implementation
of the new General Ledger System’ and the inherent risk of
‘infrastructure assets’, whilst the reduced
‘green’ level of inherent risk had been allocated to
‘accounting for COVID-19 related government grants’;
and ‘pension valuation and other disclosures’.
- value for money risks;
- audit materiality;
- scope of the audit;
- audit team;
- audit timeline;
- independence; and
- appendices.
Members considered the report and made the
following comments:
- Members noted that the risk level
for the National Non-Domestic Rates (NNDR) Appeals Provision had
remained unchanged at an ‘inherent risk’ however the
narrative suggested that the risk was raised.
- Members queried why the Partnership
had not been included as a risk, and whether the schedule of work
would be affected if a risk was subsequently identified.
- The EY Audit Manager responded that
whilst the Partnership had been identified as a potential
‘Value For Money’ risk within the previous report, no
capacity issues were currently evident within the Finance Team
which would impact effective and timely preparation of accounts.
Any issues raised during the ‘Value For Money’ work
could lead to an alteration of this risk level in the future.
- The Assistant Director –
Finance added that any possible risk the partnership presented to
the accounts would be highlighted under the governance and
management arrangements and not within the financial arrangements
themselves. The extra transactions required to administer the
partnership were low in volume and the new partnership arrangements
had been referenced within the Annual Governance Statement.
- The Chief Finance Officer (PSPS)
concurred and stated that transaction numbers were low and not
material in value. There was confidence that EY would ensure that
charging protocols followed between authorities were in order,
nonetheless, any delays to the audit as a result of the EY
assessment would affect the delivery of the planned schedule of
work.
- There was agreement that the risk
regarding the partnership would remain unchanged but should any
issues be identified by EY, this area could be rated as the highest
‘red’ risk for the following year.
- The EY Audit Manager confirmed that
identification of any risk would be raised during the monitoring
process however this should not impact existing
timeframes.
- The Committee agreed the following
Materiality figures set by EY:
- Planning Materiality at
£1.184m;
- Performance Materiality at
£0.89m; and
- Audit differences at
£60,000.
- Members referred to the Value For
Money assessment planning and queried why this had not been
completed.
- The EY Audit Manager stated that
Value for Money 2021/2022 assessment planning had not been
completed for any EY Cambridge council. An audit phased plan had
been agreed with officers and was scheduled for September and
October 2022.
- Members noted the ‘Developing
the Right Audit Culture’ section within the report, and
queried whether the delivery challenges encountered during
2021/2022 had been resolved. It was important that the schedule was
adhered to.
- The EY Audit Manager acknowledged
the challenges that had been encountered two years ago and stated
that improvements were seen last year. In addition, the schedule
was realistic and stronger plans had been implemented for 2022/2023
to ensure a timely delivery, this included:
- that advance work had been
undertaken and all requests were with the Finance team;
- that a fixed EY team had been
allocated to South Holland District Council – from the
planning stage to completion; and
- that a second EY Audit Manager had
been allocated.
AGREED:
That the South
Holland District Council Initial Audit Plan year ended 31 March
2022 be noted.