Agenda item

Report of EY enclosed.

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.