Consideration was given to the report of the
External Audit Director – KPMG which asked the Governance and
Audit Committee to consider the indicative External Audit Plan and
Strategy Memorandum for SHDC for the year ending 31 March 2024.
The External Audit Director – KPMG
introduced the report which highlighted the nature, scope and
timing of key audit activities of the draft financial statements
2023/2024, presented at agenda item 5 of the current meeting.
The report was ‘indicative’ for
the following reasons:
- A revised audit standard ‘ISA
315’ had been released which focussed on planning and risk
assessment. A small number of procedures were incomplete when the
report was drafted, primarily in connection with the finalisation
of the Value For Money risk assessment. Through upcoming
discussions between the PSPS Finance Team and KPMG, it was
anticipated that the matter would be resolved and that a timeline
for the audit would be agreed, with a completion target of 31
December 2024; and
- Legislation to reset the local
government accounts process, previously expected to be finalised by
early summer 2024, had been put on hold due to the general
election. The timing of any disclaimer opinion for the 2022/2023
accounts, and therefore finalisation of the audit plan and
commencement of the 2023/2024 audit, awaited the relevant
Parliamentary process to take place.
The report included the following main
areas:
- Overview of planned scope including
materiality;
- Significant risks and other audit
risks including audit approach;
- Mandatory communications;
- Mandatory communications –
additional reporting;
- Value for money risk assessment,
including summary, arrangements, recommendations raised and
followed up;
- Audit Team;
- Audit cycle and timetable;
- Fees;
- Confirmation of Independence;
- KPMG’s audit quality
framework;
- ISA (UK) 315 Revised: Overview
- ISA (UK) 240 Revised: Summary of key
changes;
- Financial Reporting Council’s
(FRC) areas of focus.
Members considered the report and made the
following comments:
- Members were pleased with the
contents and clarity of the report.
- The Chairman had discussed a number
of issues with the External Audit Director – KPMG prior to
the meeting, and the following summary was given to the Committee:
- The meaning of
‘materiality’ had been clarified, the value of which
depended upon the size of organisation being audited in order to
give a reasonable possibility that all material misstatements were
detected;
- Where additional information had
been requested from SHDC / PSPS, target response dates had been
adhered to;
- The valuation of land was difficult
to assess as this depended on market forces however the
appropriateness of the whole process utilised to arrive at
valuations was considered by the auditors;
- No new risks had been identified in
respect of Management Override;
- Clarification was given that the
Value For Money discussions included representatives of KPMG, PSPS
and SHDC; and
- Whilst the report stated
‘there is no evidence of reporting Group performance
within the minutes for the meetings we have reviewed throughout the
period to date (G&A, Cabinet and the Council)’ this
was not considered an issue due to the open nature of such
information.
- Members asked whether audit teams
reacted to issues encountered with other local authorities in order
to avoid replications.
- The Director – KPMG responded
that where issues had been identified that could be replicated,
confidential discussions with managers ensued to determine the
issue in order to provide national assurance. In practice, the
audit leadership group discussed common issues on a weekly
basis.
AGREED:
That the Indicative
External Audit Plan and Strategy Memorandum for the year ending 31
March 2024 be noted.