Agenda item

Indicative External Audit Plan and Strategy Memorandum for the year ending 31 March 2024

Minutes:

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.

 

Supporting documents: