Agenda item

To note the External Audit Plan and Strategy for the year ended 31 March 2025 (report of the Director – KPMG enclosed).

Consideration was given to the report of the Director – KPMG which provided members with the External Audit Plan and Strategy for the year ended 31 March 2025.

The Director – KPMG attended to present the report to members which detailed the following:

• Overview of planned scope including materiality;
• Significant risks and other audit risks which related to:
  • Valuation of land and buildings;
  • Management override of controls;
  • Valuation of postretirement benefit obligations; and
  • Group – Valuation of Investment Properties;
• Mandatory communications;
• Value for money;
• Audit team at Appendix A;
• Audit cycle and timetable at Appendix B;
• Fees at Appendix C;
• Confirmation of independence at Appendix D;
• KPMG’s audit quality framework at Appendix E;
• Statement of effectiveness of KPMG’s system of quality management at Appendix F;
• Understanding of IT at Appendix G;
• Revised requirements for the Group Audit at Appendix H; and
• Financial Reporting Council’s (FRC) areas of focus at Appendix I.

Members considered the report and made the following comments:

• Members referred to page 24 of the report regarding the setting of the 2024/2025 Financial Plan and queried why recommendations relating to the inclusion of the financial performance of South Holland Homes, Welland Homes and PSPS were not accepted by management.
  • The Interim Director of Finance (Section 151 Officer) would provide a written response after the meeting.

• Members referred both to commentary on page 26 of the report regarding deadline omissions within the ‘developing the 2024/25 efficiency plan’; and page 39 of the report in respect of ‘future savings within the efficiency programme’ where specific savings plans beyond 2024/25 had not been outlined. Were there any reasons why such matters could not be addressed now?
  • The Interim Director of Finance (Section 151 Officer) responded that the issue would be addressed as part of the proposed change to the 2026/27 Budget setting process (at Agenda item 11 of the current meeting) where efficiency programmes would be identified in advance of budget setting.

• Members queried whether Senior Leadership Team (SLT) meetings and decisions were now being recorded following performance improvement observations at page 38 of the report. Members were also concerned that a clear record of decisions and actions that arose from meetings undertaken at any level were circulated to officers to enable feedback and concerns to be raised. 
  • The Assistant Director – Governance (Monitoring Officer) responded that:
    • SLT meetings were now being recorded;
    • All decisions made under executive arrangements were published on the Council’s website, barring exempt information; and
    • Actions from informal team meetings were dealt with at a service level according to team culture and practice and may be captured within meeting notes or circulated via email.

• Member queried how often the Fraud Risk Register would come forward to the committee.
  • The Business Change and Intelligence Manager responded that the Fraud Risk Register had been presented to the committee for the first time at the current meeting but would be presented to the Committee regularly as part of the quarterly Risk Register.

• Members referred to the commentary in respect of the budget quarterly monitoring action plans at page 33 of the report and queried whether the recommendation for the timely sign-off of reports was now being implemented.
  • The Interim Director of Finance (Section 151 Officer) responded that:
    • A significant level of financial control was in place, the Council had delivered its service and recorded an underspend at the end of the 2024/25 financial year;
    • No fundamental weaknesses were believed to prevail, and the control environment would be closely monitored; and
    • The monitoring of budget manager quarterly actions was not commonplace in Local Authorities and an opportunity to discuss this practice with External Audit would be requested.

AGREED

That the External Audit Plan and Strategy for the year ended 31 March 2025 be noted.