Agenda item

External Audit Plan 2014/15

South Holland District Council (report of KMPG enclosed)

Minutes:

Consideration was given to KPMG’s External Audit Plan for 2014/15, which was presented to the Committee by the Audit Manager, KPMG.

 

The external auditor’s statutory responsibilities and powers were set out in the Audit Commission Act 1998 and the Audit Commission’s Code of Audit Practice. 

 

The Audit Commission was due to close at 31 March 2015. However, audit responsibilities under the Audit Commission Act 1998 and the Code of Audit Practice in respect of the 2014/15 financial year remained unchanged.  Details of the new arrangements were set out in Appendix 4 of the report.

 

The Code of Audit Practice summarised the auditor’s responsibilities into two objectives, requiring them to audit/review and report on the Authority’s:

 

·         Financial statements (including the Annual Governance Statement): providing an opinion on the Authority’s accounts; and

·         Use of resources: concluding on the arrangements in place for securing economy, efficiency and effectiveness in the Authority’s use of resources (the value for money conclusion).

 

Section two of the report included headline messages, focusing on the key risks identified for the year.  The following risk was identified:

 

·         The impact of changes in accounting standards on the consolidation of the Council’s joint venture company, Compass Point Business Services (East Coast) Ltd (CPBS)..

 

Section three of the report outlined KPMG’s audit approach.  This was undertaken in four stages: Stage 1 – Planning (January to February); Stage 2 – Control evaluation (March to April); Stage 3 – Substantive procedures (August to September); and Stage 4 – Completion (September).

 

Section four of the report provided more detail on the impact of changes in accounting standards on the consolidation of the Council’s joint venture company, Compass Point, as detailed above.  KPMG would assess the Authority’s progress in addressing this risk area as part of its interim work, and conclude this work at year end.

 

Section five of the report explained KPMG’s approach to Value for Money (VFM) work.  In meeting their statutory responsibilites relating to economy, efficiency and effectivess, the Commission’s Code of Audit Practice required auditors to:

 

·         Plan their work based on consideration of the significant risks of giving a wrong conclusion (audit risk); and

·         Carry out only as much work as was appropriate to enable them to give a safe VFM conclusion.

 

The VFM audit methodology remained unchanged from last year,  There were only relatively minor amendments to reflect the key issues facing the local government sector.  The specified criteria for VFM conclusion were:

 

·         The organisation had proper arrangements in place for securing financial resilience; and

·         The organisation had proper arrangements for challenging how it secured economy, efficiency and effectiveness.

 

Section six of the report provided information on the audit team, its proposed deliverables, the timescales and fees for their work. 

 

Under the audit deliverables, the following information would be provided to the Committee

 

·         External Audit Plan – March 2015;

·         Report to Those Charged with Governance (ISA 260 report) – September 2015;

·         Auditor’s Report – September 2015;

·         Whole of Government Accounts – September 2015; and

·         Annual Audit Letter – November 2015

 

The planned audit fee for 2014/15 was £59,382.  KPMG’s Audit Fee Letter 2014/15, presented to the Committee in April 2014, first set out the fees for the 2014/15 audit.  The auditors had considered it necessary to make a minor change to the agreed fees at this stage in respect of the addition of £900 made available by the Audit Commission to reflect the work associated with NNDR.  The audit fee included work on the VFM conclusion and the audit of the Authority’s financial statements.

 

AGREED:

 

That the External Audit Plan 2014/15 be agreed.                                                           

Supporting documents: