Agenda item

External Audit Plan 2015/16

South Holland District Council (report of KPMG enclosed)


Consideration was given to KPMG’s External Audit Plan for 2015/16, which was presented to the Committee by the Audit Manager, KPMG.


The external auditor’s statutory responsibilities and powers were set out in the Local Audit and Accountability Act 2014 and the National Audit Office’s Code of Audit Practice. 


The audit had two key objectives, requiring the external auditor 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).


Financial Statements Audit work followed a four stage audit process, and Appendix 1 to the report provided more detail on the activities that this included.  The report concentrated on the Financial Statements Audit Planning stage of the Financial Statements Audit.


Value for Money Arrangements work followed a five stage process.  More detail was provided within the report of what this included, and the report also concentrated on explaining the Value for Money approach for 2015/16.


The following headlines within the report were provided:


Financial Statement Audit


There were no significant changes to the Code of Practice on Local Authority Accounting in 2015/16, which provided stability in terms of the accounting standards the Authority needed to comply with.


Materiality – Materiality for planning purposes had been based on this year’s budget and was set at £600,000.  KPMG were obliged to report uncorrected omissions or misstatements other than those which were ‘clearly trivial’ to those charged with governance, and this had been set at £30,000.


Significant risks – Those risks requiring specific audit attention and procedures to address the likelihood of a material financial statement error had been identified as:


·         Management override of controls;

·         Fraudulent revenue recognition; and

·         Provision for business rate appeals


Other areas of audit focus – Other areas of audit focus were those risks with less likelihood of giving rise to a material error but which were nevertheless worthy of audit understanding.  KPMG had not identified any such risks at this stage, but they would review how amendments to accounting standards affected the Authority and the change in the Authority’s approach to the minimum revenue provision.


Value for Money Arrangements work


The National Audit Office (previously the Audit Commission) had issued new guidance for the VFM audit which applied for the 2015/16 audit year.  The approach was broadly similar in concept to the previous VFM audit regime, but there were some notable changes:


·         There was a new overall criterion on which the auditor’s VFM conclusion was based;

·         The overall criteria was supported by three new sub-criteria.


KPMG’s risk assessment was ongoing and they would report VFM significant risks during their audit.


The Committee was also advised of KPMG’s Audit fee.  Their Audit Fee Letter 2015/16 had been presented to the Committee in April 2015, and had set out fees for the 2015/16 audit.  The letter had also set out their assumptions.  The planned audit fee for 2015/16 was £44,537.  This was a reduction in audit fee, compared to 2014/15, of £14,845 (25%).  KPMG’s audit fee included their work on the VFM conclusion and their audit on the Authority’s financial statements.


The Committee commented that the report was clear and concise, and that it answered any questions that they might have.




That the External Audit Plan 2015/16 be agreed. 

Supporting documents: