To consider the report.

Duncan Laird, Senior Manager, KPMG, presented the report summary for the Audit and Performance Review Panel. There were no significant changes to the Code of Practice on LA Accounting in 2017/18. The deadline for the production and signing of the financial statements had been significantly advanced in comparison to year ended 31 March 2017. Whilst the Authority chose to advance its own accounts production timescale last year, the Authority would be required to produce Group accounts for the first time and further advances would be required in order to ensure that deadlines were met. As a result, a significant risk had been recognised in relation to this matter.

In order to meet the revised deadlines it would be essential that the draft financial statements and all prepared by client documentation was available in line with agreed timetables. Where this was not achieved there would be a significant likelihood that the audit report would not be issued by 31 July 2018.

Materiality for planning purposes had been set at £4.6 million for the Authority and £25 million for the Pension Fund.

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 £0.23 million for the Authority and £1.25 million for the Pension Fund.

Those risks that required specific audit attention and procedure to address the likelihood of a material financial statement error had been identified as:

·         Valuation of land and buildings

·         Pension Liabilities

·         Group accounts and faster Close

In relation to the Pension Fund audit, those risks requiring specific audit attention and procedures have been identified as:

·         Valuation of hard to price investments

·         Valuation of the longevity hedge

In relation to the Pension Funds audit, those risks requiring specific audit attention and procedures have been identified as:

·         Valuation of hard to price investments

·         Valuation of the longevity hedge

We had not completed our detailed risk assessment regarding the arrangements to secure value for money, however our initial VFM audit planning has identified the following significant VFM audit risks to date:

·         Delivery of Budgets

·         Management of contracts

The work would be completed in four phases from January to July and the key deliverables were the Audit Plan and the report to those charged with Governance.

The fee for the 2017/18 audit was £81,803 for the Authority and £24, 831 for the Pension Fund. The fees were in line with the scale fees published by the PSAA, with additional fees in 2016/17 for work on behalf of other admitted body auditors and work on the revised longevity hedge model, subject to approval by PSAA.

Points discussed by Panel Members included:

·         There were two main functions, financial statements and value for money arrangements.

·         Group accounts had been produced this time, including AfC and Optalis.

·         There were three significant risks.

·         Did the Electoral have the right to challenge the Audit Fees, this had been challenged before, about a total cost of £1500. Not too many at this council.

·         The report was classified as confidential, this was a public document.

·         “Materiality” was discussed by the Panel. Below £230K would be trivial and anything above would be bought to the Panel.

·         If the accounts were incorrect, could they be corrected? A pre audit was carried out of the statements of accounts, if any errors were found, they were corrected, materiality was not a consideration.

·         Land Assets and redevelopment, the land value was as of today and not what they might be. Once there was more certainty on what the land would be used for, significant valuations could be carried out.

·         Are agreements in place to get access to the right people and places for the accounts at AfC and Optalis? They had opted out of RBWM therefore it was easier to access their accounts. We had contact details of their auditors. At present all the significant information was in place.

·         RBWM was a very distributed council, this bought additional risks for us. We were distributed to AfC, Optalis, free schools, academies, should all assets be looked at? This was currently not a risk.

·         First we did the accounts three months earlier, now it was two months earlier, how are the deadlines met? Were there any Concerns? There were no real concerns, the Finance team had tried it last year and did very well. Trying to bring everything forward by doing earlier and shifting burden of work away from the busy period of June/July. It was a challenging timetable but achievable,

·         This was KPMG’s last audit, the reason was asked. KPMG had put a bid in but had not been selected. Deloitte had been selected for 2018/19.