Agenda item

Ernst and Young - 2020 to 2021 Annual Results Report to those Charged with Governance

Report number: PAS/WS/21/018


The Committee received Report number PAS/WS/21/018, which presented the results from Ernst and Young’s (EY) audit of the 2020 to 2021 financial statements for West Suffolk Council.  The report set out issues they were required to report on to those charged with governance.  EY were also required to report on the results of the work undertaken to assess the council’s arrangements to secure value for money (VM) in the use of resources.  


The council’s unaudited 2020 to 2021 Statement of Accounts, signed by the Chief Finance Officer (Section 151 Officer) on 21 July 2021, had been updated to reflect any adjustments recommended by EY over this period as a result of their audit work.  Members were informed that these adjustments did not affect the council’s overall financial position and were in most cases merely presentational changes.


At the time of writing the report, it was not anticipated that there would be any significant issues with the accounts, but there were still a number of audit procedures to be concluded.


A copy of the Audit Results Report dated 8 November 2021, attached at Appendix A to the report was presented to the Committee by Mark Hodgson (Associate Partner).  Attached at Appendix B to the report was West Suffolk Council’s Letter of Representation, on behalf of the Council in accordance with the audit of the financial statements for West Suffolk Council for the year ended 31 March 2021.


Mark Hodgson presented the report and referred the Committee to the executive summary on page 6, and updated members on progress made in completing outstanding audit procedures since 8 November 2021, as follows:


-      Leases - Completed and no matters to report.

-      Accounts Payable - Completed and no matters to report.

-      Accounts Receivable - Completed and no matters to report.

-      Property, Plant and Equipment testing (including Investment Property and the Solar Farm) – Awaiting assurance reports from our EY Real Estate team and Transaction Support teams.

-      IAS 19 – Pensions Liability. Completed and the Liability had reduced by £0.488m as a result of an updated IAS 19 report from the valuer.

-      Provisions - Completed and no matters to report.

-      Reserves – underway and will be completed once other procedures are complete, as it is the summary position of the transactions.

-      Covid-19 Grants – Some remaining queries with officers. Complete next week. One classification amendment to date as reported in Section 4 of the report.

-      Housing Benefit Expenditure - Completed and no matters to report.

-      Collection Fund Income - Completed and no matters to report.

-      Related Party Transactions - Completed and no matters to report.

-      Group Consolidation – waiting to complete closing inventory procedures at the subsidiary.

-      Whole of government accounts submission – This would not be completed by the time of issuing the audit opinion as HM Treasury had not issued the guidance to auditors.


The overall message was the Committee could take a lot of assurance from the report and from EY’s findings.  He then drew the Committee’s attention to the following key matters:


1)   Page 6 (Changes in materiality) – EY was working towards an overall materiality assessment of £1.992m.


2)   Page 14 (Accounting for Covid-19 related grant funding) – There was one minor disclosure.


3)   Page 15 (Valuation of property, plant and equipment) – needs to be concluded.


4)   Page 18 (Pensions valuations and disclosures) – The Suffolk Pension Fund had increased to £7.62m.  West Suffolk Council’s share of the increase was £0.488m.


Mark Hodgson confirmed that EY was working towards signing off the audit by 30 November 2021.  He explained that there was a very limited number of corrections; EY had not identified any value for money risks; there were no matters to report under the audit opinion, and EY would be issuing its Annual Audit Opinion in December 2021.  The draft Financial Statements were robust, and he wished to thank Rachael Mann, Director (Resources and Property) and her team for their assistance during the audit.


The Committee scrutinised the report and asked questions to which Mark Hodgson provided comprehensive responses.


In response to a question raised regarding the understated pension fund, Mark Hodgson explained this was a result of an increase in the valuation of the Pension Fund’s Investment assets identified through the audit of the Suffolk Pension Fund (£7.62m).  West Suffolk Council’s share of the increase was £0.488m.  This was due to a timing difference of available actual valuations for certain investment asset classes within the Pension Fund.  The impact of the increase in the Pension Investment Asset valuation was a reduction in the West Suffolk Council’s pension liability.


In response to a question raised regarding the timing of the accounts, officers explained that typically, the statement of accounts would be brought to the Committee in September each year.  In setting the Committee’s timetable it was unfortunate that the accounts fell in November, as well as the state of the audit sector in completing the audit process.  EY had honoured the audit statement date and were on track to sign off the statement of accounts by 30 November 2022.


The Director (Resources and Property) was pleased with the audit and the results and wished to thank the Council’s finance team and EY’s audit team for their work.


Councillor Phil Wittam then moved the recommendations, this was duly seconded by Councillor John Augustine, and with the vote being unanimous, it was:


          RESOLVED: That


1)        The work in respect of the External Auditors unqualified audit opinion, as of today (18 November 2021) on the Financial Statements of West Suffolk Council for 2020 to 2021 (Appendix A) attached to Report number PAS/WS/21/018 was ongoing, be noted.


2)        The External Auditors had no matters to report on the council’s arrangements to secure economy, efficiency and effectiveness in its use of resources, issued by the Auditor, (Appendix A), be noted.


3)        The Letter of Representation on behalf of West Suffolk Council (Appendix B) attached to Report number PAS/WS/21/018, be approved, before the Ernst and Young Associate Partner issues his opinion and conclusion.


4)        The Chief Finance Officer, in consultation with the Chair of the Performance and Audit Scrutiny Committee be given delegated authority to conclude the signing of the 2020 to 2021 accounts.


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