Agenda item

Report No: PAS/SE/15/023

The Committee received Report No: PAS/SE/15/023, which presented the results of the Ernst and Young (EY) audit of the financial statements for 2014-2015.  The report set out those issues they were formally required to report on to those charged with governance, under the Audit Commission Code of Audit Practice and International Standards on Auditing (ISA (UK & Ireland) 260). 

The report also included the results of the work that EY had undertaken to assess the Council’s arrangements to secure value for money in the use of its resources, as the Performance and Audit Scrutiny Committee was charged with governance in accordance with powers delegated to it under the Council’s Constitution.

The Council’s unaudited 2014-2015 statement of accounts, signed by the Council’s Chief Financial Officer (Section 151 Officer) on 30 June 2015, had been updated to reflect adjustments recommended by EY from their audit work.  Members were advised that the adjustments were all immaterial to the overall financial position of the Council and were in most cases merely presentational changes. 

A copy of the Audit Committee Summary was attached as Appendix A, and was presented to the Committee by Neil Harris (Director) and Mary Springer (Auditor) from EY.

Also attached as Appendix B to the report was a Letter of Representation, on behalf of the Council in accordance with the audit of the financial statement for St Edmundsbury Borough Council for the year ended 31 March 2015.  The Head of Resources and Performance advised the Committee that during the time of the audit, auditors were unable to obtain a third party confirmation of a £3m investment with Ulster Bank.  Therefore, it was proposed that an additional paragraph be included in the Letter of Representation, above “subsequent events”, to read as follows:

“Specific Disclosure

I confirm that an Investment £3m with Ulster Bank, for which auditors were unable to obtain third party confirmation, existed at 31 March 2015.”

Mr Harris confirmed that all work on the audit of the Council’s 2014-2015 financial statements had been concluded and no further errors had been identified.  He explained that EY was currently working on closing down the audit files, which meant EY would not be able to issue an unqualified opinion and certificate until Friday 25 September 2015, on both the Council’s 2014-2015 financial statements and arrangements for securing economy, efficiency and effectiveness in its use of resources.  Mr Harris reassured Members that EY endeavours to conclude its audit work by the date of the Committee.  

He wished to thank the Head of Resources and Performance and her team who had been helpful and instrumental in making this a very smooth audit for EY.

However, he wished to draw the Committee’s attention to a couple of key areas:

1)   On page 24 – There had been a significant change to the valuation of the Apex, resulting in an impairment of £4.8m.  EY reviewed the work of the valuer, and the Council was now revisiting its five year revaluation programme to ensure that any significant movements would be identified and appropriately disclosed.

2)   On page 29 – Value for money risk identified – arrangements for financial resilience of local authorities.  Mr Harris was satisfied with the assurances provided in how the Council was addressing the budget gap.

3)   The audit fee for 2014-2015 remained the same as previously indicated to the Committee.

Finally, Mr Harris explained that this would be his final presentation to the Committee.  A new audit lead (Rob Murray) would be taking over from November 2015, as he had completed his seven years as the Councils External Audit Director.

Members asked a number of questions in relation to the report, to which Mr Harris duly responded.

The Chairman expressed the Committees and her disappointment that EY were not in a position to issue its audit opinion until Friday 25 September 2015, instead of this evening (23 September 2015).

The Chairman, on behalf of the Committee wished to thank the Head of Resources and Performance and the Finance Team for their outstanding work also wished to thank EY for their audit work. In particular, thanked Neil for his work over the last seven years.

With the vote being unanimous, it was

RESOLVED: That

1)   The unqualified opinion of the Financial Statements for 2014-2015 (page 3 of Appendix A), issued by the Auditor be noted.

2)   The Value for Money conclusion stating that the Council had proper arrangements in securing economy, efficiency and effectiveness in its use of resources (page 3 of Appendix A), issued by the Auditor be noted.

3)   The Letter of Representation on behalf of the Council be approved, before the Audit Director issues his opinion and conclusion, subject to the inclusion of the additional paragraph, as follows:

Specific Disclosure - I confirm that an Investment £3m with Ulster Bank, for which auditors were unable to obtain third party confirmation, existed at 31 March 2015.