Agenda item

Report No: PAS/FH/15/022

The Committee received Report No: PAS/FH/15/022, 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.

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

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.  However, one item had not been adjusted in respect of the Newmarket Leisure Centre adjudication costs.  This item had been carried forward from the 2011-2012 statement of accounts audit and it had been agreed by Members of the Performance and Audit Scrutiny Committee in that and subsequent years, that this would remain as an unadjusted item for the 2014-2015 statement of accounts.

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 Forest Heath District Council for the year ended 31 March 2015.

Mr Harris confirmed that all work on the audit of the Council’s 2014-2015 financial statements had been completed and no further errors had been identified.  Therefore, EY would be issuing an unqualified opinion and certificate on 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.  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 31, it was confirmed that there were no changes in EY’s assessment of independence since their confirmation in their Audit Plan dated March 2015.

2)   On page 33, the unadjusted audit error for Newmarket Leisure Centre relating to capital spend, which EY did not necessarily feel complied with the Accounting Standards.

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 and officers duly responded.  In particular discussions were held on the history behind the Newmarket Leisure Centre unadjusted audit error relating to capital spend.

The Chairman, on behalf of the Committee wished to thank the Head of Resources and Performance and the Finance Team for their outstanding work and also wished to thank EY for their audit work.

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.