Agenda item

The report summarises the auditing activities undertaken by KPMG in the period September 2017 to December 2017 and provides an overview of actions

to be completed by the next meeting of the Audit Committee.

Andrew Sayers (Partner, KPMG - External Audit) introduced the report which provided the Committee with external audit updates since September 2017 and the work planned before the next meeting on 10 January 2018.

He drew Members’ attention to the completion of the work on the Housing Benefit Subsidy claim and Teachers’ Pension Return which was expected to be certified by 30 November 2017, and added that a report would be provided on the detailed findings at the next Audit Advisory Committee meeting. He also explained that the five objections which related to the payment made to the Council’s former Human Resources (HR) Director had not been upheld, and that the decision letters (which set out the external auditor’s reasons in detail) had been sent to the objectors individually on the afternoon of the meeting. He added that although the objections had not been upheld he had made three recommendations for improvement.  He also specified that the outstanding objection which related to the Lender Option Borrower Option (LOBO) loans remained in the process of being reviewed.

Members requested clarity on the process for how the determination letters to objectors were issued by the external auditor. There were specific questions raised on whether Audit Advisory Committee Members should have sight of the auditor’s reasoning for the objections not being upheld, and to what extent the information would be made available to the public. Conrad Hall clarified that there were strict legal restrictions on how the information could be shared.  These restrictions flow from the overall legal framework for managing objections to the accounts, rather than because of the particular content of these letters. Conrad Hall added that the restrictions on circulating the letters applied to anyone in receipt of them, therefore including the objectors, and that a breach of these restrictions would potentially constitute a criminal offence. He outlined that information that was already in the public domain on the issue could of course be shared, and that this therefore included the fact that the objections had not been upheld and that recommendations for improvement had been made (as these facts had been disclosed earlier by Andrew Sayers).  Conrad Hall added that the Council would consider an additional public response, but would first need to take careful legal advice which it had not yet been possible to do as the determination letters had only been received about three hours before the start of the meeting. Andrew Sayers added that the objectors themselves had a legal responsibility not to share the response, and that the potential criminal consequences of doing so had been made clear to them. A Member of the Committee placed on record their concern at members of the Audit Advisory Committee not being able to access the response even if on a limited or restricted basis. 

A question was also raised on whether a final figure on the External Auditor’s fees had yet been reached. Andrew Sayers responded that he did not have a figure at the time of the meeting, but would circulate it to members of the Committee as soon as possible.

It was RESOLVED that:

(i)         The External Audit Progress Report by noted;

(ii)        An additional summary of information (which could be legally shared) on the determination not to uphold to objections in relation to a payment to the Council’s former HR Director, be circulated to Members. The summary would also include guidance on the legal restrictions on sharing the Auditor’s full response; and

(iii)       The figure for the External Auditor’s fees be circulated to members of the Committee once finalised.