Agenda item

This document provides an overview of the planned scope and timing of the statutory audit of London Borough of Brent and the statutory audit of London Borough of Brent Pension Fund for those charged with governance.

Wards Affected:                             Contract person:

All wards                                            Sophia Brown,

                                                            Senior Manager, Grant Thornton

                                                            Email: Sophia.Y.Brown@uk.gt.com

                                                            Tel:     020 7728 3179

Sophia Brown (Senior Audit Manager, Grant Thornton) introduced the report which set out the planned scope and timing of the statutory audit of Brent Council for those charged with governance.

In terms of the approach outlined, the Committee noted:

·                The key matters identified as impacting on Grant Thornton’s audit approach of the Authority and Pension Fund, which included the wider economy and political uncertainty; the improved level of financial reporting introduced by the Financial Reporting Council (FRC), the implementation of IFRS 16 (leases) and the impact of the Good Governance proposals recently published by the Scheme Advisory Board (SAB) in relation to the Pension Fund;

·                The following significant risks identified as requiring consideration, which were the same as previous years and included  – management of override controls; valuation of land and buildings; valuation of net pension fund liability and also specifically in relaton to the Pension Fund the valuation of Level 3 investments;

·                The level of financial statement and Pension Fund materiality determined by Grant Thornton, as detailed in sections 1  and 7 of the report, which the Committee noted had reduced from the previous year;

·                The significant risks identified for assessment as part of the audit on the arrangements to secure Value for Money which included, as detailed witin section 8 of the report, the financial outturn and sustainability and also capital programme funding given the extensive nature of the programme and revised borrowing arrangements;

·                The audit scope and risk assessment, as detailed within section 3 of the report;

·                The timeline and requirements for the audit as detailed within section 9 of the report;

·                The level of planned audit fees for 2019/20, as detailed within section 10 of the report; and

·                The statement of Independence & non-audit services provided by Grant Thornton in accordance with the FRC Ethical Standard, as detailed within section 11 of the report.

Before moving on to consider the update provided, David Ewart (as Chair) advised member that he had been interviewed by the FRC as part of the previous year’s audit process.  Having noted the declaration, the following issues were raised by the Committee in response to the update on the External Audit Plan:

·                Further details were sought on the overall governance arrangements and significance of the valuation of Level 3 investments as an area of risk to be assessed in relation to the Pension Fund audit.  In response, Paul Dossett (Partner - Grant Thornton) advised that the focus on Level 3 Investments was as a result of the significant degree of judgement required to reach an appropriate valuation at year-end given the overall values involved.  He confirmed this was a common risk identified and not specific to the management of Brent’s Pension Fund.  In terms of the governance arrangements, the audit would be focussed around providing assurance in relation to not only the Level 3 investments but also the net liability of the Fund based on a routine approach that was also designed to recognise the challenging nature of the current environment within which investments were currently having to perform.

·                In response to a query raised on the wider audit, Paul Dossett advised that no specific issues had been identified in terms of the approach to be adopted for Brent.  The standard issues being raised across a range of authorities included the management of reserves and approach being adopted towards allocation of the Dedicated Schools Grant.  Whilst the scale of the capital programme in Brent and borrowing arrangements had been identified for review within the VFM assessment, the Council’s general accounting framework and governance arrangements were felt to be sound meaning the overall level of risk to be assessed was regarded as standard.

As no further issues were raised the Chair thanked Grant Thornton for their report and it was RESOLVED that the contents of the External Audit Plan be noted.