Agenda item

To receive a report from Grant Thornton (External Auditors) providing an update on the 2020/21 Audit Findings.

(This report has been circulated as part of the republished agenda on 16 September 21)

Sophia Brown (Senior Manager, Grant Thornton)introduced the report, outlining the key issues and findings in relation to the statutory audit of Council’s Statement of Accounts for the year ended 31 March 2021.

In considering the report the Committee noted:

·                That the audit work had substantially been completed and currently there were no matters of which the auditors were aware that would require modification of their unqualified audit opinion (as detailed within Appendix E of the report) or material changes to the financial statements, subject to the outstanding matters identified within the report.

·                The final quality review process was in the process of being completed, with the Value for Money work already finalised.   As a result the External Auditor had been able to confirm they were satisfied the Council had made proper arrangements for securing economy, efficiency and effectiveness in its use of resources at this stage.

·                The work of Brent Council’s finance team in support of the audit during such a challenging period relating to the pandemic was acknowledged, with a particular mention to Sin-Yee Tang. The external auditors had advised they had not encountered any significant difficulties in the audit process.

·                It was noted that the levels of materiality had remained the same as reported in the audit plan. Work on journals had also been completed, with no issues to report.

·                The review undertaken as part of the audit in relation to the following areas of significant risks identified within the Audit Plan:

Ø   Fraud in expenditure recognition – with no issues identified in respect of the risk identified;

Ø   Valuation of land and buildings – whilst further work was being undertaken to review the impact of the useful economic lives (UELs) valuation on in year depreciation charged and accumulated buildings depreciation, this was not expected to have any significant impact;

Ø   Valuation of pension fund net liability – with no issues identified in respect of the risk identified;

·                The key estimates and judgements considered as part of the enhanced audit requirements, with specific attention drawn to the following areas:

Ø   In relation to the valuation of land and buildings - the revised requirements under ISA540 had required enhanced disclosure of accounting estimates with the need identified for more work to improve the quality of the disclosures around estimation, uncertainty of land and building valuations along with consideration of alternative estimates that were available;

Ø   In relation to the Minimum Revenue Provision (MRP) - whilst the External Auditors had been satisfied that the Council had approved its MRP through appropriate governance structures and had sufficient reserves to cover the impact of any change in approach introduced following a recent Government consultation, the need was identified for the Council to ensure that the MRP continued to be adequate within the context of increased borrowing. Discussions were ongoing to conclude on the reasonableness of the decrease in the MRP charge for 2020/21.   The Committee were also advised of an adjustment needing to be made to Brent’s rating in terms of the MRP analysis of London Boroughs, which had come about as draft figures had been used up to this point, andwould therefore be corrected in the final report to show as orange rather than red.

·                The assessments provided in relation to the Council’s Internal Control mechanisms and accompanying recommendations and Action Plan detailed in response to the issues identified during the course of the audit.  These included:

Ø   Bank reconciliation;

Ø   Grants Register;

Ø   Payroll creditors reconciliation;

Ø   Security Management;

·                The matters which had been identified as significant for discussion with management during the course of the audit, which had been focussed around future funding arrangements and the Dedicated Schools Grant.

·                The communication requirements identified during the audit process on which confirmation was provided all responses had now been received.

The Committee was then invited to raise questions on the report, which are summarised below:

·                Members were keen to ensure that a final version of the Audit Report was provided for all members of the Advisory Committee, once available.

As no further issues were raised the Chair thanked officers for the report and efforts in responding to the actions and issues identified and it was RESOLVED to note the contents, key issues and findings contained within the Audit Findings report with a final version to be circulated once the necessary final adjustments and discussions had been concluded