Agenda item

To receive and consider the following papers from Grant Thornton as the Council’s external auditors:

13.1    London Borough of Brent External Audit Plan for year ending 31 March 2022

13.2    London Borough of Brent Pension Fund External Audit Plan for year ending 31 March 2022

13.1    London Borough of Brent External Audit Plan (year ending 31 March 2022)

Sophia Brown, Director, Grant Thornton (External Auditor), introduced a report detailing the London Borough of Brent’s External Audit Plan for the year ending 31 March 2022.

Key issues highlighted were as follows:

·                The key matters identified as background to the Audit Plan, which had included as mentioned earlier in the meeting the accounting of Infrastructure Assets and implementation of the new Oracle Cloud Fusion system.

·                The scope of the Audit Plan and significant risks identified as requiring special audit consideration.  This had included, as a newly identified risk the new system implementation of the Oracle Cloud Fusion system and associated data migration.  Based on the audit activity undertaken to date around implementation of the Oracle Cloud Fusion system only one area of significant risk had been identified to date relating to the potential for material misstatement as a result of system migration at financial statement level with the new fixed asset module set up to record capital transactions in only one rather than 12 periods.  It was noted, however, that mitigations were in place involving manual adjustments in order to address the risk identified.

·                The update provided in relation to planning materiality, which had been determined as £17.072m (PY £16.176m) for the group and £16.9m (PY £16.1m) for the Council, which equated to 1.5% of prior gross expenditure for the year with “clearly trivial set at £0.845m (PY £0.8m).

·                No risk of significant weaknesses had been identified as a result of Grant Thornton’s initial planning work in relation to Value for Money with activity ongoing to conclude the review of arrangements prior to the final Auditor’s Annual Report being issued.  Members were advised that a final visit was scheduled in July 2022 with the audit due to be completed by September 2022.

·                The revised Auditing Accounting Estimates and Related Disclosures which had been issued by the Financial Reporting Council, the requirements of which had been applied for the first time to the current audit process.  Members noted the scope of additional information required under the new requirements.

·                The range of other audit responsibilities undertaken by Grant Thornton as the Council’s External Auditors, along with outline of the current and proposed audit fee.

The Chair then invited the Committee to raise questions on the report, with the responses summarised as follows:

·                In response to a query regarding implementation of the Oracle Cloud Fusion system, members were advised that Phase 1 had been successfully completed in October 2021 with work now underway to implement Phase 2.  Whilst recognising the focus in relation to data migration, officers advised that the remaining Phase 2 implementation would not be expected to have any material impact on production of the Council’s final accounts.  In view of the issues raised it was agreed that the Committee continue to be kept updated on the progress with regards to the Oracle data migration (in particular, the fixed asset module) and any impact on the year-end review of accounts.  (Action: RavJassar)

·                In terms of the progress made against the implementation of prior year audit recommendations, Grant Thornton advised members they had no concerns and endorsed the progress made.

·                In relation to a query regarding audit fees, members noted that the appointment of the Council’s External Auditors was undertaken through an independent procurement process to which the Council had opted in managed through Public Sector Audit Appointments (PSAA).  In noting the recent changes in the local audit market and regulatory requirements and their impact in relation to the scope of audit work required, the approach delivered through the PSAA was felt to have delivered a realistic specification and fee for the required level of audit activity working with the market.  The Council had opted in to the same sector led arrangement for the appointment of its next external auditors from 1 April 23, with members advised that 98% of bodies eligible had opted into the previous national arrangements, which had attracted competitive bids from audit firms.  In terms of benchmark data regarding audit fees, Members were keen to compare the level of fees charged across other comparator authorities and the way in which the scale of fees was structured under the PSAA scheme.  It was therefore agreed that benchmark data on external audit fees would be provided for the Committee based on five other comparator boroughs who had also opted in to the PSAA scheme. (Action: Minesh Patel)

As no further issues were raised the Chair thanked Grant Thornton for their report which the Committee RESOLVED to note, subject to the actions identified above.

13.2  London Borough of Brent Pension Fund External Audit Plan (year end 31 March 22)

ReshmaRavikumar, Grant Thornton External Auditor, introduced a report detailing the London Borough of Brent’s Pension Fund External Audit Plan for year ending 31 March 2022.

Key issues highlighted were as follows:

·                The key matters identified as background to the Audit Plan, which had included as mentioned earlier in the meeting implementation of the new Oracle Cloud Fusion system.

·                The scope of the Audit Plan and significant risks identified as requiring special audit consideration.  This had also included, as a newly identified risk the new system implementation of the Oracle Cloud Fusion system and associated data migration.

·                The update provided in relation to planning materiality, which had been determined as £10.31m (PY £10.3m) for the Pension Fund, which equated to 1% of prior year net assets with “clearly trivial set at £0.5m (PY £0.5m).

·                The interim audit visit had taken place in March 2022 with the final visit due to take place between July and September 2022.

·                The current and proposed audit fee along with the IT audit strategy, which would include a streamlined assessment of the IT general controls in relation to the Pension Fund Administration.

The Chair then invited the Committee to raise questions on the report, with the responses summarised as follows:

·                Further details were sought on the level of Pension Fund audit fee when compared to that charged for the Council’s main audit work.  In response members were advised that the lower fee related to the scope and complexity of audit work required in relation to the Fund, which was focussed on a single service.

As no further issues were raised the Chair once again thanked Grant Thornton for their report which the Committee RESOLVED to note.