Issue - meetings

To note the report from the Council’s External Auditors, KPMG, which summarises the conclusions and any significant issues arising from the audit of the 2017/18 Annual Financial Report.

To consider any Advance Questions submitted.

The Committee received a report on the ISA 260 External Audit report for 2017/18. The report was noted to be broadly very positive, and to continue to the series of unqualified audit opinions received. The Committee was assured that where recommendations were raised by the report, these were being monitored and addressed.

The Committee considered and discussed, the report, with questions and comments made regarding the following topics:

·         Bank Reconciliations: It was noted that there was a recommendation regarding enhancing the bank reconciliations process. It was noted that unadjusted audit differences of £612k had been identified as part of this process, and that this was largely related to two payments to Surrey Pensions and to the Ministry of Local Government. It was identified that following receipt of the report, work had been undertaken to confirm the associated details of the differences and reconcile appropriately. It was noted that a number of process improvements had been made, and that supporting reconciliation work was now largely complete.

·         Budget Performance: It was identified that the Council had generally been successful in making savings in a challenging financial climate, but that it had been recommended that there were further opportunities to leverage synergies between individual schemes to achieve greater savings. It was confirmed that these options were being considered as part of the 2019/20 budget setting process, and that further confirmation of details would be provided as a written response.

·         Senior Officer Remuneration: It was confirmed that all senior officer remuneration has now been disclosed, in line with the recommendation made.

·         Reporting and triviality: A query was raised regarding the identification in the report of the auditors of an individual difference being considered as trivial if it is less than £103k. It was noted that a written response would be provided to this query.

RESOLVED that the report and findings of the External Auditors be noted.

To consider the External Auditors report on the 2017/18 financial year.

RESOLVED that:

(i)            The report from the external auditors (ISA 260) on the 2017/18 audit be noted; and

(ii)          The Management Representation Letter be agreed and signed by the Leader.

Councillor T. Schofield, Executive Member for Finance, presented the ISA 260 report from KPMG following their audit of the Council’s 2017/18 accounts.

Councillor Schofield highlighted that the ISA 260 and Management Representation Letter had been published via an addendum to the agenda as soon as possible following completion of the audit.

It was noted that KPMG, the Council’s external auditors, had undertaken a thorough audit which had included favourable references to the quality of the accounting statements and supporting working papers. Councillor Schofield expressed his pleasure that, once again, he was reporting that KPMG had issued an unqualified audit opinion on the accounts.  

Councillor Schofield went on to explain that the report highlighted a balance of £612,000 of unadjusted audit differences. These transactions related to 2015/16 and comprised of payments to Surrey Pension Fund and the Ministry of Housing, Communities and Local Government totalling £600,000. It was explained that these payments were unmatched to the schedule of payments expected. Councillor Schofield highlighted that officers were working with each organisation to resolve these outstanding items and had prioritised changes in process to prevent a reoccurrence of this situation. The three remaining items, totalling £12,000 would be investigated and resolved thereafter and related to 2015/16 and 2016/17.

In response to questions about unadjusted audit differences, Councillor Schofield highlighted these items had previously been reviewed by audit and had been identified on bank statements at the time of identifying the reconciling item. It was explained that the difficulty in locating specific payments had been due to the lack of availability of online statements for the period and not having immediate access to historical records.

During the discussion a number of issues were considered in relation to: (a) bank reconciliation and (b) the process for valuing land, buildings and investment properties.

Joanne Lees from KPMG presented key findings from their audit report on the Council’s 2017/18 accounts, including recommendations raised, and reiterated their unqualified opinion on the accounts.

In conclusion, Councillor Schofield referred to the Management Representation Letter which the Executive had been requested to agree for signature by the Leader. The Executive Member confirmed that this letter formed part of the usual audit process that provided assurances on matters required by auditing standards.    

The Executive congratulated all involved for a positive report and thanked Joanne Lees from KPMG for attending the meeting, presenting her report and the conclusions of the audit.    

RESOLVED that:

(i)            The report from the external auditors (ISA 260) on the 2017/18 audit be noted; and

(ii)          The Management Representation Letter be agreed and signed by the Leader.

Reasons for decision: The Executive is responsible for corporate governance.  How the Council utilises and accounts for resources is intrinsic to good governance.

Alternative option: None.