Agenda item

To receive and note information from the Council’s External Auditors on the audit plan for the 2020/21 External Audit.

Members received the External Audit planning report to the Committee from the Council’s External Auditors Deloitte. This set out the External Audit Plan for the 2020 financial audit of the Council.

Interim Head of Finance, Pat Main, updated the Committee on timing changes for preparing the Draft Statement of Accounts this year. There is a delay in publishing the Draft Statement of Accounts 2019/20 on the Council’s website as required by the Accounts and Audit Regulations 2020 as 31 August 2020. This delay will ensure that all matters raised in the 2018/19 audit were addressed, primarily in relation to fixed asset record-keeping and accounting. This was due to the competing demands on Finance team resources due to the COVID-19 pandemic, and the additional work carried out to enhance the quality of the accounts that was being carried out during this closedown.

Ben Sheriff and Maltiti Al-Hassan from Deloitte attended the meeting to present the report. The most significant change to the External Audit Plan this year related to the potential effects of the COVID-19 global pandemic. These include impacts on the publication of the annual report and financial statements, on asset valuations, on pension fund investment measurement, on expected credit losses and the requirement to report in more depth on events after the reporting period. It was noted that CIPFA had issued relevance guidance on the topic.

Other areas of external audit focus were on pensions liability valuation and accounting estimates, consideration of governance arrangements particularly on investments and wider pressures on local government finance and disclosures around financial sustainability.

In response to Member questions, it was confirmed by Deloitte that the delay in publishing the Draft Statement of Accounts 2019/20 had been discussed and considered during the resource planning and updated timetable of the audit and the delay was not a concern currently.

Members made the following observations and comments:

Internal Audit reports – Members asked if delays to internal audit reports due to the Council’s emergency response would have an impact on the external audit work. Deloitte confirmed that there were ongoing discussions with the Internal Auditors as work was reprioritised and at present there were no concerns.

Property valuation – Members asked for more information on property valuation which was identified as a significant risk due to the impact of the pandemic. Deloitte updated the Committee. Due to the uncertainty around year-end as the pandemic emerged, it was difficult for valuers to give precise values for property. This was a common position across all property valuations. Deloitte expected valuers to use their professional judgement and follow guidance on valuation standards from the Royal Institute of Chartered Surveyors as well as conducting research into current local market information.

Pension liability valuation – it was noted that the Council’s actuary, Hymans Robertson, produced a report each year that outlined the liability of each council’s pension fund. The Council was part of the Local Government Pension Scheme administered by Surrey County Council. Deloitte’s focus was on a risk assessment of this calculation and consideration of the make-up of the pension assets.

RESOLVED that the External Audit Plan for the 2020 audit of the 2019/20 financial accounts and the Committee’s observations be noted.