Agenda item

The Committee considered a report of the Director of Corporate Resources, the purpose of which was to present the Annual Audit Letter 2019/20 for approval. A copy of the report marked ‘Agenda Item 10’, is filed with these minutes.

The Chairman welcomed Mr John Gregory from Grant Thornton UK LLP, the County Council’s external auditors for 2019/20, to the meeting.

Mr Gregory confirmed that an unqualified opinion had been issued on the Authority’s accounts for the year ending March 2020 and the value for money conclusion issued for that period was also unqualified. He stated that as previously reported to the Committee the Emphasis of Matter (EoM) that had been included in Grant Thornton’s audit opinion regarding the valuation of land and buildings, was simply an additional paragraph to draw the reader’s attention to a particular part of the accounts, in this case to acknowledge disclosures of material uncertainty that had been made in the Bruton Knowles’ valuation report as at 31 March 2020 as a result of the Covid-19 pandemic.

Mr Gregory also confirmed that with regard to the Whole of Government Accounts the work referred to in the Annual Audit Letter to complete the work on the Council’s consolidation return following guidance issued by the National Audit Office was now complete, there were no outstanding issues to report on this matter and an assurance statement would be issued to this effect.

Arising from discussion and questions the following points were raised:

(i)         In response to concerns raised regarding the disparity between the planned fees for the period and the actual fees charged to the Council for the year ending March 2020, Mr Gregory advised the following:

•       The areas of additional work unrelated to the Covid-19 pandemic had been foreseen, negotiated with the relevant Council officers and factored into the relevant Audit Plan to communicate that fee increases were expected. The increases had also been discussed with the Public Sector Audit Appointments Ltd. (PSAA) (the sector led body for external auditor appointments) around the same time and subsequently approved. These fee increases reflected the pressures Grant Thornton was facing to make the changes imposed by regulators to national auditing standards such as around pension liabilities and Property, Plant and Equipment (PPE). For example, there was now an expectation for auditing companies to employ its own or obtain advice from valuation experts to help support the work around the valuation of PPE.  

•       The effects of the Covid-19 pandemic had caused the costs to Grant Thornton to deliver audits for the year ending March 2020 to increase significantly by around 40-50%. Rather than recovering all of the costs from its clients, Grant Thornton had absorbed much of the costs itself and asked its clients to pay a proportion of the total amount. The additional fees were necessary due to the additional work that the pandemic had created, particularly as due to the Covid-19 restrictions much of the usual informal contact had not been possible and work ordinarily carried out face to face had had to be conducted remotely which could often be a longer process and had caused delays in auditing processes. There had also been specific technical accounting issues to resolve. Members were further advised that these issues were also not isolated to Grant Thornton in that other companies had also experienced similar issues.

•       As to whether Grant Thornton was able to offset some of the additional costs relating the Covid-19 pandemic against a perceived reduction in chargeable travel time to appointments, Mr Gregory explained that whilst staff travelling to attend meetings such as at County Hall may have been chargeable the majority of travel that Grant Thornton’s audit team undertook prior to the pandemic to carry out audits would have usually formed part of their daily commute and would therefore not be chargeable to clients.

(ii)        In response to a query raised by a member, it was confirmed that the valuation of pensions was an area also considered by the Local Pension Board and Committee. Mr Gregory added that each year auditors were required to consider their report against other areas of reporting to ensure consistency.

RESOLVED:

That the Annual Audit Letter for 2019-20 be approved and distributed to all Members of the Council.