Agenda item

The Committee considered a report of the Director of Corporate Resources which presented the indicative External Audit Plan and Audit Risk Assessment for the Council and its Pension Fund (2021/22) for consideration. A copy of the report marked ‘Agenda Item 8’, is filed with these minutes.

The Chairman welcomed Mr Mark Stocks of Grant Thornton UK LLP, the County Council’s external auditors, to the meeting.

In presenting Grant Thornton UK LLP’s indicative External Audit Plan Mr Stocks highlighted the following points:

(i)      The External Audit Plan was due to be finalised in June 2022 with the External Audit due to commence in July 2022.

(ii)    Following initial inspection of the Council’s income streams, the significant risk in the External Audit Plan around this looked to be reduced based on the assessment of the controls that were in place. However, a level of testing in this area would still be undertaken as part of the External Audit.

(iii)   In regard to the significant risk identified around Infrastructure Assets, specific areas were required to be assessed this time around due to a number of national issues that had been identified prior to completion of the last External Audit. The Chartered Institute of Public Finance and Accountancy (CIPFA) had launched a consultation this week on how such assets should be accounted for in response to the difficulties some authorities had been experiencing when completing valuations.

(iv)   A significant risk around the East Midlands (EM) Freeport had been included in the Audit Plan. Members were reassured that Grant Thornton would begin looking at the arrangements for this which were expected to be complex, to assess the areas (such as income flows around business rates) likely to have an impact on the Council’s accounts in future years.

(v)    Work was ongoing in respect to the Council’s Value for Money arrangements.  Whilst there had been a few recommendations for improvement made the previous year the report on the Council’s arrangements had largely been positive. The intention this year was to undertake a more detailed inspection of service areas such as education and social care, but currently there were no significant risks expected to be identified from the work being undertaken.

(vi)   Mr Stocks confirmed that Grant Thornton had been satisfied with the responses given by the County Council to enable completion of the Audit Risk Assessment for the County Council and its Pension Fund accounts. Members confirmed they were also satisfied with the responses in the report presented. 

Arising from discussion, the following points were raised:

(vii)     Members wanted to understand more on the risk around the EM Freeport that had been included in the Audit Plan, including the governance arrangements (which were still being finalised), the visibility the Committee would have around Freeport activity going forwards and the impact on the western side of the County in terms of infrastructure requirements. It was agreed that the Committee would be given a broader update on the wider impact of the Freeport at a future meeting.

(viii)    It was commented that the Government’s response to implementing the recommendations of the Redmond Review appeared to be slow. Regarding the impact to the Council in the short term Mr Stocks acknowledged that progress with the major recommendations was likely to be limited. However, in terms of recent progress the Financial Reporting Council would soon be moving into the role of system leader for local audits which was expected to be helpful in terms of coordination. It was noted that the Public Sector Audit Appointments (PSAA) had also launched the tendering exercise to appoint external auditors for the period commencing from the 2023/24 financial year which was hoped would generate more market supply. The Director highlighted that the Internal Audit Progress and Plan report further down the agenda provided a further update on the actions being undertaken by the Department for Levelling Up, Housing and Communities and CIPFA in response to the Redmond Review.

RESOLVED:

(a)    That the report presenting the indicative External Audit Plan and Audit Risk Assessment 2021/22 for the Council and its Pension Fund be noted;

(b)    That the Director be requested to provide an update on the wider impact of the Freeport at a future meeting.