Agenda item

To receive an update from DBO, the Council’s External Auditors, on their work to audit the Council’s financial statements.

The Committee received a report setting out BDO’s (the Council’s external auditor) plans for their audit of the Council’s 2019/20 financial records

It was noted that there had been a delay in the current Interim Executive Head of Finance and committee members receiving the report, therefore limiting the opportunity for Members to review the Audit Plan and thus inform the audit process. The delay had been caused by a number of issues, including the departure of the Council’s Executive Head of Finance earlier in the year, his interim replacement then leaving in July and a second interim Executive Head of Finance not taking up the role until mid-August. It was recognised that the circumstances leading to these delays would need to be addressed to ensure they would not be repeated.

Both the Interim Executive Head of Finance and BDO’s Audit Partner accepted that these delays should have been avoided and undertook to ensure in future:

      i.                A wider distribution of the draft Audit Plan (e.g., to Chief Accountant as well as Executive Head of Finance);

       ii.                        The receipt, acknowledgement and actioning of papers from BDO to the Council to be a standing item on the agenda of periodic meeting between BDO and the Council’s Finance Officers.

It was reported that the audit’s scope had been determined by the National Audit Office’s Code of Audit Practice and would include auditing the financial statements, reviewing arrangements to secure value for money through the economic, efficient and effective use of its resources and, where appropriate, exercise the auditor’s wider reporting powers and duties.

In setting out their approach to the audit of the accounts, DBO had identified the following areas that would be subject to specific scrutiny:

·         Management override of financial controls

·         Revenue (and expenditure) recognition

·         Valuation of non-current assets

·         Pension liability valuation

·         Allowance for non-collection of receivables

·         Going concern

·         Sustainability of finances

·         Finance statement preparation and informed decision making

Arising from the Committee’s questions and comments the following points were noted:

·         It was clarified that the reference to fraud related to fraudulent claims perpetrated against the Council for example Housing Benefit and the majority of these were worth less than £10,000.

·         The Jersey Property Unit Trust would be audited by the BDO Jersey Team and the findings include in the main audit report however the Trust’s year end was December 2019.

·         The additional audit fee reflects a combination of the additional work required to deal with the number of errors identified in the 2018/19 accounts and the increased complexity of the audit in recent years for example the audit of the JPUT and the Council’s expanded investment property portfolio.

·         It was clarified that if a property was bought solely for the purposes of income generation then it would be recognised as an investment in the accounts.  If a property was acquired for a combination of investment income and regeneration purposes then in accordance with the CIPFR Code of Audit and Practice it must be shown in the accounts as ‘Other Land and Buildings’.

It was noted that, due to the Covid-19 pandemic, the reporting deadlines in relation to completing the audit had been changed.  Councils had been given until the end of July 2020 to finalise their accounts and audits had to be completed by the end of November 2020.  An additional meeting of the Audit and Standards Committee to discuss the audited report had been scheduled for Monday 18^th January 2021.

The Committee noted the update.