Agenda item

The Committee gave consideration to an update by Mazars, the external auditors, on progress in delivering their responsibilities.

The report highlighted how Mazars were ensuring resilience and maintaining the level and quality of client services during the pandemic.

Mazars were committed to working with the Council throughout the current period, recognising the need to be flexible as the environment changed and the significant pressures on the Council’s finance team.  The audit will able to be carried out remotely and arrangements had been put into place to facilitate this.  The key difference this year was that until further notice the external auditors would not have a physical on-site presence.

The External Auditors provided an update on their proposed audit programme and external audit fees:

·         Public Interest Entity (PIE) – Statutory audit legislation came into effect for all financial years starting on or after 17 June 2016.  The PIE definition included organisations with transferable securities listed on regulated markets and governed by law.  Oldham Council had £6.6m of listed debt as at 31 March 2019 and as a result fell under the definition of a PIE.  There are additional requirements at both the planning and reporting stages of the audit which culminate in the requirement to produce a more detailed ‘long form’ audit report.

·         Audit Regulator recommendations – The external auditors continually strived to maintain high standards of audit quality.  One mechanism was to consider the outcome of independent quality reviews of audit work and that of other audit suppliers.  As a result of increased expectations on external auditors following recent reviews, Mazars were planning increases in the level of work carried out on:

o   The value of the Council’s defined benefit pension scheme assets and liabilities; and

o   The value of the Council’s property, plant and equipment and investment property assets.

The driving factors had been discussed with officers and the audit fee would be revisited for 2019/20 to reflect the increased level of risk-based work that was not considered by PSAA when the scale fee was set.  The Committee was asked to note that the additional fee is subject to detailed scrutiny by the PSAA as part of the approval process.

The Committee were also provided with an update on the external audit of the Council which included regular dialogue with the Director of Finance, revision of audit resource plans to ensure external audit of the financial statements were delivered in line with the Council’s revised plans. Progress was understandably slower with the challenges of remote working and additional workload and specific reporting challenges related to the impact of the pandemic on financial markets.

Members were informed that work on the audit had commenced three weeks prior to the Committee meeting and this included virtual meetings with officers from Finance.  Progress was slower that usual and it was a testament to the Finance Team and Mazars that good progress was being made.  It showed the resilience of people and systems during challenging times.  Areas being focused upon in the audit included the pension fund, corporate property plants and equipment as well as other financial assets. 

Members asked about the impact of the pandemic on the Final Accounts and were informed that audits carried out initially included interest in matters of growing concern which include valuation of assets which may be impacted by the economic downturn.

RESOLVED that the audit progress report submitted by the External Auditors, Mazars, be noted.