Agenda item

External Audit - Audit Completion Report

Minutes:

The Committee gave consideration to a report which presented the Council’s draft Audit Completion Report, as attached at Appendix 1, for the year ending 31 March 2020 as prepared by the External Auditor, Mazars LLP.

 

The Audit Completion Report at Appendix 1 to the report summarised the External Auditor’s audit conclusion.  The scope of working included the identification of significant audit risks, key audit matters and other areas of management judgement as outlined in the Audit Strategy Memorandum (ASM) that had been presented to the Audit Committee on 20 January 2020.   Since the presentation of the ASM, the consideration of a significant risk was revised.  The External Auditor had identified in their ASM that there was a significant audit risk, and key audit matter, related to the valuation of the Council’s pension liability.  It was subsequently identified that the significant audit risk and key audit matters applied to the Council’s group level and not just the Council single-entity financial statements, resulting in the pension liabilities of the Council’s two wholly owned consolidated subsidiary companies being considered significant risks. 

 

Since the External Auditor had issued the Audit Strategy Memorandum the UK had been subject to the challenges and restrictions of COVID-19.  Other than the matter highlighted above, the External Auditor had concluded that the original significant audit risks, key audit matters and other areas of management judgement remained appropriate.

 

One implication of COVID-19 for the Council was the deadlines for submission of the draft and audited financial statements had been pushed back to 31st August and 30th November respectively.  Despite the revised deadlines, the difficulties encountered by the Finance team during accounts preparation and audit were acknowledged and the External Auditor expressed their sincere thanks for the assistance of the team during the audit.

 

The Audit of the accounts had been substantially completed.  Several items required resolutions, as presented at page 4 of the report, and were in the main outside the control of the Council.  The following update was provided.

 

The challenges of completing the accounts with the shift to home working were highlighted as well with dealing with different priorities.  The Oldham accounts had been prepared to a really good standard and officers had supported the external auditors with their queries.  Members were provided updates on issues since the publication of the report and were informed of work ongoing on valuation, work on the heritage assets had been completed, ongoing work related to the Manchester Airport shareholdings and issues related to Pensions which were outside the control of the authority.  There were no control issues identified which was a positive position.

 

External auditors provided a detailed explanation on the findings.  The Valuation of land and buildings was yet to be completed but it was not expected that there would be any issues of significant risk to be reported. Assurance was still awaited from the Pension Fund Auditor, information had been requested but not yet received.  Section 5 set out the adjustments to the final accounts and the impact of Covid regarding the revised actuarial report.  There were no issues to report on the override of controls. 

 

It was confirmed that Council had implemented all the recommendations from last year. 

 

Members were informed that the deadlines had been changed for Final Accounts given the impact of the pandemic.  The External Auditors were confident that none of the outstanding matters would lead to a material amendment.  Whilst the audit was not yet finished, the accounts were substantially completed and further on than the report may indicate.  At this stage, the external auditors could give an unqualified opinion and would be surprised if there were any amendments.

 

Members expressed concern related to the number of issues and their ability to give agreement to the Final Accounts.  This would be discussed at the next item.

 

Members were informed that when the Extraordinary Audit Committee meeting had been set the External Auditor had indicated that the work on the Final Accounts was nearly completed.  The main outstanding issues were outside the control of the Council and linked to other parties.  If the accounts had been completed in an office environment the issues would have been resolved quicker.  It was included in the recommendation of the Final Accounts report that the Committee delegate authority to approve the accounts to the Vice Chair and the Director of Finance on the advice of the External Auditor.  It was suggested that the recommendation be amended so that if any significant changes or concerns were raised, the report would be brought back to the attention of the Committee. The External Auditors did not anticipate significant amendments. 

 

The External Auditor spoke on the Value for Money conclusion which was required on overall arrangements in the use of resources.  Reference was made to the oversight and understanding of the financial position and robust governance.

 

RESOLVED the Audit Completion Report for the year ending 31 March 2020 be noted.

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