Skip to content

H1 - do not remove

Agenda item

Report from External Auditor

To receive a report and appendices from the Council’s External Auditor, Grant Thornton UK.


The covering report from the Financial Services Manager (FSM) enclosed three documents from the Council’s External Auditor, Grant Thornton UK, for consideration/approval by the Audit Board as appropriate;


·         Audit Findings Report for the Council for the Year ended 31 March 2019 (Appendix A to the covering report);

·         Letter of Representation for the Council’s Financial Statements for the year ended 31 March 2019 (Appendix B to the covering report);

·         External Auditor’s Planned Audit Fee for 2019/20 (Appendix C to the report).


The FSM advised Board Members that the audit of the Council’s accounts for the period under review had yet to be completed by the External Auditor. Grant Thornton staff continued to work on the audit, and hoped to complete their work to enable the Council’s Accounts for 2018/19 to be sign-off by the Strategic Director (Internal Services) and the Board Chairman by the statutory deadline of 31 July 2019 (Appendix B to the report refers).


This was particularly disappointing situation, given that it had been agreed with the External Auditors to bring forward the July 2019 Audit Board to mid-month, to enable sign-off of the Accounts in plenty of time before the statutory deadline.


Elizabeth Jackson, Audit Lead Grant Thornton, advised Members that the remaining audit work to be completed by her staff had not affected the conclusions in her Audit Findings Report (AFR), and her intention to give both  an Unqualified Opinion on the Council’s Accounts and an Unqualified Value for Money Conclusion (Appendix A to the report – agenda p.15 refers).  Ongoing audit work related to the Council’s Financial Statements (Statement of Accounts), which required a higher quality and level of audit work due to demands from the Auditors regulators.


She referred Members to the following additional points as set-out in the AFR:


·         Audit Adjustment: One adjustment had been made for a double counted Council property (AFR p.19 agenda p.31);

·         Pooled Funds: One new issue had arisen, relating to the Council’s accounting policy for assessing the value of pooled funds, following implementation of the new International Financial Reporting Standard 9 (IFRS 9) for such funds. At present, Grant Thornton did not agree with the Council’s interpretation of IFRS 9 [an interpretation which other Councils shared] and as a consequence, the External Auditor was not able to issue an Audit Opinion at this stage. Discussions would continue between the Council and Grant Thornton, with the outcome reported to the Board as required. The Ministry of Housing, Communities & Local Government (MHC&LG) had set Councils a 5 year override to establish their treatment of pooled funds following the advent of IFRS 9. In this context, Members were advised that unless/until a pooled fund was ‘realised’, there was no financial impact on a Council in terms of income. Should the divergence of opinion between the Council and Grant Thornton regarding IFRS 9 remain unresolved on 31 July 2019, the External Auditor would issue a ‘Qualified Opinion’ with an appropriate IFRS 9 ‘comment’, to enable the Council’s Accounts for 2018-19 to be signed-off under delegated authority from the Audit Board (Appendix A report p.8 agenda p.20 refers);

·         ‘Financial Statements’: A decision had now issued from the National Audit Office (NAO) regarding the ‘McCloud’ ruling re age discrimination in respect of pensions.  An opinion had been sought from the Council’s actuaries, who had judged that the NAO ruling would not impact significantly on the Council’s pension scheme as the estimate for error was low. This had enabled the External Auditor to issue an Unqualified Opinion in relation to the Council’s Accounts (AFR p.4 agenda p.16);

·         Audit Fees: These had been previously calculated by Grant Thornton to remain unchanged over a five year period. However, the additional work that had been required regarding property (re)valuations, might attract a slight increase in fees for the period under review (AFR p.21 agenda p.33).




1.    That Members welcome the External Auditor’s intention to issue an Unqualified Opinion on both the Financial Statements and Value for Money Conclusion (as set out in Appendix A to the report), subject to reaching agreement on the IFRS9 issue highlighted above;


2.    That Members approve the Letter of Representation attached at Appendix B to the report;


3.    That Members note the External Auditor’s proposed audit fee for 2019/20 (attached at Appendix C to the report).


Supporting documents: