The External Auditor presented a progress report on the principal matters that had arisen to date from the audit for the year ended 31 March 2012. The audit testing was not yet complete and the results of work carried out to date in relation to significant risks were summarised in the Executive Summary.
The following significant risks had been identified and the External Auditor provided a detailed explanation and update as to the current position for each of the following items:
· Revenue recognition: recognising grant income.
· Recoverability of investments.
· Valuation of fixed assets.
· Accounting for Heritage Assets.
· Disclosure of related parties.
· Presentation of summary financial statements.
· Risk of Accounts Payable control deficiencies.
· Management override of internal control.
· Financial standing.
An updated Appendix 1: Audit adjustments and uncorrected misstatements was tabled for Members information.
As part of the audit the External Auditor was required to form a conclusion on the Councils arrangements for securing economy, efficiency and effectiveness in the use of resources, known as 'value for money. The key audit risks that had been identified were:
· Financial sustainability.
· Asset management and the development of the property hubs.
· Management of information across the Council.
The External Auditor had reviewed the financial planning process and progress in updating the Medium Term Financial Plan. The findings from the previous years audit had been followed up to ascertain how far the Council had moved towards articulating its strategic direction and vision for what the Council would look like at the end of the Medium Term Financial Plan period. No issues had arisen that would impact on the value for money conclusion and more detailed findings and recommendations would be reported to the Audit and Governance Committee in a separate management letter.
Work in relation to asset management had focussed on the non-strategic asset review and the hub initiative. The Council continued to recognise that as financial challenges increased and specific funding streams ceased, financial and capital planning processes needed to be extremely robust to ensure risks were managed effectively and resources continued to be targeted in priority areas.
It was noted that a buildings review was underway and Members had asked previously for an update to be brought to the Audit and Governance Committee.
With regard to the management of information, the External Auditor had focused on a case study on the information flows on safeguarding within Children Families and Learning, due to continued pressures in this service area. No issues had arisen that impacted on the value for money conclusion, however a number of observations and recommendations in relation to the sources of information available to the Council and how that information was used had been noted. These findings would be reported to the next Audit and Governance Committee in the management letter.
On satisfactory completion of the outstanding matters, the External Auditor anticipated issuing an unqualified audit opinion on the truth and fairness of the financial statements, in addition to giving an audit opinion on the whole of government accounts forms.
RECOMMENDED as follows:
1. that Members note the progress report on the external audit of the 2011/2012 Accounts.
2. an update on the Buildings Review would be presented to the next meeting of the Audit and Governance Committee.