Agenda item

To review and note the EY External Audit Plan.

The EA introduced the report and informed Members that it provided details of the 2019/20 audit that was currently underway. He added that the materiality level being worked to was £1.12m, with any audit differences above £56k to be reported to the Committee at its next meeting. It was noted that the audit risks EY hoped to provide assurance against were outlined on p5-6 with two elevated risks, the first relating to property plant and equipment and the second to non-domestic rates appeals provision. The EA informed Members that the increase in the first elevated risk had been driven by differences between the valuer used by the Council, and the audit undertaken in 2018/19. The second elevated risk was driven by a new requirement for auditors to pay greater attention to audit estimates, which made it an inherent risk.

Questions and Discussion

       i.          Cllr C Cushing referred to p35 where it was stated that the breach of internal controls had arisen as a result of a whistle blower, and asked whether this was correct, as he understood it was the result of an FOI request. The EA replied that EY had been notified of the issue via the Public Interest Disclosure Act, otherwise referred to as the whistleblowing process. In response to a follow-up question from Cllr C Cushing, the EA stated that he could not confirm whether the Council’s Whistleblowing Policy had been followed, as this had not been part of the EY investigation. Cllr C Cushing asked whether any further work was planned to ensure that the Council’s procedures had been properly followed. The EA replied that efforts would be made to ensure that as a primary respondent under legislation, EY had been notified appropriately, though there were no plans for a specific enquiry to determine whether the Council’s own Policy had been followed. He added that EY did not have a specific duty to determine whether the Council’s own Whistleblowing Policy had been fully adhered to, because EY had been notified as a respondent under legislation. Cllr C Cushing suggested that he did not feel the term whistleblowing was being used accurately, and noted that whilst no criminality had been found during the Police investigation, it was possible that there could have been lesser degrees of culpability. He then asked whether EY Forensics would consider these allegations to identify what internal controls the breaches involved, in order to determine whether allegations were founded, where responsibility fell, the severity of any breaches, and whether any lessons could be learnt. The EA replied that he would engage the EY Forensics Team to review the facts behind the issue raised, and would thereafter report on whether the Council’s controls were adequate. It was confirmed that the work was mostly complete, though the report on the findings would not be published until the next meeting. It was confirmed that a draft report would be shared with officers and the Chairman for comment in advance of the meeting.

      ii.          It was confirmed, following a question from the Chairman, that EY had not been asked to review any other matters relating to the Police investigation.

     iii.          Cllr S Penfold referred to comments on p41 that suggested that EY would postpone audits if information could not be provided within the agreed timeframe. He then asked what would happen if EY were not able to meet key dates within the timeframe, as the agreement appeared to be one-sided. The EA agreed that whilst the agreement did appear one-sided, the onus was on EY to issue an audit opinion, which it could not do without the necessary information. He added that the contract was between the Council and Public Sector Audit appointments (PSAA) Ltd, rather than directly with EY, to ensure independence. It was noted that any delays caused by EY would be explained to the Council, in order to agree a revised timetable.

    iv.          The CTA sought to reassure Members that the increased risks raised by the EA relating to valuations for property plant and equipment had led to the introduction of new procedures, which would resolve the issue. She added that she would also question whether risk in relation to the NDR appeals provision had genuinely increased.

RESOLVED

To review and note the EY External Audit Plan.