Agenda item

The external auditor Grant Thornton’s Audit Plan for Surrey County Council outlines its audit strategy and plan to deliver the audit of the 2013/14 financial statements and to issue its value for money conclusion.

Declarations of Interest:
None.

Witnesses:

Andy Mack, Engagement Lead (Grant Thornton)

Kathryn Sharp, Audit Manager (Grant Thornton)

Kevin Kilburn, Deputy Chief Finance Officer

Nikki O’Connor, Finance Manager (Assets & Accounting)

Key Points Raised During the Discussion:

1.    The Engagement Lead introduced the Audit Plan for Surrey County Council.

2.    In response to a question over whether agreement has now been reached on the correct accounting for Academy Schools, the Audit Manager informed the Committee that a consultation document on the proposed accounting treatment had just been published.  The final Guidance will not be published until 2015/16.  However, Grant Thornton was happy with Surrey’s approach to accounting for Academy Schools.  The Finance Manager (Assets & Accounting) informed the Committee that this year an additional disclosure note would be included in the Accounts for schools which are not on the balance sheet.  She explained that the asset values of those schools which had just become Academies had only recently been re-valued, but a desk-top review to re-value schools which had previously had Foundation status was being undertaken.  The inclusion of this disclosure note was not a requirement in the Code of Practice at present.  In response to a further question, the Finance Manager (Assets & Accounting) also explained that the County Council owns the land for community and voluntary aided schools but not for academies, foundation schools or voluntary controlled schools. 

3.    Members asked how materiality is measured.  The Engagement Lead explained that there are two ways to measure materiality: through the use of a numerical calculation; through including context, eg what is particularly sensitive such as the remuneration of senior officers.

4.    The Engagement Lead clarified that the risks identified in the Audit Plan are not specific to Surrey but are general for all local authorities of this size and focus on the material items in the accounts.

5.    The Engagement Lead explained that the term ‘foreseeable future’ generally equates to 12 months from the date of the published opinion.  However, the Audit would be broader than that, testing resilience over a three to five year period.

6.    The Engagement Lead clarified that the impact of the 2013/14 changes to the Local Government Pension Scheme in relation to the audit for 2013/14 referred to automatic enrolment and amendments to IAS19 which will impact the pension scheme disclosures in the Statement of Accounts.

7.    It was confirmed that the Audit Plan is very similar to the previous year’s plan.  There is continuity year on year as the work builds on the work previously undertaken and the material items continue to be the same.

8.    As the Plan stated that it would follow up progress the Council has made in implementing the recommendations raised in Grant Thornton’s 2012/13 Financial Resilience Report, the Chairman requested a reminder of what the recommendations were and what progress had been made.  The Deputy Chief Finance Officer reminded Members that the recommendations concerned the adequacy of planning assumptions over the longer term given the scale of the challenge faced by the local authority sector and the general understanding of the financial environment.  Steps forward have been taken in both areas and officers await the outcome of the 2013/14 review to see if the auditors agree that progress has been made.

Actions/Further information to be provided:

None

RESOLVED:

That the Committee notes the work that Grant Thornton plans to undertake to deliver the audit and issue its value for money conclusion.

Committee Next Steps:
The Committee will receive the findings of Grant Thornton’s audit in July 2014.