Agenda item

To consider the Wokingham Borough Council Outline Audit Plan year ended 31 March 2021.

The Committee received an update on the Wokingham Borough Council Outline Audit Plan year ended 31 March 2021.

During the discussion of this item the following points were made:

·       Helen Thompson indicated that the 2019/20 audit was not yet completed but it was important that Members had sight of the risks that were considered relevant for the 2020/21 audit.

·       Stephan Van Der Merwe indicated that the risks remained largely unchanged.  The misstatement due to fraud and error and the risk of fraud in revenue and expenditure recognition, were inherently fraud risks and would be audited as significant risks.  The valuation of land and buildings remained a significant risk and E&Y would be focusing on the properties that were largely influenced by market conditions; properties that were carried at estimated useful value and the investment properties that were under fair value.  Other properties carried at depreciated replacement cost and the Housing Revenue Account properties that were influenced to some degree by the market conditions, would be audited as an inherent risk and would be an area of audit focus.

·       The pension liability remained an area of focus.

·       The going concern disclosure remained an area of focus due to the ongoing market conditions because of Covid.

·       Accounting for the Covid grant was a new area of focus due to the significant level of government funding received in relation to Covid.

·       Accounting for Public Finance Initiative and Group Accounts were also highlighted.

·       With regards to the value for money assessment, Helen Thompson informed Members that a new code of practice was in operation.  There were now three specified reporting criteria instead of a single criterion.  A more detailed initial risk assessment against each of these reporting criteria, was now required.  Each criterion was broken down into a set of specific arrangements.  From the risk assessment the external auditors could either identify a weakness in the proper arrangements or conclude that proper arrangements were in place for the criteria and the sub arrangements.  More work was required if a significant weakness was identified.  The risk assessment would be reported to the Committee at its July meeting.  Members were informed that if EY were not satisfied that there were proper arrangements in place then this would be referred to by exception in the audit report.

·       From the 2020/21 audit, an Annual Audit Letter would no longer be produced.  An Annual Auditor report would be produced instead which would contain the reporting around the value for money.

·       With regards to the Groups Accounts, Councillor Gee asked whether there was now greater standardisation of the accounting policies.

·       With regards to assets at depreciated replacement costs, Councillor Gee asked if it was likely that there would be a difference in opinion regarding valuation costs.  Helen Thompson explained that the risks attached to these assets were different to those valued at market value.  Conversations would be had with officers to ensure that any issues were identified and addressed at the start of the audit.

·       Councillor Shepherd-DuBey queried whether the former Marks and Spencer’s building was considered Property, Plant and Equipment or Commercial Property.  The Assistant Director Finance agreed to provide a written response.  He believed that most of the regeneration work around Peach Place were still classed as assets under construction.  Helen Thompson assured the Committee that no assets would fall outside of the audit remit.

·       With regards to the changes in looking at the capital assets, Councillor Ross asked if there would be any changes where construction was underway at the end of the year.  Helen Thompson explained that assets that were under construction would be considered under the audit as before.

·       In response to a question from Councillor Gee, Helen Thompson explained the value for money work and how it was reflected in the audit fee. 

RESOLVED:  That the update on the Wokingham Borough Council Outline Audit Plan year ended 31 March 2021 be noted.