Agenda item

The External Auditor submits a report to the Audit and Risk Committee, which provides an overview of the indicative planned scope and timing of the statutory audit of Leicester City Council for those charged with governance.

The Committee is recommended to note the report.

The External Auditor submitted a report to the Audit and Risk Committee, which provided an overview of the indicative planned scope and timing of the statutory audit of Leicester City Council for those charged with governance.

Nicola Coombe, External Auditor, presented the report, and gave the following information:

·         It was noted it was an iterative document. It was reported there were two areas of presumed significant risk under ISA [UK] 240: revenue recognition may be misstated due the improper recognition of revenue; the risk of management over-ride of controls was present in all entities.

·         Under the presumed risks were the valuation of land and buildings, and valuation of net defined pension liability, both of which required significant estimate in the financial statements, had a number of assumptions and were susceptible to changes.

·         To inform the external auditor’s planning of audit works, a number of enquiries had been made and a serious of questions posed to management across different themes, such as, fraud, laws and regulations, going concern, related parties and accounting estimates.

·         Under Value for Money 2021/22, a planning assessment had not yet been undertaken, however, follow up on risks of significant weakness reported as part of the 2020/21 review was anticipated. These were:

o   Financial sustainability – consideration should be given to more formal, explicit monitoring, at a Member level, of the extent to which proposed savings are realised.

o   Governance – it was recommended that the Council undertake a skills and knowledge assessment of the Audit and Risk Committee and consider if the appointment of an independent member would add value.

o   Economy, efficiency and effectiveness – in its refresh of the Economic Recovery Plan, the Council should consider adding quantifiable indicators to its aims and objectives along with an analysis setting out its starting position, from which improvement could be measured.

·         Other certification work undertaken was noted. Under Teachers Pension Return and end of year certificate a minor exception was noted in the work which was amended accordingly. It was further noted under the pooling of Housing Capital Receipts that no exceptions were identified.

·         With regards to the Housing Benefit assurance process, as in prior years work had resulted in a qualification letter, the summary of which was included in the report.

External Auditors noted that the Council put in a lot of work to assist external auditors to which officers were thanked.

A Member asked with regards to the provision of bad debts and business rates, how had the Council applied mechanisms to ensure all the bad debts were considered appropriately and given the economic situation how had the Council applied its rules and regulations to ensure business rates had been taken into full consideration. In response the Head of Finance noted that bad debt provision was reviewed annually, and that Housing Benefit was looked at separately to business rates, each being given advice and with historical information available on what percentage of bad debt had been written off in the past. The Head of Finance informed the meeting that a report would be taken to OSC that showed the level of debts and how much had been written off over a period of time but would also be shared with Members of the Audit and Risk Committee.

Grant Patterson informed the meeting that guidance was still awaited from Government on whole of government accounts which was not expected until June / July 2022, which was awaited before the 2020/21 audit could be formally closed.

The Chair noted the report.

RESOLVED:

That:

1.    The Audit and Risk Committee note the report.

2.    It was noted that the 2020/21 audit had not been formally closed as guidance on whole of government accounts was awaited from Government.

3.    The Head of Finance would circulate to Members of the Audit and Risk Committee the latest Income Collection report that had gone to OSC.