Agenda item

The External Auditor submits a report which summarises the 2013/14 audit of Leicester City Council.

The Audit and Risk Committee are asked to note the report and approve the letter of representation.

Officers from KPMG, the External Auditors, presented a report to those charged with governance (ISA 260). The report summarised the key findings arising from the audit of Leicester City Council’s financial statements for the year ended 31^st March 2015, the Auditor’s assessment of the Council’s arrangements to secure value for money (VFM) in its use of resources, and the requirement for Members to authorise the Director of Finance to sign the letter of representation to KPMG from the Council in connection with the audit of the Council’s financial statements.

Members’ attention was drawn to the headlines in the report at Section two, and the anticipated unqualified audit opinion on the accounts. The external auditors had identified a number of adjustments and asked that an amendment to the report be noted on page 12, Section two, Audit Adjustments, to read “Two investments totalling £20 million had been reclassified from ‘Cash and cash equivalents’ to ‘Short term investments’”,  it was noted that  the change did not affect the asset position.

The external auditors asked the Committee to note page 21, Section four with reference to the OFSTED report in March 2015, and the additional work required to ensure the Council was undertaking the 24 recommendations addressed to it. External auditors concluded it was too early to say whether the Council had addressed the recommendations, though they were satisfied that an appropriate timetable was in place. Therefore, the external auditors provided a qualified ‘except for’ Value for Money conclusion in respect of that issue.

The external auditors referred to the recommendation and management response at Appendix 1, page 22 in the report, regarding amendments of a presentational nature. Management accepted the recommendation to ensure the 2015-16 accounts closedown timetable included a robust quality review of the notes, and a plan of work to deliver the objective was in place.

No new recommendations were identified, but Members’ attention was drawn to the previous year’s year outstanding recommendations at Appendix 2, page 23 of the report:

1.    Publish the names of members who failed to return related party declarations. The Chair of the Audit and Risk Committee may wish to consider what further actions are available.

It was reported that there was one declaration outstanding. The Chair expressed support for the recommendation to publish the names of members who failed to return related party declarations.

2.    Produce a report on non-routine journals raised by finance staff, and provide evidence that journals were authorised by a senior member of the finance team.

Officers informed the meeting the recommendation would be included in the specification of needs from the Council’s future finance system, for which a procurement exercise was currently underway.

The external auditors concluded the Council had satisfactory processes in place for the production of the accounts, and officers had dealt with audit queries in a professional, timely manner. They acknowledged that amended accounts were received, and all that remained was for the external auditors to receive a signed management representation letter. It was agreed the Chair and Director of Finance would sign the letter at the end of the meeting.

The Chair thanked the External Auditors for the report.

RESOLVED:

that:

1.    the Audit and Risk Committee note the annual governance report (ISA 260) for the 2014-15 audit and letter of representation submitted by the Director of Finance;

2.    the audit adjustment amendment at page 12, Section two to £20 million be noted;

3.    the qualified ‘except for’ Value for Money conclusion given following the OFSTED report in March 2015, and the additional work required by the authority through its Improvement Plan be noted;

4.    the names of members who failed to return related party declarations be published, in accordance with the External Auditor’s recommendation.