The External Auditor will present the Audit Completion Report (Document “L”) which summarises the findings from the audit of City of Bradford Metropolitan District Council’s 2016/17 financial statements.

Recommended-

That the Committee:

·         consider the unadjusted misstatements schedule (Appendix A); and

·         approve the letter of requested representations (Appendix B) including the reasons for not amending the unadjusted misstatements.

(Steve Appleton (01274) 432392)

The External Auditor presented the Audit Completion Report (Document “L”) which summarised the findings from the audit of City of Bradford Metropolitan District Council’s 2016/17 financial statements.

It was reported that materiality had been set at £17.916 million and the trivial threshold for reporting matters had been set at £0.448 million.

Members were informed that the work had identified a few misstatements that had been discussed with management, a summary of the identified misstatements was provided in Appendix A to Document “L”.

The External Auditor reported on the significant risks (detailed in section 2 of the report) and key areas of management judgement which included:

·         Management override of control – the work undertaken had provided the assurance and had not highlighted any material issues to bring to Members attention; no indication of management override of controls were identified.

·         Revenue Recognition – the sample testing of receipts in the period after year-end identified income of £0.205 million which should have been recognised in 2016/17 but had not been accrued.  Appendix A set out the possible non-material misstatements if the sample results were replicated within the whole population.

·         Estimation uncertainty for pension liabilities – the audit work had provided the assurance and no material issues to bring to the Council’s attention had been identified; there was no indication of material estimation error in respect of pensions.

·         Accounting for the valuation of land and buildings for schools converting to academy status – The audit work had provided the assurance and no material issues had been identified to bring to Members attention; there was no material error relating to the treatment of schools converting to academy status.

It was reported that key areas of management judgement included valuation of property, plant and equipment; planned work was completed after reviewing the Council’s use of experts to inform management judgements about valuation of land and buildings and the application of the new financial reporting standards and no matters to bring to Members attention had been identified.

Members were informed that the Council’s accounting policies and disclosures and were found to be in line with the requirements of the Code of Practice on Local Authority Accounting (the Code).  There had been no significant changes to accounting policies for the year ended 31 March 2017.

It was reported that External Audit received draft financial statements from management on 30 June 2017; a few numerical misstatements had been identified which were detailed in Appendix A although none had a material impact on the Council’s reported financial performance for the year or year-end assets and liabilities.

Members were informed that producing high quality working papers was as crucial part of compiling financial statements that were complete and materially accurate; the working papers supporting financial statements were of a good standard; External Audit were grateful to officers for their assistance in responding to requests for information and in dealing with External Audit queries in a timely and efficient manner.

Members were informed that during the course of the audit External Audit did not encounter any significant difficulties and had the full co-operation of management.

It was reported that Internal Control recommendations included:

·         ensuring that formal access disabling requests were issued for all leavers before the leaving date, in order to avoid unauthorised access to the Council’s networks and programs

·         testing the Disaster Recovery Plan at least on an annual basis in order to ensure proper and timely recovery in case of a disaster or major incident.

Members were informed that the Value For Money Conclusion was detailed at Section 4 of the report.  The Value for Money Conclusion included:

·         The Council had made arrangements for managing its savings programme and achieved planned savings of £37.7 million, equivalent to 83% of the savings plan, during 2016/17. The shortfall of £7.9 million was bridged by compensating measures including use of budget contingencies set aside to mitigate the risks of delay in implementing some of the more complex savings plan.

·         The Council approved a balance budget for 2017/18 in February 2017 which involved planned savings of £46 million; financial monitoring processes allowed management to identify emerging difficulties implementing planned savings so that mitigating actions could be taken at an early stage.

·         The Council had revised its medium term financial strategy for 2018/19 to 2020/21 and beyond to provide a longer term view of the significant financial challenges it faced; External Audit review indicated that the core assumptions were appropriate factors to consider and that management recognise the risks associated with the assumptions.

As it was Steve Appleton’s last meeting, Members wished him all the best for his future and thanked him for the work he had undertaken over the years.

 Resolved-

(1)       That the unadjusted misstatements schedule (Appendix A) be considered.

(2)       That the letter of requested representations (Appendix B) including the reasons for not amending the unadjusted misstatements be approved.

Action:           Strategic Director, Corporate Services