Letter of: the external auditor EY.

Purpose: to present the annual audit letter following completion of the audit process for the year ended 31 March 2019 and the results and conclusions on significant areas of the audit process.

Recommendation: to discuss and note the letter and matters arising from the audit.

The Committee considered the annual audit letter dated August 2019 of the external auditor EY, setting out the audit opinion and findings at the conclusion of the audit of the council’s accounts.

The Committee noted that EY had issued an unqualified opinion, with no significant risks found on testing.

They were very concerned that EY had completed the audit and signed off on 7 August, a week late. They noted the reputational impact borne by the Council as a result of EY’s lateness.

Adrian Balmer, EY, explained that EY and his team were disappointed that they had not met the deadline and were working to prevent a repeat. This was not unique to this Council as 40% of audits in England and Wales completed late this year. The 31 July deadline (that applied this year and in 2018) significantly compressed the audit timetable and there were not sufficient experienced staff to complete the required work over a compressed timescale.

The Committee noted that the Head of Financial Services would meet EY to agree the final audit fee, to review the audit process for this year, and to seek assurances that the project plan for next year would result in the audit completing in time.

The Committee agreed to note the annual audit letter and the final audit opinion.

Report of: the external auditor Ernst & Young

Attached as a separate supplement (to follow)

Purpose of report: to inform the Committee of outcome of the audit of the accounts.

Recommendation: to discuss and note the report.

The Committee considered the draft audit results report dated 24 July 2019 ofthe external auditor Ernst & Young (EY) setting out the findings of the audit and the outstanding work required to complete the audit and issue the opinion.

The Committee noted that the audit work would not be completed by the statutory deadline of 31 July, and noted the good progress since the draft report was published.

The external auditors (Janet Dawson and Sue Gill) and Bill Lewis ( Financial Accounting Manager) explained the reasons for the delay: principally an unforeseen lack of capacity in the audit team; delays in finalising the audit of the annual accounts for the Council’s trading companies; and a lack of timely communication between the two audit teams.

The auditors reported that of the items in appendix C the audit of cash & bank & investments, grant income, journals testing were ongoing. All other items were completed or nearly finished, or could only be completed at the conclusion of the audit. They expected to issue their final opinion by 2 August 2019.

The Committee noted the conclusions in the draft audit report, the changes made to the final accounts as a result, and the outstanding work. They were concerned about the delay and noted the actions that the Head of Financial Services would take to place the appropriate notifications. They noted that no penalties would be incurred by the Council or EY as a result of the delays.

The Committee agreed:

·         that the audit should be completed and the finalised accounts and audit opinion should be published as soon as possible.

·         to note the draft audit report and updates from the auditors.