Agenda item



Peter Barber (Grant Thornton) presented the report – the annual audit letter aimed at stakeholders so should be available on your website.  It gives a clear opinion on your financial statements and value for money (VFM).  The next part of the report (page 71) gives the final proposed fees for the Council. It reflects the changes in fees which were outlined.  When the plan was presented around 12 months ago, uplifts were proposed and had been agreed in principle on increased focus and risk.  Since Covid-19 there has been a significant impact on delivery and resource input.  In addition, with the accounts for 2019-2020 it was unclear if Aequus, ACL and ADL would be consolidated into the main part of the accounts.  This resulted in a large number of procedures that had to be undertaken and incurred another uplift.  As always the final fees are subject to sign off and approval.  Evidence to support the need for this work has been submitted.


As regards the Pension Fund there is a similar scenario (page 74).  There was a focus on level 3 investments, then a further increase due to work driven by Covid.  Given the inherent risk within the valuation, some extra expertise had been brought in from their valuation team.


Additional fees was an area for discussion and the following points were raised:


·  Further explanation was given as to how the work on additional fees was verified;

·  public sector audit appointments are responsible for 490+ councils and pension funds and things have moved on in terms of regulations in terms of challenge and scope of the audit and there are expected uplifts across every council that vary depending on the size of the portfolio;

·  an example when Aequus first went into the group accounts in 2019-2020 which resulted in extra work;

·  further changes in VFM can’t be done until 2021-22;


In respect of the audit plan for 2021 for the Council, currently in 2021-22 and we have only just received the plan for 2020-21, so not where we would wish to be nationally and we are 2-3 months behind in the audit cycle.  There are still some 2019-20 audits outstanding.  In terms of opinion it would be similar to 2019-20 and it will be land and buildings that takes a lot of input.  There will be focus on the Pension Fund liability.  There will be a proposed materiality figure of 7 million and anything over that will be subject to audit procedures.  Introduction of VFM will change new areas of focus in 2021-22.  2021 was a better outturn position at the beginning of Covid-19, then with clarity and funding/grants from central government there was confidence to deliver the budget in 2021-22.  However, things change in 2022-23 with lots of uncertainty and gaps.  Governance is a key role for the Council and within the Council it was good but there was need for further work with partners and subsidiaries to be effective and proportionate.  The last area is economy efficiency and effectiveness, about performance management arrangements, KPIs and benchmarking and how the Councils knows it is performing well and sharing best practice.  So auditors would be working with Council officers on these areas which would impact on additional fees.  There would be money available to help public sector with these costs.


Points raised:


·  new VFM arrangements – broad headings with supporting guidance on challenge areas and there will have to be work in all three areas;

·  the plan seeks to identify the areas of risk and flag at an early stage to clarify where the Council needs to improve;

·  these points are specific to BANES, other councils are suffering from the impact of Covid-19 and struggling to balance the books, unitary authorities with demand led services find it increasingly hard, Covid-19 is a bigger issue for BANES due to the income from the investment portfolio, so more vulnerable;

·  in respect of governance BANES has looked at alternatives like Aequus and working with a combined authority;

·  on VFM there has been an extension of 3 months as this is a new area, if there are areas of concern we would share our findings earlier;

·  the detailed work on VFM the bulk in July – September, working remotely or face-to-face, engaging with key people;

·  correlation between fees and work level on VFM – have local government advice, training, work requires specific skills so we are resourcing for this – extended time has been given for Year 1 to get the work completed;

·  the issue of timing of the accounts sign-off, target is September 2021 – we won’t hit this deadline but will liaise with officers as to what is deliverable;

·  this delay caused issues for BANES officers and incurred fees;

·  the Pension Fund would be prioritised over the Council, then the Council in October 2021;

·  Corporate Audit Committee dates were arranged around the statutory work, updates and sign-off of the accounts so liaison and flexibility between external auditors and officers was vital to facilitate planning;

·  BANES was not the only local authority not to have completed accounts within the deadline and it was expected that more authorities would miss the deadline again this year;

·  BANES accounts were complex with more investment properties than most, more land and buildings, as well as group accounts.


In respect of the Pension Fund (page 99) the difference was that an opinion is given on the accounts but there is no VFM equivalent.  The focus is valuation at level 3 investments and materiality is higher this year.  All the default risks are set out and reflect an uplift in fees due to additional work.




1)  to note the External Audit Letter (Appendix 1); and

2)  to endorse the Audit Plans for the Council and Avon Pension Fund (Appendices 2 & 3).

Supporting documents: