Agenda item

The Divisional Director, Risk and Assurance, introduced Barrie Morris of Grant Thornton, the newly-appointed external auditors, and invited him to address the Committee.

Mr Morris said that Grant Thornton had been performing external audits on behalf of the Audit Commission since 1982. Grant Thornton had now gained more critical mass, having had 300 staff from the Audit Commission join them and there were now only 61 staff at the Audit Commission’s central headquarters, reducing central overheads. These two factors allowed Grant Thornton to offer a very competitive fee. Members would find that the style of audit would be very similar to that provided by the Audit Commission, with whom many Grant Thornton staff had trained. Mr Hackett would remain the main contact with the Council. A specific partner of Grant Thornton would provide a dedicated service to the Avon Pension Fund, which had particular risks.

The Chair asked Mr Morris what he expected of the Committee, which had many members who were not financial professionals, so that it could play its part in the audit process. Mr Morris replied that it was good to have a challenging committee; training and briefings could be provided if members desired. Grant Thornton would involve the Committee in the audit process to ensure that it was satisfied with the framework in place.

Councillor Macrae said that he thought Grant Thornton would bring greater commercial acumen.

The Chair asked about the possibility of conflicts of interest in Grant Thornton. Mr Morris replied said that a circular had been sent to all Grant Thornton staff asking them to declare interests, including personal relationships with members of Council staff. APB Standard 5 would be strictly applied. There was a higher test for working with the public sector, where not only conflicts of interest but even the appearance of conflicts had to be avoided.

Mr Barker said that the public sector was changing rapidly and cross-fertilisation from the private sector would be good.

The Chair noted that the covering paper referred to a 30% reduction in the audit fee, whereas the appendix stated that the reduction was 40%. The Divisional Director, Risk and Assurance confirmed that the reduction was 40%. Councillor Ward asked whether, given this huge reduction if fee, the Council would receive the same quality of service as previously. Mr Morris replied that they would be monitored by the Audit Commission to ensure that their standards were met and by the Financial Reporting Council. There was also a commercial imperative: if Grant Thornton produced bad audits, they would not be employed.

In response to questions from Members, Mr Hackett said that the claim that the uncertified claim given in the table in paragraph 2.2 of the Grant Certification Report report related to the Combe Down stone mines. In response to a question from Councillor Macrae, he confirmed that the claim was uncertified because records prior to 2003 had been lost and that no malfeasance was involved. In response to the Chair, he confirmed that the sum was non-material.

RESOLVED to note the update from the External Auditor including the planned fees for 2012/13 and the findings from the Grant Certification Report.