To receive notification of any matters which the chair determines should be considered as urgent business and the special circumstances which have made the matters urgent, and to receive any announcements from the chair.
Minutes:
The chair welcomed everyone to the meeting, outlined the procedure to be followed, and advised on emergency evacuation arrangements.
The chair then noted that EY, the external auditors, verbal report was an item of urgent business which had arisen since the publication of the agenda due to delays in completing necessary work.
The chair agreed to accept this as an urgent item in accordance with Section 100B (4)(a) Local Government Act 1972, due to the special circumstances which was the progress of the external audit of the councils by its external auditors EY. The special circumstances were due to delays in completing necessary work and the need for the committee to be updated at this meeting given the timescale until the next meeting.
Richard Tebbs from EY then provided the committee with a verbal update on the progress with the external audit of the 2021/22 statement of accounts.
The main points that the external auditor highlighted were EY’s key indicators of risk and a brief introduction to their materiality.
There were two presumed risks that EY consider and assess where management could override controls; firstly, there is a presumed risk for fraud in revenue and expenditure where management could manipulate statements for a specific outcome – specifically around using capital receipts to fund revenue expenditure and property, plant, and equipment additions. EY had completed their testing for this presumed risk and found nothing of concern.
The second presumed risk EY tests for were misstatements due to fraud and error. They focused on manual entries and estimates where management would have shown a potential bias in making them. However, again, EY had tested these areas and had no concerns. Two other areas for evaluation on both councils were also indicated as being over the valuation of land and buildings and the pension liability valuation. The external auditor indicated that testing in both these areas was ongoing.
The external auditor then indicated what EY consider to be material to the financial statements; specifically, £921,000 is considered material for South Oxfordshire District Council and £851,000 is considered material for Vale of White Horse District Council. There were a few items that they were working through with management, but it was noted that they had no concerns over the information they were provided.
In terms of progress on the audit of the accounts, the external auditor informed the committee that most areas were complete, subject to quality control procedures, with some outstanding areas such as Community Infrastructure Levy income but that there were no issues arising from these areas. On property valuation, some information was proving difficult to get from the external valuers. In addition, they were working through the pension scheme changes arising from the latest triennial valuation of the pension fund and their effect on the financial statements. Finally, the external auditor noted that more detail would be provided in a report going to a future committee meeting.
The committee then asked about the particular changes to the pension scheme that were indicated but the external auditor clarified that they were mainly to do with the review process. As the triannual review has taken place, they are looking to assess the differences between the figures reported in this compared to previous estimates.
Following on from this, members asked about the delay in the external audit process and sought confirmation that the councils were meeting their statutory requirements. In response, the external auditor confirmed that there was a deadline set out in regulations, but the regulations made provision for deadlines not being met. The head of finance also confirmed this was the case, and that there was no breach, and they were complying with the regulations. In addition, the head of finance informed members that there was a nation-wide problem with the audits and both councils were actually in advance of many other authorities and only a small minority of councils had published their 2021/22 accounts.