Agenda item

Formal Response to Audit (ISA 260) Recommendations

Report of the Director of Finance and Commercial Services



The Committee received a report of the Director of Finance and Commercial Services, Ryan Keyworth. The report provided Members with an update on progress to consider and implement Ernst & Young’s prior year recommendations, following the audit of the Council’s 2019/20 and 2020/21 Statement of Accounts.



Ruth Matheson (Finance Manager) explained that each year Ernst & Young (EY) carry out an annual audit of the Council’s statement of accounts and make recommendations (observations) in their Audit Results (ISA 260) report that is reported to Members of the Audit and Standards Committee. Such recommendations were for officers to implement within EY’s suggested timeframes, which EY monitor and regularly update the Committee on the Council’s progress. Ernst & Young presented their 2020/21 Audit Results report to the Audit and Standards Committee on 20 January 2022, which was finalised and reissued alongside EY’s opinion on 1 March 2022. The Audit Results report listed fifteen open observations, both from 2019/20 and 2020/21. The nine open observations relating to 2019/20 remained open at the end of the 2020/21 audit, as EY had reported these at the end of the 2020/21 financial year and acknowledged that officers had little opportunity within the timescales to take action on the recommendations in time for EY to report in 2020/21. It was added that the observations were outlined at Appendix 1 of the report.



Ruth Matheson outlined the observations for 2019/20 and 2020/21 that had the most significant impact on the Council’s accounts. These were as follows: -


  • Property Plant and Equipment
  • School Balances
  • Expenditure/payables cut off


  • Debtors
  • IFRS 16
  • Investment Properties
  • Members of Interests
  • Quality Assurance
  • Leases


Further information was outlined from pages 53 to 62 of the report.



Members of the Committee asked questions and the following responses were provided: -



The Director of Legal and Governance, Gillian Duckworth explained that Members were asked to complete a Declaration of Interests form immediately after being elected. Members should also receive an annual notification, reminding them to review their form. It was added that it was the Members responsibility to inform Officers of any changes throughout the year.



Ruth Matheson explained that some of the recommendations mentioned may re-occur. EY might also make further recommendations to those outlined to keep improving. Ruth Matheson did not believe there was any recommendation outlined that that was of significant weakness, each recommendation was believed to have appropriate measures in place.



Hayley Clark stated that she was assured that the majority of the 15 recommendations outlined would be closed off immediately. She added that there was always the chance of additional recommendations being identified.



The Director of Finance and Commercial Services confirmed that planning had begun for how to deal with the terminations of school PFI contracts.



RESOLVED: That the Audit and Standards Committee noted management’s response on progress made to Ernst & Young’s prior year recommendations.



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