Agenda item

Report of Head of Financial Services

Committee received the report of the Head of Financial Services to inform and seek the Committee’s comments on the External Auditor’s Plan for the Audit of the 2011/12 Accounts and to advise the Committee of the Auditor’s Certification of Grant Claims and Returns Report 2010/11.

Richard Lee of KPMG LLP, the Council’s External Auditors, told Members that the Certification of Grant Claims and Returns Report had been produced during the 2010/11 audit and was a statutory document that summarised the results of work on the certification of the Council’s 2010/11 grant claims and returns.

Referring to the External Audit Plan 2011/12, Members were advised that there were four key stages in the financial statements audit process.  Planning was the most important stage, where key audit risks were drawn out.  Three significant risks had been identified. 

Firstly, it would be more difficult for many Authorities to deliver savings in a way that secured longer term financial and operational sustainability. 

Secondly, the 2011/12 Local Government Accounting Code of Practice included a number of accounting changes, which the Authority needed to review and appropriately address in its 2011/12 financial statement, including a new requirement to carry heritage assets at valuation.

Thirdly, Members had taken the decision to review the current lease arrangements for Lancaster Market, with a view to negotiating a surrender of the long term lease from Allied (Lancaster) Limited.  The Council needed to understand the implications of surrendering the lease from a financial statements and financing perspective and regarding the demonstration of value for money.

Richard Lee reported that to meet the statutory responsibilities relating to economy, efficiency and effectiveness, auditors were required to plan their work based on consideration of the significant risks of giving a wrong conclusion (audit risk) and to carry out sufficient work to give a sound Value for Money (VfM) conclusion.  The specified criteria were that the Council had proper arrangements in place for securing financial resilience and for challenging how it securedeconomy, efficiency and effectiveness.

Members then asked some questions in connection with Lancaster Market.

Steve Clark, Engagement Lead, advised it was KPMG’s role to review the Council’s proposals for the Market to see whether they demonstrated an appropriate use of the Council’s resources to inform the VfM conclusion, and to review the proposed accounting treatment to ensure it was in line with the relevant accounting standards and the Code of Practice.  The three distinct issues for KPMG in relation to Lancaster Market were the above mentioned accounting treatment, which may impact on affordability, the level of compensation to market traders, and advice gained on the reasonableness of any head lease surrender premium.  He also offered to attend any wider Council meeting when further information was known, to share his views with Members to inform their decision-making.

The Chairman thanked Richard Lee for presenting the reports and Steve Clark for his advice.

Resolved unanimously:

That the External Auditor’s Audit Plan for 2011/12 and the Certification of Grant Claims and Returns 2010/11 report be noted.