Agenda item

To receive the 2019/20 External Audit Plan from Grant Thornton.

Mark Bartlett, Audit Manager at Grant Thornton, outlined the External Audit Plan for the year ending 31 March 2020.

Mark outlined the scope of the audit and highlighted the key areas of significant risk.

The significant risks identified were:

·      The revenue cycle includes fraudulent transactions – this was rebutted after the auditor concluded there was little evidence of any risk;

·      Management over-ride of controls – this will be evaluated by Grant Thornton;

·      Valuation of land and buildings – this will be evaluated by Grant Thornton; and

·      Valuation of pension fund net liability – this will be evaluated by Grant Thornton

Mark highlighted other risks identified which were the implementation of International Financial Reporting Standards (IFRS) 16 Leases which had been issues but not adopted.  This would be implemented from April 2020 and Mark advised Grant Thornton would evaluate the processes adopted to limit impact.

The committee were updated on the proposed fee variations this year.

Cllr Hyman had registered to speak on this item. He asked why the falsification of figures risk had not been included within the significant risks.  He commented that the falsification of the transport assessment for the Brightwells scheme in Farnham which the Air Quality Officer had identified in 2010 had not been considered and, in his view,  this posed an enormous risk to Farnham and to Waverley’s reputation.

He also commented on the lack of implementation of the European Court of Justices ruling 2018 (Sweetman ruling) which we had to abide to by law and which had cost us a huge sum in appeals.  Cllr Hyman expressed his view that there was an assumption that an assessment for mitigation was in LPP1 but it is not. Cllr Hyman asked that the committee take this forward as he felt we were selling mitigation to developers.

Cllr Floyd-Douglass asked where the Coronavirus sat within this as a risk.  Mark advised it would be the same as Brexit (e.g. non-financial risk).  Graeme Clark assured the committee that senior management were very aware of the operational and strategic risks involved in this.

Peter Vickers commented that members had received a presentation from Zurich not long ago and that there would be another member briefing on risk soon.

Cllr Davidson asked what Grant Thornton had experienced from other local authorities with regard to risks we may encounter.  Mark highlighted the risks around shopping centres as set out in the Value for Money risks in the report.

Cllr Marriott asked Mark if future trends were considered when looking at property valuations and risks.  Mark advised predicted trends were considered.  Cllr Seaborne asked if financial stability was what he was actually meaning.  Mark clarified this by saying they consider how robust the planning for the budget is.

Cllr Seaborne noted that the sentence ‘We will keep you informed of changes to the financial reporting requirements for 2018/19 through on-going discussions and invitations to our technical update workshops’, which had been in last year’s report, was omitted from this years.  Mark assured the committee that they had regular meetings with senior management to update.

Cllr Dear highlighted the implications/risks of the current administration cutting various services as highlighted in the 2020/21 Budget Report to Council.  He advised he would like to see risk assessments done on the various savings proposals put forward by Heads of Service.  Graeme Clark advised the risk assessments were done internally. There were challenges in the budget and the cumulative impact of each saving was a risk. Value for Money O&S would track this.  Management Board had also asked for more frequent and robust monitoring reports.

Cllr Dear felt that a framework around risk assessments was needed.

Tom Horwood thanked the committee for their comments and advised that he had asked the Heads of Service to risk assess when suggesting savings and they had done this, and some savings proposals were not taken forward in the budget.

Cllr Davidson commented that he too shared these concerns and asked whether it was the Audit Committee or Value for Money O&S who would monitor the progress towards the savings.  Graeme Clark advised it was the Executive’s role but that Value for Money O&S would have oversight of the monitoring; the Audit Committee’s role was to monitor the risks of not keeping within budget.

The Committee AGREED to note Grant Thornton’s Audit Plan 2019/20.