Agenda item

Grant Thornton to present the Committee with the External Audit Plan for 2015-16. (Report to follow prior to the meeting).

The Committee was presented with the latest draft version of the Grant Thornton External Audit Plan for the Council for 2015/16 which gave an overview of the planned scope and timing of the audit.

Iain Murray described the major challenges and opportunities facing the Council and key sector developments that would need to be considered. He also summarised the significant potential risks identified in the Plan.

In completing his summary of the Plan, Iain Murray explained that the Local Audit & Accountability Act 2014 and the National Audit Office Code of Audit Practice required them to consider whether the Council had put in place proper arrangements for securing economy, efficiency and effectiveness in its use of resources. This was known as the `Value for Money ` conclusion.

The guidance identified that for local government bodies, auditors were required to give a conclusion on whether the proper arrangements had been put in place.

Councillor John Williamson argued that there were risks that had not been included that should be and that the aims of the new corporate plan were vague, subjective and a wish list. As a result, Councillor Williamson felt the stated aims of the draft Plan could not be achieved as there were no measurable targets.

During the discussion, the Committee requested an update on when they will be able to view the Shottermill Recreation Ground and Ewart Bequest Trust accounts. Members were advised that due to scheduling differences between the Group and Waverley accounts, the timings of when the Committee would be able to scrutinise them was different. It was agreed that Members would be provided with a schedule to enable them to plan forward to ensure that they meet agreed deadlines for approving accounts.

Members also asked about the concept of `materiality` and were advised that in performing their audit, Grant Thornton applied the concept following the requirements of the `International Standard on Auditing (UK & Ireland) (ISA) 320: Materiality in Planning and Performing an Audit`. The standard states that `misstatements, including omissions, are considered to be material if they, individually or in the aggregate, could reasonably be expected to influence the economic decisions of users taken on the basis of the financial statements`.

Grant Thornton had determined materiality for the statements as a whole proportion of Waverley’s gross revenue expenditure. For the purposes of planning the audit, they had determined the Council’s overall materiality to be £1,598k, equating to 2% of the prior year gross revenue expenditure. Members that 2% was an industry wide standard and that only substantial errors were considered material. In the case of the Council, this meant that anything under £80k would not be considered material.

The Committee was advised that ISA 320 also required Grant Thornton to determine separate, lower, materiality levels where there were `particular classes of transactions, account balances or disclosures for which misstatements of lesser amounts then materiality for the financial statements as a whole could reasonably be expected to influence the economic decisions of users`. Grant Thornton had not identified any items where separate materiality levels would have been appropriate.

RESOLVED that the Committee notes the progress for the External Audit Plan 15/16.