Agenda item

External Audit Fee Letter and Plan for 2021/22

To receive the report of Grant Thornton


The External Auditors presented the Audit Plan for 2021/22 as there would be no Audit Fee Letter this year.   The Plan picked upon past papers that had come before Committee, what were the risks and how the External Auditors could help Members to understand the estimates as well as the context of the audit, the draft Accounts and the Councils strong financial performance against the backdrop of the pandemic.  Also reported were the changes in relation to grants, the value for money (vfm) approach together with an overview of the Council’s finance in order to identify any significant weaknesses.  Whilst External Audit had focussed holistically on governance and financial stability, work would be undertaken on governance arrangements, financial stability, partnership working, efficiency and performance and this was a much broader context.  Also reported was the impact of the covid 19 pandemic in relation to home working, the emphasis on matter and valuation of property.  The valuation of the markets had moved following the concerns that last year the markets were uncertain.   A summary of the plan gave details with regard to NuPlace Group Accounts and the Group Audit and consolidated accounts, management override controls and the consolidation process across the Council as a whole, Governance, Valuation of land and buildings, net Pension Fund liability and the significant risks and fraud recognition.  Although the plan was similar to that of the last financial year, materiality measure had moved and the benchmark would differ.  Going forward there would be two areas of focus for vfm which would be financial sustainability and governance arrangements together with the group audit on investment properties and work around estimates. Other matters highlighted were the rebuttal around expenditure and the going concern, the change to public sector audits around service provision and financial sustainability.   Related parties were making progress and any recommendations would be picked up at end of year.  The audit timetable would run May to July and would be brought back to Committee in September which would contain information in relation to the vfm, and the Annual Audit Report would replace the Audit Letter after September.  There was a significant fee variation proposed driven by the increased requirements on auditors due to the raising of the bar for the quality of the audits in relation to pensions and PPE, the changes with regard to vfm and increasing work around estimates.  It was suggested that a 60% fee increase was made across the country in line with the PSAA scale fee and this had been accepted by the Finance Team subject to a review by the PSAA.  Non-Audit services such a certification of claims and returns, teachers’ pensions and housing benefits subsidiary may need to be added to the Committee’s Terms of Reference for approval.


During the debate some Members raised queries regarding the extra work on vfm and the significant fee increase and if this was the same for all councils.  Other Members asked if the increase was linked to inflation and that this large increase may be questioned by the public. 


The External Auditors confirmed to Members that here had been a change to the Codes of Audit Practice and more information was needed for the public to understand what work was being undertaken and to analyse any cause for concern.  There had been a more holistic view during the year and the Council had achieved good CQC scores for Adult Social Care but that the External Auditors had to attend more meetings, undertake additional benchmarking and drive performance metrics.  There had also been increased engagement at a senior level and at a greater depth which takes more time and incurred additional costs.  This increase was consistent across all of their client base.   Auditors were regulated and since the original contract had been let the regulatory regime had been changed to a scoring system and incurred additional work to satisfy regulators and demonstrate good accounting standards including estimates and assumptions and going forward looking closely at loans, credit losses and the changes around vfm.


The Director: Finance and Human Resources informed Members that although this was a fairly significant increase discussions had taken place and due to the increase of work around the quality of audits and the Redland Review the fee was still less than it had been in previous years and it was hoped some additional funding would come forward to offset the fee.

Supporting documents: