Report of the Council’s External Auditors, Grant Thornton, giving an overview
of the planned scope and timing of the statutory audit of the final accounts and
the Value for Money work for the financial year 2019/20.
A representative from Grant Thornton presented the report on the External Audit Plan. The Committee was asked to note the significant risks outlined in the report, which had been updated to reflect the additional significant risk of Covid-19. Reference was made to the deadline for the audit opinion, which had been moved to the end of November following the Covid-19 outbreak. A fee variation was also detailed in the report, which was due to the additional work required regarding pensions, Personal Protective Equipment valuation, Covid-19 and the requirement for additional supervision and leadership to meet the Financial Reporting Council’s standards. Members were given the opportunity to ask any questions relating to the report.
A question was raised as to the criteria by which a risk would be considered significant. It was explained that the most significant financial risks were those of a high value that relied on estimates, which could lead to a material misstatement.
Further explanation was requested regarding the risk of financial sustainability identified in the report in relation to the need for an updated Medium Term Financial Strategy (MTFS) and Corporate Plan. The Interim Director of Finance outlined the timeline over the coming months for the development of these documents, emphasising the need for the MTFS to align with the Corporate Plan. Funding gaps within the current MTFS could be partially attributed to forecasts made regarding the Business Rates baseline reset and Fair Funding Review, which were originally due to be implemented in April 2020. Due to the current Covid-19 pandemic, it was likely that the resets would be deferred and the Council would receive a similar sized settlement to previous years for 2021/22. Any changes to the MTFS as a result of the pandemic would be fed into the amended 2020/21 budget process.
Another Member commented on the risk associated with financial sustainability, noting that the impact of Covid-19 on the MTFS and Corporate Plan would need to be adequately assessed using the Council’s Risk Register. A suggestion was given that External Audit be asked to consider the Risk Register within its Value for Money work.
· The Interim Director of Finance to discuss with External Audit the potential to include a review of the Council’s Risk Register within its Value for Money work
One Member referred to the significant risk reported with reference to the pension fund net liability. He expressed concern that as the current contribution amount was based on a valuation made in 2019, there was a risk that the effect of Covid-19 on the stock market could require the Council to increase its pension contributions. It was explained that any requirement for the Council to change its contributions to the pension fund would be factored into the MTFS.
Reference was made to the significant risk identifying the valuation of land and buildings. A Councillor asked how the land at St Martin’s Park, Stamford was assessed and whether there was an increased financial risk due to the impact of Covid-19. It was confirmed that work was continuing to be undertaken to secure potential bidders for the site, but as the Council had already put in place financing to meet the holding costs using the regeneration reserve, there were no budgetary pressures from the site at present.
The Chairman thanked External Audit for its report and confirmed that the Committee had reviewed and noted its contents.