Penair School. Audit Discussion Memorandum

Transcription

1 Penair School Audit Discussion Memorandum For the year ended 31 August 2016

2 Contents 1 Introduction 1 2 Issues arising from audit Audit findings Management report points 6

3 1 Introduction 1.1 Scope The scope of our work has been designed primarily to enable us to form an opinion on the financial statements of the academy. Our work has been carried out in accordance with relevant legislation and auditing standards. 1.2 Audit status We have completed the fieldwork and review stages of the audit of the financial statements of Penair School for the year ended 31 August On the basis of our audit work our audit report will not be qualified in any respect. 1.3 Assurance review on regularity We have completed the assurance review on regularity for Penair School for the year ended 31 August On the basis of our work no concerns will be raised. 1.4 Acknowledgement We would like to take this opportunity to thank Sue Bunt, Guy Chappell and all other staff for their cooperation and assistance during our audit. 1

4 2 Issues arising from audit 2.1 Pension schemes Local Government Pension Scheme The Local Government Pension Scheme has been treated as a defined benefit scheme and therefore the accounts include the relevant disclosures as required by Financial Reporting Standard 102. As a result of the actuarial report carried out by Hymans Robertson LLP on behalf of the academy there is a 2,467,000 deficit included in restricted general reserves. The deficit brought forward at 1 September 2015 was 1,303,000. In accordance with the latest EFA guidance, an additional paragraph has been included in Note 19 Pension and similar obligations to reflect the Department for Education s guarantee regarding any local government pension scheme deficit that may exist if the academy closes Teachers Pension Scheme The Teachers Pension Scheme has been treated as a defined contribution scheme by the Financial Reporting Standard 102 and in accordance with the Academies Account Direction 2015/16 and EFA guidance. 2.2 Safeguarding of assets It was brought to our attention in the 2014 audit that the safeguarding procedures for computers and equipment required tightening as several items of equipment could not be located including IT equipment. The introduction of the School Asset Manager software in 2015 has provided more information on IT equipment. We understand that this is to be fully rolled out in 2016/17. This has now been rolled out. 2.3 Catering income and expenditure On the basis that some of the catering income generated by the School is included within unrestricted funds (Adult income and external catering), the School should consider a fair way of allocating costs between the above activities and the regular catering service to pupils. Costs have been allocated based on the weighting between unrestricted and restricted catering income. 2.4 Ofsted report Need to improve the school has two years in which to achieve a good rating in order to avoid additional measures being imposed. In May 2016 the School received a monitoring inspection visit which concluded that the School is taking action to improve. 2

5 2 Issues arising from audit (continued) 2.5 Going concern The budget set for the next three years forecasts a surplus of 162k in 2016/17, and significant deficits in 2017/18 and 2018/19 that would result in a net deficit reserves position overall. In approving the financial statements the trustees need to be content that the budget can be achieved or improved on, and in the event of a shortfall that adequate reserves are held to fund any deficit in the short term. 2.6 Pupil numbers In light of the above point on the budget set, going forward the School needs to consider how it is going to break even in the face of potentially declining pupil numbers which will have a detrimental impact on funding in years to come. From the budget provided pupil numbers are forecast to be 880 in 2017/18 and 879 in 2018/19. What steps are being taken to increase pupil numbers. Plans to address falling numbers include the School s PR strategy and its development of closer ties with primaries to encourage pupils to feed through to the School. 3

6 3 Audit findings The purpose of this section is to bring to your attention the findings from the recent audit. We appreciate that you will already be aware of the majority of the matters contained in this section; however, we are required by auditing standards to formally communicate them to you. Modifications to the audit report Based on our audit work carried out, we intend to issue an unqualified report. Unadjusted misstatements There were no material unadjusted misstatements identified during the audit. Accounting systems and internal controls Our audit work is carried out using mainly substantive procedures. We are unable to provide a comprehensive list of weaknesses that may exist in the accounting and control systems, or of all the possible improvements that could be made. We bring to your attention (see management report points, Section 6) only those matters that have been identified as a result of our performed audit procedures. Qualitative aspects of accounting policies and practices and financial reporting During the course of our audit we considered the application of the requirements of accounting standards, generally accepted accounting principles, the Statement of Recommended Practice Accounting and Reporting by Charities and the Academies Accounts Direction 2015/16 in the financial reporting process. We confirm that the above have been appropriately applied. There were no disagreements with management about matters that individually or in aggregate could be significant to the financial statements or the audit report. Independence, integrity and objectivity of the audit engagement partner and audit staff We provide accounting and taxation services to the company in addition to acting as auditors. We wish to confirm to you that in our opinion the provision of such services does not affect our independence as the additional services provided are of a routine compliance nature and the Board takes any decisions where judgement is required. The firm and the audit engagement team have therefore complied with relevant ethical requirements concerning independence. The overall assessment of threats and safeguards concluded that there are no relationships which bear on the independence, integrity and objectivity of the audit engagement partner and audit staff. As Robinson Reed Layton also provide accountancy services, different teams have been involved in the audit and accountancy work. There was a review by a second partner. Approach and scope of the audit There were no difficulties encountered or limitations on or additional requirements to the approach and scope of our audit. 4

7 3 Audit findings (continued) Material Risks and exposures There were no material risks and exposures such as pending litigation, which are required to have been disclosed in the financial statements which have not been so disclosed. Letter of representation Please see our letter of representation which should be signed at the same time the accounts are approved. Other relevant matters relating to the audit The purpose of the audit was to enable us to express an opinion on the financial statements. The audit included consideration of internal control relevant to the preparation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purposes of expressing an opinion of the effectiveness of internal control. The matters reported in this document are limited to those deficiencies that the auditor has identified during the audit and that the auditor has concluded are of sufficient importance to merit being reported to those charged with governance. 5

8 4 Management report points Arising in 2016: 4.1 Transparent recording of Governor authorisation or orders/projects It is not clear from a review of the minutes that approval was given for the awarding of contracts for both CIF funded projects, whilst it is clear that the Business & Enterprise Committee discussed the project, it was unclear that they formally approved the appointment of project managers/final contractors. Noted, the Governors did discuss and authorise the award of the contract. Going forward the minutes will more clearly document these types of decisions. 4.2 Credit control With the exception of the EFA balance in trade debtors, the remaining 9,718 had been unpaid for more than 91 days at the time of the audit. We are aware that there have been staffing issues in the finance team that have prevented these matters from being chased. The School will seek to recover these balances. Going forward invoices will be raised in advance for the use of school facilities. 4.3 Payroll Relatively minor differences were noted on the monthly payroll reconciliations, these being differences between the amounts of deductions made from payslip/payments made through EDENRED for childcare vouchers. This is being looked into by the finance team and LFS technician. 4.4 CIF Projects Please provide a copy of the final return made to the EFA for the 240, /16 CIF funding received and spent during the year. This should be submitted in the 2016 calendar year. 4.5 Authorisation of Cheques To provide an audit trail for us when reviewing cheque payments, we recommend that the FMS payment slip associated with the cheque is signed at the same time that the cheque is signed. Noted, this will be done going forward. 6