The Annual Audit Letter for Carlisle City Council

Transcription

1 The Annual Audit Letter for Carlisle City Council Year ended 31 March 2015 October 2015 Jackie Bellard Director T or E jackie.bellard@uk.gt.com Richard McGahon Senior Manager T or E richard.a.mcgahon@uk.gt.com John Cangley Auditor In Charge T E john.d.cangley@uk.gt.com 2015 Grant Thornton UK LLP Annual Audit Letter 2014/15

2 Contents Section Page 1. Key messages 3 Appendices A Key issues and recommendations 5 B Summary of reports and audit fees Grant Thornton UK LLP Annual Audit Letter 2014/15 2

3 Key messages Our Annual Audit Letter summarises the key findings arising from the work that we have carried out at Carlisle City Council ('the Council') for the year ended 31 March The Letter is intended to communicate key messages to the Council and external stakeholders, including members of the public. Our annual work programme, which includes nationally prescribed and locally determined work, has been undertaken in accordance with the Audit Plan that we issued on 27 March 2015 and was conducted in accordance with the Audit Commission's Code of Audit Practice, International Standards on Auditing (UK and Ireland) and other guidance issued by the Audit Commission and Public Sector Audit Appointments Limited. Financial statements audit (including audit opinion) We reported our findings arising from the audit of the financial statements in our Audit Findings Report on 25 September 2015 to the Audit Committee. The key messages reported were: no adjustments affecting the Council's reported financial position one large adjustment for 1.1 million in respect of the accounting treatment for money held in an Escrow Account for future land drainage work as part of an overall land exchange deal. The 1.1 million had been accounted for as capital expenditure but should have been treated as a payment in advance. When the Council is involved in particularly complex one off transactions like this, and where several different departments and external advisors are involved, a summary working paper which documents the background, expert advice and accounting treatment should be prepared a number of other adjustments to improve the presentation and compliance of the financial statements one unadjusted error for 0.29 million which was treated as a provision but our view is that it did not meet the definition of a provision. The Council has not adjusted for this as its view was that if is was not treated as a provision it would have been shown as an earmarked reserve with no effect on the general fund balance. The Council's draft accounts were authorised for issue on 29 May 2015 which was a significant achievement and demonstrates their ability to meet the earlier statutory production of accounts deadline of 31 May which will come into effect for the 2017/18 accounts. To continue their ability to deliver this, and as part of the, de-cluttering of the accounts agenda, the Council had agreed to remove immaterial notes when producing the 2015/16 accounts. This will help reduce the size of the accounts and focus attention on the large figures. We issued an unqualified opinion on the Council's 2014/15 financial statements on 25 September 2015, meeting the deadline set by the Department for Communities and Local Government. Our opinion confirms that the financial statements give a true and fair view of the Council's financial position and of the income and expenditure recorded by the Council Grant Thornton UK LLP Annual Audit Letter 2014/15 3

4 Key messages continued (continued) Value for Money (VfM) conclusion We issued an unqualified VfM conclusion for 2014/15 on 25 September On the basis of our work, and having regard to the guidance on the specified criteria published by the Audit Commission, we are satisfied that in all significant respects the Council put in place proper arrangements to secure economy, efficiency and effectiveness in its use of resources for the year ending 31 March The Council has adequate systems and processes in place to manage financial risks effectively and this has helped it secure a financial position that enables it to continue to operate for the foreseeable future. The Council's General Fund balance at 31 March 2015 was million which meant it reached its target level of 2.6 million earlier than expected and it is expected to be at the Council's set level for the duration of the Medium Term Financial Plan (MTFP). Profiling and delivery of the capital programme has continued to improve in 2014/15 and there has been clear action taken to improve stewardship over contract monitoring arrangements. The Council has had a good record of delivering savings. The re-profiling of future savings has increased the level of cumulative savings required and Members will need to ensure that the agreed savings are delivered on time. There is also scope to review profiling of the 2015/16 revenue budget. Certification of housing benefit grant claim We will certify the Council's 2014/15 housing benefit subsidy claim by the deadline of 30 November Work is ongoing and we will need to issue a qualification letter. Audit fee Our audit fee for 2014/15 was 71,053, excluding VAT which was in line with our planned fee for the year and the same as the fee for the previous year. Further detail is included within appendix B Grant Thornton UK LLP Annual Audit Letter 2014/15 4

5 Appendix A: Key issues and recommendations This appendix summarised the significant recommendations identified during the 2014/15 audit. No. Issue and recommendation Priority Management response/ responsible office/ due date 1. When reviewing the 2014/15 accounts we identified several immaterial notes in the accounts. Removing immaterial notes will help reduce the size of the accounts and focus attention on the large figures. Recommendation: As part of the production of the 2015/16 accounts the Council should consider, as part of the de-cluttering agenda, removing immaterial notes from the accounts. Medium This will be reviewed as part of the 2015/16 accounts with any immaterial notes being removed, in line with the de-cluttering agenda. Responsible office: Financial Services & HR Manager / Chief Accountant Due date: By 30 June There was no summary paper which fully documented the background to the land deal, expert advice obtained or the accounting treatment with reference to the Code or accounting standards. Recommendation: Ensure that for particularly complex one off transactions that there is a summary working paper which clearly documents, with supporting evidence: the background to the transaction including any reports to Council / Executive the transaction itself any relevant revaluations / other expert advice the accounting treatment with reference to the Code and relevant accounting standards Medium Agreed summary working papers will be provided at the commencement of the Audit process. Responsible office: Financial Services & HR Manager / Chief Accountant Due date: By 30 June Grant Thornton UK LLP Annual Audit Letter 2014/15 5

6 Appendix A: Key issues and recommendations (continued) No. Issue and recommendation Priority Management response/ responsible office/ due date 3. The re-profiling of future savings has increased the overall level of cumulative savings required. Recommendation: Members will need to fully understand the future impact of any further changes to savings targets and ensure that there is no slippage against agreed savings targets as this will result in greater savings requirements in future years. Medium The 2016/17 budget process will address any changes to the transformation savings targets in the light of service requirements and the impact of Government announcements on the future of Local Government funding. The Resources Overview and Scrutiny Panel (ROSP) monitors progress against the current savings target on a regular basis. Responsible office: Director of Resources Due date: November / December The profiling of the 2014/15 revenue budget showed that only 43% was expected to be spent by 31 December As revenue expenditure tends to be on more routine areas such as payroll and supplies and services there is a need to assess whether the profiling of the budget matches expected spending plans. Recommendation: Review the profiling of the 2015/16 revenue budget to ensure that it fully reflects expected spending patterns. Medium Reprofiling of revenue budgets is a priority for the finance team in 2015 and improvements to the budget monitoring procedures to inform the decision making process is a continuous process. Responsible office: Financial Services & HR Manager / Chief Accountant / Principal Accountant Due date: By December Grant Thornton UK LLP Annual Audit Letter 2014/15 6

7 Appendix B: Reports issued and fees We confirm below the fees charged for the audit and there were no fees for the provision of non-audit services. Fees for audit services Per Audit plan Actual fees Council audit 71,053 71,053 Housing benefit grant certification fee 18,790 18,790 Total audit fees 89,843 89,843 Our grant certification fee is still an estimate as our work on the Council's Housing benefits subsidy claim is still ongoing and will not be finalised until late November Reports issued Report Date issued Audit Plan March 2015 Audit Findings Report September 2015 Annual Audit Letter October 2015 Certification Report January 2016 (Estimate) 2015 Grant Thornton UK LLP Annual Audit Letter 2014/15 7

8 2015 Grant Thornton UK LLP. All rights reserved. 'Grant Thornton' means Grant Thornton UK LLP, a limited liability partnership. Grant Thornton is a member firm of Grant Thornton International Ltd (Grant Thornton International). References to 'Grant Thornton' are to the brand under which the Grant Thornton member firms operate and refer to one or more member firms, as the context requires. Grant Thornton International and the member firms are not a worldwide partnership. Services are delivered independently by member firms, which are not responsible for the services or activities of one another. Grant Thornton International does not provide services to clients. grant-thornton.co.uk 2015 Grant Thornton UK LLP Annual Audit Letter 2014/15