Agenda item

To consider the external auditors’ Audit Letter 2019/20. 

39.1          Attention was drawn to Grant Thornton’s annual audit letter for 2019/20, circulated at Pages No. 13-27, which summarised the key findings arising from the work that had been carried out for the year ended 31 March 2020. Members were asked to consider the annual audit letter.  

39.2          The representative from Grant Thornton explained that the report was provided annually following the conclusion of all audit work and summarised the work taken in response to the audit opinion, the majority of the report covered things that had already been presented to the Committee but she made particular reference to Page No. 15 which set out the key elements of the work of external audit including materiality; financial statements opinion; whole of government accounts; use of statutory powers; value for money arrangements; and certification. Pages No. 17-20 detailed the significant risks identified for Tewkesbury Borough Council and the work done against those. Pages No. 23 and 24 covered the value for money risk reporting. Pages No. 25 and 26 confirmed the final proposed fees for audit which included an additional amount which had been in the audit plan, the majority of which was due to work undertaken as a direct result of the impact of the COVID-19 Pandemic. There had also been additional technical work for two adjustments that had been identified in the accounts and the additional fee for that recognised the time taken to undertake the work and consult with colleagues where necessary.

39.3          The Chair thanked the representative for her report. He appreciated the extra work that had been undertaken throughout this difficult year and that additional costs had been kept as low as possible. In terms of ‘raising the bar’, a Member questioned whether this was set by materiality and if that had not changed why the underlying amount of work had changed. In addition, he questioned whether something unexpected had been found in the pensions valuation audit. In response, the Grant Thornton representative explained that raising the bar was something that had been at the forefront of auditors minds; the Financial Reporting Council (FRC) had reviewed the work Grant Thornton did and had found that whilst it provided safe opinions there was more that could be done. The work was not specifically set just around materiality but, whilst that may not have changed, the methods by which information was tested had changed so there were additional elements to be taken into account. Greater testing provided more assurance to the Council. In terms of pensions work, the McCloud judgement had put in additional liabilities to pensions and that work was above what had been involved when the scale fee had been submitted – again, this followed FRC recommendations. The scale fees were set a long time ago and this was one of the reasons the Redmond Review had been looking at audit fees and ensuring they actually covered the resources which were now needed to undertake audits.

39.4          In response to a query as to whether the additional £7,000 in external audit fees was reasonable, the Head of Finance and Asset Management advised that, in the circumstances, he did feel they were reasonable and in fact they had been greatly reduced by Grant Thornton.

39.5          Accordingly, it was

                 RESOLVED           That the Grant Thornton Annual Audit Letter 2019/20 be                                       NOTED.