Agenda item

Report of Grant Thornton

5.1       The Committee received a report from the Council’s external Auditors, Grant Thornton, on the key findings arising from their audit of the Council’s 2015-2016 financial statements (Council and Pension Fund).

5.2       The chairman announced that the publication of the papers did not meet the statutory deadline.  These were circulated to the committee at the earliest opportunity once Grant Thornton had completed the necessary work to be able to report to members the findings from the audit of the accounts.  He agreed to accept the report and its appendices as a matter of urgency.

5.3       Paul Dossett summarised the findings for the City Council’s financial statements while Elizabeth Olive summarised the findings for the City of Westminster Pension Fund.  The Auditors expected to issue unqualified audit opinions on both sets of financial statements.

5.4       The Auditors had identified no adjustments affecting the council’s reported financial position. 

5.5       The auditors considered that the Council prepared a good quality set of de-cluttered draft accounts for audit, and the supporting working papers were of a high quality.  Minor improvements and enhancements were recommended to improve the presentation of the financial statements.  The auditors drew attention to a small number of control issues in both the Council and Pension Fund financial statements that included cross entity journals for the Council being posted during 2015-2016.

5.6       The Committee was informed that the Council had proactively managed the risks arising from the managed services contract during the year by carrying out extensive sample testing of the transactions and working with BT to correct data issues and strengthen the controls in the ledger.     

5.7       With regard to the audit approach for the Council’s financial statements, in addition to those risks highlighted in its Audit Plan 2015/16 for the authority the auditors had identified one further significant risk relating to the provision for national non domestic rates (business rates). 

5.8       In respect of value for money, one significant risk, which had been identified in the Audit Plan 2015/16, related to the capital programme business case process. 

5.9       Matters arising from the financial statements audit and the review of the Council’s arrangements for securing economy, efficiency and effectiveness in its use of resources had been discussed with the City Treasurer and the finance team.  A number of recommendations were made by the auditor which were being taken forward by the finance team.

5.10     The Auditor concluded that in all significant aspects the Council had proper arrangements in place to secure value for money in the use of its resources.

5.11     With reference to the issue of materiality, the committee asked why the figure of overall materiality differed in Grant Thornton’s findings report and the Council’s financial statements.  Mr Dossett explained that the measure in the audit findings report was based on Grant Thornton’s judgement of risk.  This included factors such as issues around the managed services programme.  The latter would in part explain the difference in materiality in last year’s audit findings report produced by KPMG.  He explained that the Council’s figure was different as the authority will have come to its own judgement on what the figure should be.

5.11     Paul Dossett informed the committee that following discussions between Grant Thornton and a local elector who had submitted objections to the financial statements for 2012/13 to 2014/15 the objector had agreed to withdraw their objections.  This would enable Grant Thornton to certify the financial statements from those years in the next couple of days.  The committee agreed that there were no material items that it was aware of that would impact on these accounts being signed off.

5.12     RESOLVED: That the report be noted.