Agenda item

Reference was made to the Draft Initial Audit results report circulated to Councillors prior to the meeting. It was agreed that any questions or comments in relation to this report would be forwarded outside of the meeting to James Lake, Chief Accountant or to Tunde Adekoya, Pensions Fund Accountant.

Suresh Patel of External Auditor Ernst and Young provided the Committee with an update on the audit of the 2019/20 Pensions Fund Accounts. It was confirmed that the audit was still in progress.  The audit plan for the 2019/20 accounts had been issued in February 2020; since then EY had had to take into account the impact of the Covid-19 pandemic on the Council’s financial reporting. Members were informed that EY were impressed with how the Finance Team had continued to function in difficult circumstances and thanked them for their assistance to date. It was confirmed that the main impact of Covid-19 in terms of financial reporting had been around property valuations, asset values, investment returns and disclosures around the impact of Covid-19 including ‘going concern.’ The Committee was informed that ‘emphasis of matter’ would be included in the final EY report to aid understanding of the accounts. The deadline for publication of LBH Pensions Fund audited accounts was 30 November 2020.

Larisa Midoni of Ernst and Young highlighted to the Committee some of the key points in the initial audit report. There had been some changes to the risk assessment as a result of Covid-19:

·         Valuation of Investments - the virus had affected pooled property funds and underlying property investments were now subject to the Royal Institute of Chartered Surveyors ‘material uncertainty’ paragraphs in their valuation reports;

·         Disclosures of Going Concern – additional inherent risks had been identified;

·         Changes to the scope of the audit as a result of Covid-19 – EY had undertaken additional enquiries to understand the impact of Covid-19;

·         Changes in materiality – it was considered that the basis and range were still appropriate;

·         Additional audit procedures as a result of Covid-19 – increased scrutiny of information produced by the Entity (IPE);

·         Additional EY consultation requirements concerning the impact on auditor reports – additional consultation processes were still being undertaken.

It was noted that a more detailed status of the audit could be found on page 6 of the EY draft initial audit report. Members were advised that EY aimed to finalise the audit in time for the Audit Committee meeting on 1 October 2020.

In terms of fees, it was confirmed that EY were in discussion with the Section 151 officer about proposals to increase their scale fee. There would also be additional fees in relation to the triennial valuation and internal consultation.

Members sought further clarification regarding the statement on page 19 of the agenda pack ‘balances cannot be determined with certainty, actual results could be materially different from the assumptions and estimates.’ It was confirmed that this was standard wording.

Members agreed the recommendation as set out in the officer’s report.

RESOLVED: That Pensions Committee noted EY’s findings on the audit of the Pensions Fund accounts for 2019/20.