Agenda item

James Lake, Chief Accountant, introduced the External Audit Annual Letter, which set out the findings of the external auditors Ernst and Young (EY) from their work over the previous year. Hillingdon was one of only seven London boroughs (of the thirty-three total) who had completed their accounts and audit sign-off by the deadline. EY had issued an unqualified opinion at the previous meeting and confirmed that proper arrangements were in place to secure value for money. In addition, there was reporting consistency within the accounts, and there were no matters which required reporting in terms of public interest or to the Secretary of State. HM  Treasury had now fixed the reporting issue within their Whole Government Accounts which meant EY should now be able to finish this part of the audit; the Teacher's Pension certification had been completed on time, the Housing Benefit Assurance Process had been completed and submitted by the deadline, and the Pooling of the Housing Capital Receipts audit had been started.

EY addressed the Committee, highlighting that as a result of the low number of exceptions and the non-material misstatements that had been identified, the unqualified opinions on both the main audit and the pension fund, and the resolution to the Treasury’s Whole Government Accounts reporting issue, EY was hopeful that they would conclude on Hillingdon’s accounts review by the end of the current week, with the conclusion certificate to follow. Moving forward, work had already begun between EY and Council officers regarding audit work for the year ahead, including planning to overcome challenges regarding COVID-19 and planning deadlines. Regarding fees, agreement had been reached for the payment of the additional audit work carried out by EY. This did not include the proposed PSAA scale fee increase, however where there was an overlap these would be taken into consideration to ensure no double counting.

In response to questions from Members, it was confirmed that the risk relating to the valuation of land and buildings, and the difference in valuation of up to £4.1m, was not considered material in terms of the £12m materiality threshold nor the overall asset valuation of over £1b. 5% of that £12m threshold was the reporting threshold, which would then be reported as part of the 2021/22 balance sheet. Leases were in the process of being identified, as the 2020/21 report would need to reference these in advance of 2021/22.

Members suggested that the Committee should have some involvement in the agreement of the fees to be paid to the auditors, as the Committee’s Terms of Reference included a requirement to ensure value for money. Officers advised that the fees were communicated to the Committee in advance, to enable comments, but agreement was through the PSAA (who consulted on any fee increases) and in line with the rules on what was appropriate for an authority to pay. Regarding potentially amending the Committee’s Terms of Reference to make this clearer, it was agreed that the Chairman would discuss this with Cllr Eginton following the meeting.

RESOLVED:  That the Annual Audit Letter, and the Certifications audit update, be noted.