Agenda item

To inform Members of KPMG progress in auditing the financial statements and the opinion KPMG propose to give to the financial statements.

The Committee considered a report (Agenda Item 4) concerning the Council’s external auditor’s (KPMG) progress in auditing the financial statements and the opinion KPMG proposed to give to the Financial Statements.

Joseph Holmes introduced Grant Slessor and Andy Sayer from KPMG. In introducing the item Officers noted that this item was intrinsically linked with the Council’s Financial Statements 2011-12. In accordance with the Accounts and Audit Regulations the Governance and Audit Committee were being asked to consider approving the Council’s financial statements after hearing the external auditor’s opinion. KPMG’s audit had been undertaken between July and September of this year

The Chief Accountant noted that KPMG had concluded that their audit opinion was unqualified which was good news for the Council. Andy Sayer highlighted some key issues set out in the report:

·        KPMG anticipated issuing an unqualified audit opinion by the 30 September 2012;

·        Two areas still needed to be completed namely: confirmation from the RBWM Pension Fund actuary that the longevity scheme in the pension scheme assets was appropriate and the Council’s Whole of Government Accounts submission had to be reviewed;

·        Five audit adjustments had been identified, the details were set out in Appendix Three to the report, but these adjustments would not impact on the general fund;

·        Two key risks (related to controls around finances and implementation of accounting changes associated with the new Code) were identified in the External Audit Plan 2011/12 and KPMG was satisfied that in respect of both the appropriate actions had been taken by the Council;

·        They had noted an improvement in the quality of the accounts and supporting working papers;

·        One recommendation had been issued in respect of the 2011/12 audit namely : ‘the Council to seek to fully reconcile their asset register with underlying records in order to confirm all remaining assets exist;;

·        The auditors noted that the Council was undertaking an exercise to ensure that the new asset management system was fully reconciled to the Financial Asset Register by the end of the financial year;

·        The declaration of independence and objectivity of the external auditors was set out in appendix four;

·        The Chairman of the Governance and Audit Committee and the Head of Finance were required to sign off the management representation letter and a draft copy of the letter was attached as appendix five to the report.

Councillor Quentin Webb noted that, although the 2011/12 ISA 260 report stated that there had been two recommendations in the 2010/11 report, on looking back he had noted a third recommendation namely ‘The Council should develop a formal structured process for preparing this note to ensure that all relevant accounts are considered with regard to whether they could be financial instruments.’ The external auditors responded that the financial instruments had been considered and therefore they were implicitly clear but he would ensure that reference was made to this in their final report.

Members thanked KPMG for the clear report and thanked Officers and KPMG for the work they had undertaken in undertaking the audit.

RESOLVED that the report be noted.