Agenda item

The Report and appendices are attached.

Grant Patterson (Grant Thornton) introduced the report, stating that many of the risks identified were consistent with those of previous years with a focus on valuation of pension fund net liability, valuation of land and buildings, and management override of control.

Grant Patterson stated that he was aware that the Authority would be undertaking a re-analysis of its Medium Term Financial Strategy (MTFS) to take account of the impact of COVID-19 as well as any support from central government once details were known.

Grant Patterson advised that the increased fee had been introduced in response to a tightening of auditing standards imposed by the independent regulator, the Financial Reporting Council (FRC). The FRC had raised its expectations for verification of evidence and valuation of assets across the sector; this created an additional obligation for Grant Thornton.

Rob Powell (Strategic Director, Resources) indicated that he was content with this explanation.

Grant Patterson stated that many organisations would be reviewing their ways of working, including office space requirements, in response to the coronavirus crisis. However, prior to the outbreak of the virus, Warwickshire County Council had consistently kept its estate requirements under review; the pandemic had accelerated the transformation in working practices, it was felt that the Authority would continue to use its assets efficiently.

Grant Patterson agreed that the assertion in the ‘Informing the Audit Risk Assessment’ document that “the primary responsibility to prevent and detect fraud rests with both the Audit & Standards Committee and management” was potentially misleading. To clarify, he stated that the three lines of defence against fraud could be prioritised as: (a) processes implemented by management, (b) scrutiny by the Audit and Standards Committee, and (c) inspection by the external auditor.

Chris Norton (Strategy and Commissioning Manager – Treasury, Pension, Audit and Risk) advised that a Fraud Risk Strategy was being developed by the Authority but a date for completion had not been set.

The Chair commented that the changes to ways of working following the introduction of lockdown measures, including increased homeworking and potential exposure to stress, could affect the organisation’s vulnerability to fraud. These areas were worthy of consideration within the proposed Fraud Risk Strategy which he requested be supplied to the Committee for review upon completion.

Paul Clarke (Internal Audit Manager, Delivery Lead) advised that ‘Fraud Awareness Week’ and ‘Do the Right Thing Week’ were likely to be scheduled for November 2020.

Sarah Duxbury (Assistant Director, Governance and Policy) advised that a reporting arrangement was in place to highlight any instances of non-compliance by the Authority to standards dictated by external regulatory bodies. She advised that a formal process would be followed both internally and through executive arrangements to ensure that appropriate action was taken.

Paul Clarke advised that issues raised by regulators were monitored and, depending upon the severity of the breach, communicated to the Audit and Standards Committee within an Internal Audit Report.

The Chair highlighted the additional obligations placed upon services by the coronavirus crisis, alongside funding uncertainties, and the effect this could have upon the Authority as a going concern. He referred to Northamptonshire County Council’s insolvency crisis in 2018 and raised a note of caution.

Grant Patterson stated that an assessment of the Council’s reserves had not uncovered any serious concerns. He commented that the proposed reprofiling of the MTFS would provide clarity, although uncertainties were present in respect of measures proposed by the government. He added that he did not have any specific serious concerns to report apart from the residual Value for Money risks outlined in the Report.

Resolved:

That the Audit and Standards Committee endorses:

1) The Annual Audit Plan for 2019/20 from the External Auditors;

2) The Audit Fee Letter for 2019/20; and

3) The Audit Risk Assessment for 2019/20.