Agenda item
External Audit Plan 2013/14
To receive the External Audit Plan for the period 2013/14 and note how the external auditor will deliver its financial statements audit work for the London Borough of Tower Hamlets and the London Borough of Tower Hamlets Pension Fund and to inform the Committee of the approach to value for money VFM) work for 2013/14.
Minutes:
The Engagement Partner, representing External Auditors KPMG presented the report informing the Committee that key risks would be the focus of the audit work to be undertaken. These areas were discussed in detail at section 4 of the report. Sections 5 and 6 of the report detailed the key financial statements, audit risks and the VFM audit approach.
In response to Members’ questions the following information was provided:
• Concerning risks and audit work relating to Members’ Enquiries (MEs) on the treatment of assets , the Committee was informed that these concerned surplus assets and disposal. The Audit Partner commented that the Council might look to scrutinise this area more generally.
• Concerning risks and audit work fees in relation to MEs, the Committee and was informed that this work was charged in addition to the scale fee. Members were advised that the charges did not include time lapsed between referral and conclusion of investigations but was based on an estimate of the work needed and of the time required to complete any investigations that the auditor considered were needed, based on reviewing the information provided. A Member suggested that, since the duration of works had been estimated, this element might be included into the overall fee. Members were informed that the External Auditors were able to estimate costs for known factors. However other enquiries might arise during the course of such audit work and the effects of these could not be estimated, hence the decision to list fees for MEs separately. It was noted also that, under the current Audit Commission regime , extra audit work was to be itemised separately to the fee and that KPMG was accountable to the Audit Commission for any variation to the scale fees. (The scale fees are set by the Audit Commission for each Council.) A Member further suggested that, in view of the political arrangements at Tower Hamlets, fees for MEs should be incorporated into the overall audit fee. However the cost of abnormal enquiries was not to be a financial disincentive. The Audit Partner advised that it was not possible to provide an estimate but KPMG individually assessed each ME to determine which should or should not be investigated. Because of issues discussed and for other reasons work for audit of MEs were itemised and charged separately.
• Concerning whether an ME investigation might be declined because other organisations where more suited to undertake it, Members were informed that the External Auditor would first consider whether the enquiry fell within the auditor’s remit and also whether the relevant investigative skills and expertise were available within the organisation. Reasons would be given where the Auditor declined to investigate a matter.
• Concerning whether lack of response from a local authority influenced whether an investigation would be taken up, Members were informed that delays did not have much effect on the cost of an investigation since no work was carried out whilst data was awaited.
• Concerning specific cost breakdowns of investigations, the Committee what was informed that the Acting Corporate Director, Resources would provide a written response following the meeting.
• Members were informed that the Audit Act in force in 2014 had no particular impact the auditor’s work.
• A Member complained that that the External Auditor often failed to send a written acknowledgement of receipt of an enquiry letter. The Audit Partner advised that the firm’s normal practice was to give a holding reply pending further information.
• Concerning failure to respond to an ME related to the dismissal of £38,000 for an executive unsolicited letter, the Partner advised that the details of the query would be investigated and a response provided in writing.
RESOLVED
That the report to be noted
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