the audit plan, including interim findings, for rochdale...

© 2015 Grant Thornton UK LLP | Audit Plan 2014-15

The Audit Plan, including interim findings, for

Rochdale Borough Council

Year ended 31 March 2015

29 April 2015

Graham NunnsEngagement LeadT 0113 200 2538E [email protected]

Gareth MillsEngagement ManagerT 0113 200 2535E [email protected]

Thomas MulloyEngagement Assistant ManagerE [email protected]

© 2015 Grant Thornton UK LLP | Audit Plan 2014-15 2

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As auditors we are responsible for performing the audit, in accordance with the Audit Commission's Audit Code of Practice and International Standards on Auditing (UK &

Ireland), which is directed towards forming and expressing an opinion on the financial statements that have been prepared by management with the oversight of those

charged with governance. The audit of the financial statements does not relieve management or those charged with governance of their responsibilities for the preparation

of the financial statements.

This Audit Plan highlights the key elements of our proposed audit strategy for the benefit of those charged with governance, as required by International Standard on

Auditing (UK & Ireland) 260. Its contents have been discussed with management. The Audit Findings report will be issued prior to approval of the financial statements and

will present our significant findings and other matters arising from the audit.

We look forward to working with you during the course of the audit.

Yours faithfully,

Grant Thornton UK LLP

Grant Thornton UK LLP

4 Hardman SquareSpinningfields

ManchesterM3 3EB

T +44 (0)161-953-6900

www.grant-thornton.co.uk29 April 2015

Audit Plan for Rochdale Borough Council for the year ending 31 March 2015

Chair and Members of the Audit & Risk Management Committee

Rochdale Borough Council

Number One Riverside

Smith Street

Rochdale

OL16 1XU


Contents

Section

1. Understanding your business 4

2. Developments relevant to your business and the audit 5

3. Our audit approach 6

4. Significant risks identified 7

5. Other risks 8

6. Value for Money Conclusion 10

7. Results of interim work 11

8. Key dates 15

9. Fees and independence 16

10. Communication of audit matters with those charged with governance 17

Appendix

A. Action Plan 19

The contents of this report relate only to the matters which have come to our attention,

which we believe need to be reported to you as part of our audit process. It is not a

comprehensive record of all the relevant matters, which may be subject to change, and

in particular we cannot be held responsible to you for reporting all of the risks which

may affect the Council or any weaknesses in your internal controls. This report has

been prepared solely for your benefit and should not be quoted in whole or in part

without our prior written consent. We do not accept any responsibility for any loss

occasioned to any third party acting, or refraining from acting on the basis of the

content of this report, as this report was not prepared for, nor intended for, any other

purpose.

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Understanding your business

Challenges / Opportunities

1. Children's Services

� An OFSTED judgement in 2014 assessed Children's Services and the effectiveness of the local safeguarding children board as 'requiring improvement'

� The Council continues to work towards addressing the issues set out in the inspection report, published in December 2014.

2. Financial Pressures

• The Council faces a challenging financial situation in future years. The Council has reported a funding gap of £37m for the two years 2016-17 (£21m) and 2017-18 (£16m)

• The Council continues to review how it provides its services to identify potential areas for further savings.

3. Rochdale Town Centre Development

� Having completed the Number One Riverside and the new transport interchange, the Council is now collaborating with Rochdale Development Agency to plan a new retail and leisure development in Rochdale Town Centre.

4. LG Finance Settlement

• The local government spending settlement showed local authorities are facing a cash reduction in their spending power of 6% in 2015-16

• At the same time local authorities are facing increasing demands for school places and adult social care services.

5. Collaborative working with the NHS

• Development of new working arrangements to deliver the Better Care Fund

• NHS emergency care overload and the re-emergence of bed-blocking linked to adult social care capacity.

Our response

� We will assess the progress made by the Council to address the issues raised by the inspection as part of our work to inform our Value for Money Conclusion

� We will complete a review of the Council's financial resilience and report our findings back to the Audit and Risk Management Committee in September 2015.

� We will consider your Medium Term Financial Plan and financial strategy as part of our work on your arrangements for financial resilience.

� We will discuss your plans in these areas through our regular meetings with senior management and report to those charged with governance, where appropriate.

In planning our audit we need to understand the challenges and opportunities the Council is facing. We set out a summary of our understanding below.

• We will continue to monitor the town centre redevelopment to ensure that transactions are properly accounted for and consider any relevant implications for our Value for Money Conclusion.

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6. Impact of Greater Manchester devolution

• In November 2014, the Coalition Government together with the Greater Manchester authorities signed the devolution agreement

• In addition to a directly elected mayor, there will be transfers of powers over transport, housing and jobs.

� We will discuss the developing impact of the devolution deal with senior officers at the Council, including the accounting and governance issues arising from the agreement.


Developments relevant to your business and the auditIn planning our audit we also consider the impact of key developments in the sector and take account of national audit requirements as set out in the Code of Audit Practice

('the code') and associated guidance.

Developments and other requirements

1.Financial reporting

� Changes to the CIPFA Code of Practice (the Code)

� Possible changes to the recognition of school land and buildings on local authority balance sheets

� Potential impact of the adoption of new group accounting standards (IFRS 10,11 and 12).

2. Legislation

� Local Government Finance settlement

3. Corporate governance

� Annual Governance Statement (AGS)

� Explanatory Foreword

4. Better Care Fund

� Better Care Fund (BCF) plans and the associated pooled budgets will be operational from 1 April 2015

5. Financial Pressures

� Managing service provision with less resource

� Progress against savings plans.

6. Other requirements

� The Council is required to submit a Whole of Government accounts pack on which we provide an audit opinion

� The Council completes grant claims and returns on which audit certification is required.

Our response

We will ensure that:

� the Council complies with the requirements of the CIPFA Code of Practice through discussions with management and our substantive testing

� schools are accounted for appropriately and in line with current accounting guidance

� the Council reviews its group boundary and any impact is appropriately recognised in accordance with the Code and any joint arrangements are accounted for correctly.

� We will discuss the impact of the legislative changes with the Council through our regular meetings with senior management and those charged with governance.

� We will review the arrangements the Council has in place for the production of the AGS

� We will review the AGS and the Explanatory Foreword to consider whether they are consistent with our knowledge of the Council.

� We will follow up our previous year's review of the progress being made on Rochdale's BCF and will carry out further work, if required.

� We will review the Council's performance against the 2014-15 budget, including consideration of performance against the savings plan

� We will undertake a review of Financial Resilience as part of our VFM Conclusion.

� We will carry out work on the WGA pack in accordance with requirements to ensure this is concluded by the national deadline

� We will certify the housing benefit subsidy claim in accordance with the requirements specified by Public Sector Audit Appointments Ltd. This company will take over the Audit Commission's responsibilities for housing benefit grant certification from 1 April 2015.

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© 2015 Grant Thornton UK LLP | Audit Plan 2014-15 6

Our audit approach

� Understanding the environment and the entity

� Understanding management's focus and areas of concern

� Evaluating the preliminary financial results for the year and comparison with budgets

� Reviewing the design and implementation of the internal financial control systems to the extent that they have a bearing on the risk areas

Update our understanding of the Council and key events in the year

Develop an assessment of risks and agree with management

� Consider material balances and assess the risk associated with these balances

� Assess risks as either "significant risks" or "Other risks" and develop an appropriate audit approach

� Report risk assessments and planned audit approach to those charged with governance through this Audit Plan

Complete audit testing, focussing on areas of higher audit risk

� Complete audit testing, including use of analytical review procedures and tests of detail as appropriate for the level of assessed risk

� Report any issues or proposed adjustments to management as identified

� Reassess the risk assessment if significant audit issues are identified

Our audit approach is based on an assessment of the audit risk relevant to the individual elements of the financial statements. We focus much of our audit effort on areas

that we deem to be of highest risk of material misstatement. The diagram below summarises our overall audit approach and the following pages cover significant and

Other risk areas identified and our planned audit approach to each of these areas.

Completion and reporting

� Report findings to those charged with governance through the Audit Findings report and present this to the Audit and Risk Management Committee

� Perform a review of the financial statements and ensure compliance with relevant accounting guidelines and disclosure requirements

� Review post balance sheet events right up to the date the financial statements are approved

Internal auditWe review the work performed by Internal Audit during the year to assess whether the outcome of this work highlights any additional risk areas for our audit.

MaterialityAn item would be considered to be material to the financial statements if, through its omission or non-disclosure, the financial statements would no longer show a true and fair view.

Materiality is set at the outset of planning to ensure that an appropriate level of audit work is planned. It is then used throughout the audit process in order to assess the impact of any item on the financial statements.

Any identified errors or differences greater than £250k (the NAO's threshold for Whole of Government Accounts review) will be recorded on a schedule of potential misstatements.


Significant risks identified

'Significant risks often relate to significant non-routine transactions and judgemental matters. Non-routine transactions are transactions that are unusual, either due to size or

nature, and that therefore occur infrequently. Judgemental matters may include the development of accounting estimates for which there is significant measurement

uncertainty' (ISA 315).

In this section we outline the significant risk of material misstatement which we have identified.

Significant risk Description Substantive audit procedures

Management over-ride of controls Under ISA 240 the presumption that the risk of management over-ride of controls is present in all entities.

Work completed to date:

� Preliminary review of proposed accounting estimates, judgements and decisions made by management to date

� Testing of 11 months of 'large' and 'unusual' journal entries

� Preliminary review of unusual significant transactions

� Preliminary review of accounting proposals including schools accounting treatment

Further work planned:

� Final review of accounting estimates, judgments and decisions made by management

� Testing of remaining month and year end adjustment journal entries

� Updated review of unusual significant transactions.

Under ISA 240 there is also a presumed significant risk that revenue may be misstated due to the improper recognition of revenue. Having considered the risk factors

set out in ISA240 and the nature of the revenue streams at the Council, we have determined that the risk of fraud is not significant because there is little incentive to

manipulate revenue recognition and opportunities to significantly manipulate revenue recognition are very limited in local government.

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Other risks identifiedThe auditor should evaluate the design and determine the implementation of the entity's controls, including relevant control activities, over those risks for which, in the

auditor's judgement, it is not possible or practicable to reduce the risks of material misstatement at the assertion level to an acceptably low level with audit evidence obtained

only from substantive procedures (ISA 315).

In this section we outline the other risks of material misstatement which we have identified as a result of our planning.

Other risks Description Audit Approach

Operating expenses Creditors understated or not recorded in thecorrect period (Operating expenses understated)


� Updated our understanding and documentation of the accounting system processes and key controls

� Walkthrough of the key controls to determine whether controls are designed effectively


� Substantive testing of sample of operating expenses and year end payables / accruals to source documents to ensure validspend and appropriate categorisation within net cost of services headings in the comprehensive income and expenditure statement.

Employee remuneration

Employee remuneration accruals understated(Payroll costs understated)




� we have tested a sample of payroll costs from the first ten months of the year to gain assurance that employees have been remunerated at the correct rates during 2014-15. No issues were identified.


� Testing monthly payroll reconciliations to confirm that payroll totals are accurately and completely recorded in the general ledger

� Substantive testing of sample of employee remuneration for the remaining two months, to confirm that employees exist, are paid correctly and are recorded in the general ledger. The testing will include enhancements and employer contributions.

Welfare Expenditure Welfare benefits improperly computed (Welfare benefit expenditure is misstated)





� Substantive testing of welfare benefits in accordance with work required for the Council's Housing Benefit (BEN01) claim and review of controls to reconcile both the financial ledger and housing benefit systems.

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Other risks identified cont'dOther risks Description Audit Approach

Accounting for Schools The Council is reviewing its accounting for school buildings in response to CIPFA's LAAPBulletin 101.

Property Plant and Equipment may be understated or overstated.


Regular discussions with senior finance staff on preparations for:• obtaining additional information from bodies such as local Trustee and Dioceses• exercising of judgement over the recognition of school buildings; and, where relevant:• obtaining financial valuations of those buildings to be recognised in the Council's financial statements


� Review of the Council's finalised schools accounting judgements and proposed schools accounting treatment made by management

� A summary of our audit conclusions on the Council's schools accounting treatment will be included in our Audit Findings (ISA260) Report in September 2015.

Other material balances and transactions

Under the International Standards for Auditing, "irrespective of the assessed risks of material misstatement, the auditor shall design and perform substantive procedures

for each material class of transactions, account balance, and disclosure". All other material balances will therefore be audited, however, the procedures will not be as

extensive as the procedures adopted for "Significant" and "Reasonably possible risks". These would include:

• Property, Plant and Equipment

• Investment Property

• Investments

• Long Term and Short Term Debtors

• Cash and Cash Equivalents

• Borrowing and other liabilities

• Council Tax

• Business Rates

• Grants Revenue

• Other Income

• Related Party Transactions

• Provisions

Other Audit responsibilities:

� We will undertake work to satisfy ourselves that disclosures made in the Annual Governance Statement are appropriate

� We will carry out work on the Whole of Government Accounts pack in accordance with requirements

� We will certify the housing benefit subsidy claim in accordance with the requirements specified by Public Sector Audit Appointments Ltd.

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Value for Money Conclusion

Value for Money

The Code requires us to issue a conclusion on whether the Council has put in place proper arrangements for securing economy, efficiency and effectiveness in its use of resources. This is known as the Value for Money (VFM) conclusion.

Our VFM conclusion is based on the following criteria specified by the Audit Commission:

Interim VFM work to date

We have undertaken an initial risk assessment to identify areas of risk to our VFMconclusion. We will undertake work in the following areas to address the risks identified:

• update our review of the Council's financial position against our financial resilience assessment criteria

• consider the Council's savings plans for 2015-16 to 2017-18 and review arrangements to close the funding gap of £37m for the two years (2016-17: £21m and 2017-18: £16m)

• understand the Council's risk management processes and the appropriateness and completeness of the risk register (given that, at the time of our interim visit, the risk register was last updated in June 2014)

• given the impact on last year's VFM conclusion, we will be monitoring the Council's arrangements for ensuring the effectiveness of Children's Services, including progress made against Ofsted report published in December 2014 and taking into account any subsequent reports from Ofsted up to the completion of our 2014-15 audit in September 2015.

Reporting of the VFM conclusion

The summary results of our VFM audit work and the key messages arising will be reported in our Audit Findings report to the Audit & Risk Management Committee on 8 September 2015 and in the Annual Audit Letter, due to be discussed and agreed with management in October 2015 and then circulated to members of the Audit & Risk Management Committee.

VFM criteria Focus of the criteria

The organisation has proper

arrangements in place for securing

financial resilience

The organisation has robust systems and

processes to manage financial risks and

opportunities effectively, and to secure a

stable financial position that enables it to

continue to operate for the foreseeable

future

The organisation has proper

arrangements for challenging how

it secures economy, efficiency and

effectiveness

The organisation is prioritising its

resources within tighter budgets, for

example by achieving cost reductions and

by improving efficiency and productivity

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Results of interim audit workThe findings of our interim audit work, and the impact of our findings on the accounts audit approach, are summarised in the table below:

Work performed and findings Summary / Conclusion

Entity level (Council wide) controls

We have obtained an understanding of the overall control environment relevant to the preparation of the financial statements, including:

• Communication and enforcement of integrity and ethical values

• Commitment to competence

• Participation by those charged with governance

• Management's philosophy and operating style

• Organisational structure

• Assignment of authority and responsibility

• Human resource policies and practices.

Our work has identified no material weaknesses which are likely to adversely impact on the Council's financial statements.

Review of information technology controls

Our information systems specialist team is due to perform a high level review of the Council's general IT control environment, as part of the overall review of the internal controls system. They will also perform a follow up of the issues that were raised last year.

Any findings from our IT review will be shared with management once the work is concluded. Any significant findings, together with any associated recommendations, will be included in our ISA260 Report to be presented to the Audit and Risk Management Committee in September 2015.

Journal entry controls and testing

To date we have undertaken detailed testing on journal transactions recorded for the first eleven months of the financial year, by extracting 'large' and 'unusual' entries for further review, including testing underlying details. No issues were noted.

We did, however, note that the Council does not currently have a formal journal entry policy and procedures in place. The journals once inputted into the ledger are not subjected to separate authorisation. As a mitigating control, the Council relies on budget monitoring and access to raising journals is restricted to the central finance team.

Whilst we believe the lack of a formal journal policy does not raise a material risk (due to the mitigating controls in place), we have raised a recommendation in the Action Plan at Appendix A, to propose that the Council considers formalising a policy for journals. [Rec 1]

We will undertake testing of journals posted in the final month of the financial year at our final accounts visit along with any year-end adjustment journals.

Recommendations from the Prior Year audit

All of our recommendations from the prior year have been discussed with responsible officers.

All recommendations expected to be implemented at the time of the interim audit have been appropriately actioned and implemented accordingly. Recommendations in relation to the year-end will be reviewed as part of our year-end audit.

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Results of interim audit work cont'd


Internal Audit As part of our initial planning work, we have held a number of meetings with the Head of Internal Audit.

We have completed a high level review of internal audit's overall arrangements. We also considered internal audit's work on the Council's key financial systems to date.

We note that internal audit has carried out a self assessment of compliance with the Public Sector Internal Audit Standards (PSIAS). This confirmed a compliance rate of 93% and was presented to the Audit and Risk Management Committee in March.

Our review of internal audit work has not identified any weaknesses which impact on our audit approach.

Risk Registerarrangements

During our interim visit, we noted that the Council's risk register had not been updated since June 2014. In addition, the Council's overall risk management arrangements appeared informal given that the Risk Manager post was vacant for much of 2014-15 and it was unclear what level of risk management debate had occurred with either senior management or Members .

We understand the Council is currently making arrangements to recruit a new Risk Manager to fill the post that has been vacant since June 2014. Responsibility for the maintenance and upkeep of the risk register is going to be brought back under internal audit's remit.

We have raised a recommendation in the Action Plan in relation to the need to ensure risks are being monitored on a regular basis and discussed at a senior level. [Rec 2]

Further work will be carried out on the Council's risk management procedures in the summer as part of our Value for Money Conclusion.

Identification and evaluation of financial systems controls

We have completed walkthrough tests of controls operating in areas where we consider that there is a possible risk of material misstatement to the financial statements. These are:

• Employee remuneration (Payroll)

• Operating Expenses (Payables / Creditor Payments)

• Welfare Benefits (Housing Benefits)

Our review of the payroll and operating expenses systems was satisfactory. We did identify two issues in our walkthrough testing of the welfare benefits system in relation to the following:

• One user has been allocated super user access rights on the benefits system with the potential to access elements of the system, including processing payment runs, that their role does not require

• Prior to implementing a BACS payment for benefits, a text file is held on a shared folder prior to sending to the payment team. There is a risk of inappropriate access and potential manipulation of the text file whilst on the shared drive before the payment run.

We note that there have been no issues arising to date that raise a material risk from these matters, however, to enhance the control environment we have raised two recommendations in respect of welfare benefits in our Action Plan in the Appendix. [Recs 3 and 4]

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Group Accounts boundary assessment

The Council has produced a list of 29 organisations which the Council has a relationship with that will be considered on a case by case basis against the group accounting requirements set out in the Code and Accounting Standards. This will determine whether there is a need for the Council to produce a Group Accounts.

Once the Council has completed its own documented group assessment against the Code and Accounting Standards, we will perform our own review and update the Council on our findings, as necessary.

Property, plant and equipment (PPE) accounting, including:

• valuation methodology

• "non-enhancing" capital expenditure

We have discussed a number of accounting issues in relation to PPE (fixedassets) accounting with senior members of the finance team, including:• the 2014-15 Code requirement to ensure PPE is re-valued with sufficient

regularity to ensure the carrying value of PPE does not differ materiality from the fair value as at 31 March

• the treatment of "non-enhancing" capital expenditure and the need to ensure significant in-year capital expenditure is valued on a timely basis to ensure assets are not artificially overstated in value.

From our discussions with the finance team, we understand that the Council is to ensure its valuers perform a review of all areas where capital spend exceeds £40k in order to reduce any possible risk of overstatement of the capital asset base.

As part of our final accounts audit:

• We will review the Council's valuation methodology to ensure that it can demonstrate that the carrying value of its PPE is not materially different to the fair value as at 31 March 2015

• We will review the Council's 2014-15 capital programme and consider how the significant areas of capital spend have been accounted for.

Register of Interests Open and transparent declarations of interest is a key facet of the governance of any organisation. As part of our early audit testing programme, we reviewed the disclosures contained in the Council's register of interests for a sample of Members (13 out of 60).

We then cross-referenced these disclosures to information contained on the Companies House website to ensure their completeness . Our review highlighted some potential gaps for a number of the members sampled, mainly in relation to disclosures contained on the Companies House website not being replicated on the Council's own register.

We have shared our findings with the Council's Monitoring Officer and have recommended that a review of the completeness of the Members' register of interests, including spouses and dependents, is performed as part of the year-end procedures.

This should ensure disclosures are complete and checks for any significant transactions between the Council and any organisation highlighted can be appropriately disclosed in the related party transaction note in the 2014-15 accounts. [Rec 5]

In addition, we will perform a similar review for senior officer declarations of interest during our final accounts audit. Any issues arising from our further audit work in this area will be included in our Audit Findings Report in September.

Meeting with the Council's new Monitoring Officer

We have held a number of introductory meetings during our planning and interim audit with the Council's new Monitoring Officer.

We have discussed various aspects of governance, the Council's response to police inquires related to CSE, updates on legal matters facing the Council and the impact these could have on the Council's accounting treatment of provisions and contingent liabilities.

The meetings have been very beneficial to our audit planning work and have highlighted some issues in relation to the register of interests and the procedures for the risk register (highlighted previously in this Plan).

We will meet with the Monitoring Officer again as part of our final accounts visit in the summer to discuss provisions, contingent liabilities and to get an update on governance matters.

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High level VAT arrangements review

In common with most local authorities, the Council is facing a significant financial challenge. The Council has a number of plans to help close the funding gap and has identified that some cost efficiencies could be generated by ensuring VAT treatments are appropriate.

During our interim audit visit, we agreed to facilitate a meeting between a colleague from our VAT department and an appropriate Council officer.

We will further update in our Audit Findings Report (ISA 260) should there be any further developments arising from the meeting.

Should a formal piece of work arise from this a separate engagement letter would be put in place and require approval from our Director of Audit Quality to ensure our independence is maintained. Any possible fees arising would be agreed with the Director of Finance and reported to the Audit and Risk Management Committee.

PFI – Street Lighting contract In our introductory meetings with Members, we became aware of some of the concerns regarding the operation of this contract. From our review of internal audit's report, and discussions with officers, we note that financial penalties in excess of £300k have been levied on the contract in 2014-15.

The dispute between the affected parties remains on-going as does the implementation of the ten recommendations that were agreed as a result of the internal audit work.

Although there is no material risk to our opinion arising from this matter, we will continue to maintain a watching brief and review the progress made against the recommendations.

The review of the Council's PFI schemes form part of our accounts audit work programme. Should there be any significant issues arising that impact on the PFI accounting treatment in the accounts we will report this in our Audit Findings Report (ISA 260).

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The audit cycle

Key dates

Completion /Reporting

DebriefInterim audit

visitFinal accounts

Visit

February - March 2015 July - August 2015 September 201 5 October 2015

Key phases of our audit

2014-2015

Date Activity

November 2014 to January 2015 Initial planning and introductory meetings with key officers and Members

February – March 2015 Interim on site visit and initial risk assessment for VFM conclusion

30 June 2015 [TBC] Presentation of the Audit Plan, including interim findings, to the Audit & Risk Management Committee

Mid July – August 2015 Year-end final accounts audit fieldwork visit

2 September 2015 Audit 'clearance' meeting with Director of Finance and Engagement Lead to discuss and agree the Audit Findings (ISA260) Report

8 September 2015 [TBC] Present the Audit Findings (ISA260) Report to those charged with governance (Audit & Risk Management Committee) and target date for signing the audit opinion

22 October 2015 Meeting with the Chief Executive and Director of Finance to discuss feedback on our audit approach and agree our Annual Audit Letter.

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Fees

£

Council audit 181,830

Grant certification 24,800

Total fees (excluding VAT) 206,630

Fees and independence

* both our audit and grant certification fees are the scale fees set by

the Audit Commission.

Our fee assumptions include:

� Supporting schedules to all figures in the accounts

are supplied by the agreed dates and in accordance

with the agreed upon information request list

� The scope of the audit, and the Council and its

activities, have not changed significantly

� The Council will make available management and

accounting staff to help us locate information and

to provide explanations

Independence and ethics

We confirm that there are no significant facts or matters that impact on our independence as auditors that we are

required or wish to draw to your attention. We have complied with the Auditing Practices Board's Ethical

Standards and therefore we confirm that we are independent and are able to express an objective opinion on the

financial statements.

Full details of all fees charged for audit and non-audit services will be included in our Audit Findings report at the

conclusion of the audit.

We confirm that we have implemented policies and procedures to meet the requirement of the Auditing Practices

Board's Ethical Standards.

Fees for other services

Service Fees £

Teachers Pension - Reasonable Assurance Report 4,200

Matthew Moss Initial Teacher Training Partnership Grant 1,500

Grant certification

� Our fees for grant certification cover only housing

benefit subsidy certification, which falls under the

remit of Public Sector Audit Appointments Limited.

� Fees in respect of other grant work, such as

reasonable assurance reports, are shown under 'Fees

for other services.'

Fees for other services

Fees for other services reflect those agreed at the time of issuing our Audit Plan. Any changes will be reported in

our Audit Findings Report and Annual Audit Letter.

16


Communication of audit matters with those charged with governance

Our communication planAudit Plan

Audit Findings

Respective responsibilities of auditor and management/those charged with governance

�

Overview of the planned scope and timing of the audit. Form, timing and expected general content of communications

�

Views about the qualitative aspects of the entity's accounting and financial reporting practices, significant matters and issue arising during the audit and written representations that have been sought

�

Confirmation of independence and objectivity � �

A statement that we have complied with relevant ethical requirements regarding independence, relationships and other matters which might be thought to bear on independence.

Details of non-audit work performed by Grant Thornton UK LLP and network firms, together with fees charged.

Details of safeguards applied to threats to independence

� �

Material weaknesses in internal control identified during the audit �

Identification or suspicion of fraud involving management and/or others which results in material misstatement of the financial statements

�

Non compliance with laws and regulations �

Expected modifications to the auditor's report, or emphasis of matter �

Uncorrected misstatements �

Significant matters arising in connection with related parties �

Significant matters in relation to going concern �

International Standards on Auditing (ISA) 260, as well as other ISAs, prescribe matters which we are required to communicate with those charged with governance, and which we set out in the table opposite.

This document, The Audit Plan, outlines our audit strategy and plan to deliver the audit, while The Audit Findings will be issued prior to approval of the financial statements and will present key issues and other matters arising from the audit, together with an explanation as to how these have been resolved.

We will communicate any adverse or unexpected findings affecting the audit on a timely basis, either informally or via a report to the Council.

Respective responsibilities

This plan has been prepared in the context of the Statement of Responsibilities of Auditors and Audited Bodies issued by the Audit Commission (www.audit-commission.gov.uk).

We have been appointed as the Council's independent external auditors by the Audit Commission, the body responsible for appointing external auditors to local public bodies in England. As external auditors, we have a broad remit covering finance and governance matters.

Our annual work programme is set in accordance with the Code of Audit Practice ('the Code') issued by the Audit Commission and includes nationally prescribed and locally determined work. Our work considers the Council's key risks when reaching our conclusions under the Code.

It is the responsibility of the Council to ensure that proper arrangements are in place for the conduct of its business, and that public money is safeguarded and properly accounted for. We have considered how the Council is fulfilling these responsibilities.

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Appendix

18


Action Plan

RecNo. Recommendation Priority Management response

Implementation date & responsibility

1 Journal entry policy

The Council does not currently have a formal journal entry policy and procedure in place. The journals once inputted into the ledger are not subjected to separate authorisation.

We recommend the Council produces a policy for journals, including who can raise journals, how they are raised, monitoring controls in place and frequency of observation of controls being adhered to.

Medium Agreed. A journals policy will be produced. Vicky Crossland

30 September 2015

2 Risk management arrangements and risk register

We recommend the Council strengthens its risk management arrangements in order to demonstrate that significant risks facing the Council are regularly discussed and considered by senior officers and those charged with governance, including regular formal consideration of the Council's overall risk register.

High Agreed. A recruitment process for the vacant Risk Manager post is currently ongoing. The role will include strengthening of the Council's risk management arrangements, including the focusing the level of discussion and consideration of the key risks facing the Council.

Pauline Kane

31 July 2015

3 Walkthrough of Welfare Benefits system

One user has been allocated super user access rights on the benefits system with the potential to access elements of the system, including processing payment runs, that their role does not require.

We highlighted this to the Council during our interim audit and recommended this level of access was reviewed accordingly.

Medium Agreed. The uploading of files to accounts is now to be carried out by staff within the Finance Team who do not have permissions to update the core benefits application

Carolyn Jackson

30 April 2015

19


Action Plan cont'd

RecNo. Recommendation Priority Management response

Implementation date & responsibility

4 Walkthrough of Welfare Benefits system

Prior to implementing a BACS payment for benefits, a text file is held on a shared folder prior to sending to the payment team. There is a risk of inappropriate access and potential manipulation of the text file whilst on the shared drive before the payment run.

We recommend this access level and potential availability isrestricted.

High Agreed. The access rights to the relevant folder will be restricted to senior staff on the Benefits Team, with control sheets and counter signatures in place where amendments are made to the contents of the folder.

Colin Connor

30 April 2015

5 Register of Interests

We recommended a review of the completeness of the Members' and senior officers register of interests, including spouses and dependents, is performed as part of the year-end procedures.

This should ensure disclosures are complete and checks for any significant transactions between the Council and any organisation highlighted can be appropriately disclosed in the related party transaction note in the 2014-15 accounts.

High Agreed. We will review the possible interests highlighted by external audit in their planning and interim work and deal with any potential discrepancies highlighted to ensure they are resolved prior to production of the 2014-15 accounts.

For 2015-16, we will give each political party training during the year, as a reminder of the need for Members (and senior officers) to declare all interests, and also to review their own profile on Companies House to ensure it is accurate.

Pauline Kane

30 June 2015

31 December 2015

20

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