119.1  An apology was received from Councillor Peter Adams.  Councillor Gerald Dakin substituted for Councillor Adams.

Members are reminded that they must not participate in the discussion or voting on any matter in which they have a Disclosable Pecuniary Interest and should leave the room prior to the commencement of the debate.

120.1  The Chairman reminded Members that they must not participate in the discussion or voting on any matter in which they have a Disclosable Pecuniary Interest and should leave the meeting prior to the commencement of the debate.

The Minutes of the meeting held on the 17 September 2020 are attached for confirmation. 

Contact Michelle Dulson (01743) 257719

121.1  RESOLVED:

            That the minutes of the meeting of the Audit Committee held on 17 September 2020 be approved and signed by the Chairman as a correct record.

To receive any questions from the public, notice of which has been given in accordance with Procedure Rule 14.  The deadline for notification for this meeting is 1.30pm on Tuesday 27 October 2020.

122.1  No public questions had been received.

To receive any questions of which Members of the Council have given notice.  The deadline for notification for this meeting is 1.30pm on Tuesday 27 October 2020.

123.1  No Member questions had been received.

The report of the Engagement Lead is attached.

Contact: Richard Percival (0121) 232 5434

124.1  The Committee received the report of the External Auditor (copy attached to the signed minutes) which updated the Committee in relation to the Redmond Review.    The Engagement Lead introduced this item and explained that the Redmond Review, which had been published in early September, was likely to have a fundamental impact on both the accounts process in the future and on the Audit and how the audit worked.

124.2  The Engagement Lead explained the reasons for the review and drew Members’ attention to two key issues that had come out of the review, one was that the accounts were too complex and the other was around the Audit process and the audit fees and the need to ensure that the audit market was sustainable and that audit suppliers could deliver the level of audit that the public would expect of them at a fee that would enable them to do that on a sustainable basis. 

124.3  He then took the Committee through some of the key findings of the review (set out on pages 7 to 12 of the report) along with the recommendations which included the setting up of the Office of Local Audit and Regulation and a removal of PSAA and the FRC from the field, a revised fee structure to ensure that adequate resources could be deployed to all audits in future, and reverting back to the September deadline.   Redmond was recommending not only the simplification of the accounts but also the production of an audited accounting summary, that would be more of a public document that would enable a lay person to easily understand the key financial dynamics of the local authority. 

124.4  The Engagement Lead explained that Grant Thornton’s view as a firm very much supported the outcome of the review and very much wanted to help with its implementation.  They wanted sustainable arrangements to be put in place so that they could continue with their presence in the public audit market.

124.5  In response to a query, the Engagement Lead explained that the first point on page 11 of the report referred to the ability of Audit Committees to effectively consider audit reports. The Director of Finance, Governance and Assurance (Section 151 Officer) was then asked to comment on the last paragraph on page 11 of the report about the need for a greater role for Full Council who had delegated the Audit function to the Audit Committee.

124.6  In response, the Director of Finance, Governance and Assurance (Section 151 Officer) felt that the Council as a meeting had a reasonable level of information provided from Audit Committee, which itself had the ability to review the accounts and did go into quite a bit of detail to ensure that the various issues were considered as necessary.  He therefore did not agree with the suggestion that there needed to be a greater role, and he deferred to the Engagement Lead to see if there was anything, in relation to his experience in other Local  ...  view the full minutes text for item 124.

The report of the Engagement Lead is attached.

Contact: Richard Percival (0121) 232 5434

125.1  The Committee received the report of the External Auditor – copy attached to the signed Minutes – which set out the Audit Findings for Shropshire County Pension Fund for the year ending 31 March 2020.  The Engagement Lead explained that this report was being brought to Audit Committee for completeness as it had already been through the Pensions Committee.

125.2  In summary, he explained that the audit this year had been more challenging due to remote working and more challenge being put into the audit because of the valuation issues around investments and the uncertainties due to Covid.  The Engagement Lead confirmed that the audit was complete and was in a position to be signed off once the Council’s Audit had been completed.

125.3  It was being proposed that his opinion include an emphasis of matter on the material valuation uncertainties on some investments due to Covid.  The Engagement Lead drew attention to one unadjusted mis-statement, on page 12 of his report, of £14m which was an overstatement of asset valuations due to the timing of the valuation and how the market had moved by year end.  This was however below the materiality threshold and represented three quarters of 1% of the value of the assets.  Finally, the Engagement Lead thanked the Pension Fund team for their support throughout the audit.

125.4  RESOLVED:  That the contents of the report be noted.

The report of the Head of Finance, Governance and Assurance (S151 Officer) is to follow.

Contact: James Walton Tel: (01743) 258915

126.1  The Committee received the report of the Director of Finance, Governance and Assurance (Section 151 Officer) which presented Members with the final audited outturn position for the financial year 2019/20 and detailed any amendments made to the draft Statement of Accounts during the audit process. The Director of Finance, Governance and Assurance (Section 151 Officer) took Members through the covering report and Appendices.  He explained that Appendix 3 was the Audit Findings Report which the Engagement Lead would take Members through. 

126.2  He reported that the draft Audited Statement of Accounts had been seen by the Audit Committee at its meeting on 31 July 2020 and that the revised Statement of Accounts was attached at Appendix 1.  This was largely unchanged from the draft but where there had been changes, these were set out in table 1 on page 3 of the covering report. The report then identified what each of the amendments were and included a summary of the reasoning for that change.  None of those changes were particularly concerning.

126.3  The Director of Finance, Governance and Assurance (Section 151 Officer) then drew attention to the Annual Governance Statement set out in Appendix 2 of the report which was unchanged from the document seen in July.  At the end of the meeting, the set of accounts along with the letter of representation would be signed off.   The Engagement Lead then took Members through the Audit Findings report and explained where they were in relation to the audit which was substantially complete with a few small areas outstanding.

126.4  In relation to the overall status of the audit, the Engagement Lead was proposing to include an emphasis of matter on the valuation of land and buildings.  Also, there were a couple of outstanding issues, namely the shopping centre’s valuation and the impact of the pension fund valuations in the accounts and how those needed to be reported.  These were minor issues of wording only, for which the Director of Finance, Governance and Assurance (Section 151 Officer) had delegated authority to approve.  In terms of the Group accounts, these had been done and the Engagement Lead intended to issue his opinion by Friday of the following week.

126.5  The External Audit Manager took Members through the Audit Findings report including the financial statements and arrangements for value for money.  In relation to the audit, she reported that Covid in particular had had a significant impact however it was felt that remote working had been a success and they had been able to obtain evidence to support the statements although it had taken significantly longer than anticipated, especially where there had been queries.  However, they were now in a position to give their opinion within the next week.

126.6  The External Audit Manager highlighted those areas that needed to be worked through including information received from an external valuer in relation to the shopping centres, and receipt of relevant assurances in relation to the Pension Fund.  She confirmed that levels of  ...  view the full minutes text for item 126.

The next meeting of the Audit Committee will be held on the 10 December 2020 at 1.30pm

127.1  Members noted that the next meeting of the Audit Committee would be held on the 10 December 2020 at 1:30pm.