Agenda item

Audit Progress Report

To consider a report from Grant Thornton


The Committee considered the Audit Progress Report and Sector Update from Grant Thornton. The report provided a report on progress in delivering Grant Thornton’s responsibilities as Cumbria County Council’s external auditors. The paper also provided a summary of emerging national issues and developments which were relevant to the Council and included a number of challenges and questions in respect of the emerging issues which the Committee could consider.


The Engagement Lead – Grant Thornton explained that an ethical issue had arisen as a member of the local Grant Thornton audit team had applied for a post in the County Council’s Finance Team. He set out the implications and ethical issues before the Committee and stated that the local Grant Thornton team may be unable to work on the Council’s and Pension Fund Audits. He set out the challenges and implications when using an out of area team to perform an Audit. He advised that due to these issues, Grant Thornton may be unable to commit to the Committee’s Forward Plan and deliver the County Council and Local Government Pension Scheme final Audits by 31 July 2020. A member stated that having to change an audit team as a result of potential ethical issues was normal practice.


The Chair acknowledged the implications for the Committee and the impact on the close down of the Accounts. She sought assurance that there would be no negative impact from the County Council’s point of view if the accounts were produced on time but were not audited by Grant Thornton. The Engagement Lead – Grant Thornton explained that he would liaise closely with the Director of Finance (s151 Officer) on this matter.


The Engagement Lead – Grant Thornton highlighted errors in the presentation of the Council’s Teacher’s Pension Fund End of Year Certificate (EOYC). This related to testing undertaken by Grant Thornton. However, the audit process had not yet been completed. The auditors findings had been received by the Council and these were subject to review by the Council’s team.


The Engagement Lead – Grant Thornton explained how the work undertaken had impacted on the Audit Fee which had increased from £4,900 to £8,800. The Chair welcomed that this issue had been brought to the Committee’s attention.


The Director of Finance provided some background to the annual return. The return to the Teachers Pensions Agency was summarised as being £25m worth of employees and employers contributions for 2018/19. The Senior Manager - Accountancy (Deputy S151 Officer) attended the meeting to provide a detailed explanation to the Committee of the work the team had undertaken to respond to the auditors’ findings. He explained that a contract was not in place between the pension provider and the County Council (it was with schools and the provider) but he confirmed that work would take place with the provider to rectify the issue for 2020. He advised that this had been a data returns issue. He explained his testing process in detail and confirmed that the provider had been asked for the reasons for the errors and these would be provided shortly as the provider was undergoing a move of premises. He confirmed that as part of the tender in the new framework for the pension provider contract, the County Council would be stating its expectations in order to assure this would not happen again.


The Director of Finance (s151 Officer) explained how a mathematical calculation could be undertaken on a monthly basis, however the incorrect information had been received during the end of year financial process so this would not have identified the errors. However, in future, questions would be asked during the year. She acknowledged that lessons had been learned from this and she queried whether it would have been reasonable for the Finance Team to have identified the issue, however the monthly return had not included the incorrect information present in the year end return.


The Engagement Lead – Grant Thornton emphasised that it was important to focus on the return and ensure that third part data was correct. He was encouraged by the assurances that the Director of Finance (s151 Officer) had put in place. He would wait to get the formal response from the Director of Finance (s151 Officer) and this would be included in Grant Thornton’s qualification. This would then be factored into Grant Thornton’s report planning for 2020.


The Director of Finance (s151Officer) highlighted that there had been a low number of errors in over two thousand entries. She did not consider the errors to be a material matter.


A member expressed his disappointment that the provider had changed to a complex system without trialling a parallel run and welcomed that assurances would be sought during the tendering process. It was highlighted by a member that payroll data was received in schools after staff had been paid instead of in advance when errors could be picked up.


The Chair, in noting that this issue related to a third party, thanked Finance Officers for explaining how reasonable it would have been for the Committee to have been aware of the provider’s controls, and the checks and balances that are available.  The Chair asked for an update from the Auditor at the March Committee following the finalisation of the End of Year Certificate.


The Engagement Lead – Grant Thornton reported on the Audit Fees and explained that an expert valuer for property, plant and equipment had been appointed at Grant Thornton. He explained that due to an increase in the complexity of Local Government financial transactions and financial reporting, additional audit work would be required and this would be reflected in increased fees.




1             the position be noted.

2             an update from the Auditor be given at the March 2020 Audit and Assurance Committee meeting following the finalisation of the End of Year Certificate.

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