External Audit Plan 2018/19
- Meeting of Corporate Committee, Thursday 24 January 2019 6.00 pm (Item 4.)
- View the background to item 4.
Report authorised by: Acting Strategic Director of Corporate Resources, Christina Thompson
Contact for enquiries: Nisar Visram, Assistant Director for Corporate Finance, 0207 926 9386,
Gareth Davies, Partner and Engagement Lead Mazars; Stuart Frith, Engagement Manage Mazars; Hamant Bharadia, Assistant Director for Strategic Finance; and, Christine Webster, Interim Head of Internal Audit and Counter Fraud (IACF), introduced the report and noted:
· The 2017/18 KPMG letter summarised the outcome of KPMG’s audit work on the previously approved accounts. There were a number of areas for improvement, such as not fully implemented financial control and outstanding audit recommendations from previous years.
· Each auditing firm had its own approach based on international standards, and Mazars had not assessed Lambeth as high risk as compared to other local authorities.
· The materiality level was the assessment of the level of error in accounts that would be significant, and figures under that level would not be reported.
· A qualified conclusion meant that there was an exception or issue to be resolved.
· The accounts had been passed without qualification, but Children’s Services and historical property valuation would be picked up by Mazars.
· Significant risks were detailed in the agenda pack, page 31, and were where Mazars would put most of their efforts and testing.
· Local authorities’ income was easy to prove, so any remaining errors in fees and charges were lower risk and would not be treated as a significant risk, but were still checked.
· There was a clear risk of error in property evaluation and valuations would be challenged.
· The small changes of the longevity of pension liability assumptions would be tested.
· The Redress Scheme was an area of managing judgment (agenda pack, page 33), and KPMG checked the actuarial assessment, which had been updated and reflected in the new estimate.
· Mazars would undertake further work around financial sustainability, delivery of savings and robustness of financial planning to provide assurance on arrangements.
· Homes for Lambeth was likely to feature in next year’s internal audit, but as a distinct company from the Council they had their own separate audit, however Mazars would review how this was consolidated, and review value for money and financial liabilities for the Council.
· Mazars assessed the arrangements for assessing value for money and this would include Brexit planning in the upcoming audit – including how contingency planning was approached – however, only serious concerns with this would be raised if applicable.
· Mazars had been appointed by a procurement process through the Public Sector Audit Appointments Ltd (PSAA) and the lower fees compared to previous years was similar to other local authorities. This fee would only be increased if there were delays in the production of accounts or a major area of work arose, but this was agreed with the Council following PSAA guidelines.
· Mazars’ methodology was reviewed independently and had been found satisfactory, and it was not felt that there was a lack of resource and nor would this lead to a lower quality audit.
· PWC provided independent actuaries assessment, commissioned by the National Audit Office as an arms-length arrangement and was unrelated to Lambeth’s internal audit; and Mazars noted that they were confident there was no conflict of interest, but would uncover one if it existed.
· The significant risks and judgment areas, excepting the Redress Scheme, were similar to other local authority accounts.
1. That Corporate Committee notes and scrutinises the Audit Plan from Mazars that relates to the Council’s 2018/19 financial accounts. This is set out in Appendix 1 for the Council’s accounts and Appendix 2 for the Pension Fund.
2. That Corporate Committee notes the preparatory activity undertaken and underway by officers, as set out in the main report.
3. That Corporate Committee notes the Annual Audit Letter from KPMG that relates to the Council’s
2017/18 financial accounts, as set out in Appendix 3.
The Chair recorded the Committee’s thanks to KPMG for their previous audit work and welcomed Mazars as the Council’s new auditing firm.
- 2018-19 Statement of Accounts Plan, item 4. PDF 148 KB
- Appendix 1 LBLambeth - ASM 2018-19, item 4. PDF 896 KB
- Appendix 2 LB Lambeth PF ASM - 2018-19, item 4. PDF 840 KB
- Appendix 3 Lambeth 2017-18 AAL issued, item 4. PDF 132 KB