The Committee to receive a verbal update on progress from the External Auditor EY.
Minutes:
15.1 The Committee received a verbal update from Mrs Thompson and Mr Mathers from EY.
15.2 Mrs Thompson reported that she welcomed the Redmond Review and the consideration into the role of an independent member.
15.3 Mr Mathers reported that COVID-19 had led to a challenging year for the audit; with additional factors to consider such as practical issues and new risk considerations. County Council officers were thanked for their support to EY. The work on the Pension Fund audit was progressing with a large portion of work focussing on liabilities, including IAS 19 Employee Benefits. Most membership data gaps had been filled, and stakeholder assurance letters should be sent out soon. EY expected the audit to meet the November deadline.
15.4 The Committee queried if the data issues were current or historic. – Mr Mathers confirmed that the issues were historic, and that the 31/03/19 triennial valuation timescale had led to more extensive testing this year. A programme was being followed to improve membership data. 250 areas had been tested with each area having 6 elements. In total there are only 6 gaps remaining. Ms Eberhart confirmed that current administration performance was good and only minor issues missed SLAs. Data was improving and the Pensions Committee and Pension Advisory Board were kept up to date. Mr Hunt, Cabinet Member for Finance and Chairman of the Pensions Committee, explained that the audit was looking at the period during the administration transfer, and that next year’s audit would show improvements.
15.5 Mr Mathers introduced the County Council audit and confirmed that work was progressing well for the November deadline. COVID-19 had impacted valuation work for Plant, Property, and Equipment due to market volatility. This was consistent across all local authorities. EY had commissioned their internal valuers to assist with this work, with this work being ongoing at the time of the meeting. The final processes covered going concern and linked to COVID-19 and that these areas may be highlighted in the report. Mrs Thompson confirmed that the possible impact could be the inclusion of an Emphasis of Matter paragraph in the audit report which would not constitute a qualification of the audit opinion.
15.6 The Committee made comments including those that follow.
• Queried if virtual assessment of the accounts held more danger for error. – Mrs Thompson reported that the Financial Reporting Council had monitored audits to ensure the quality of work. EY were still working to the same standards. Mr Mathers added that the delays to the audit were likely to put pressure on future timelines.
• Questioned how fees could be impacted with the new working environment. – Mrs Thompson confirmed that there had been discussions with Ms Eberhart concerning fee implications linked to risks and additional valuation work. Fee details would be included in the November report.
• Raised concerns on the impact for the following year and the sustainability of continued working from home. – Mrs Thompson agreed with the concerns and reported that the challenge for next year had not been fully considered. EY had other clients such as universities, housing and health and so the timetable for next year would be a challenge.
• Queried if revisiting the reports would be required. – Mrs Thompson explained that the going concern assessments paid close attention to future impacts. The report needed to represent a point in time. Mr Mathers did report that lessons had been learned from the working arrangements.
• Asked if next year’s deadlines would be changed. – Mrs Thompson reported that the Redmond Review had recommended putting the deadlines back.
15.7 Resolved – That the Committee notes the update.