Agenda item

The Wales Audit Officer introduced the WAO 2017 Audit Plan and explained that the plan covers the audit of the financial statements and performance audit.

Risks of material misstatement considered to be significant were identified as follows:

·         The risk of management override of controls is present in all entities. Due to the unpredictable way in which such override could occur;

·         Risk of material misstatement due to fraud in revenue recognition and as such is treated as a significant risk;

·         Risk of material misstatement in the financial statements arising from error or omission of transactions, balances and disclosure;

·         Risks associated with Accounts preparation. The preparation of the Statement of Accounts will involve the estimation of a number of account figures such as provisions for the Council’s liabilities.

·         Sensitive Disclosures: The Council’s 2016-17 financial statements will include a number of disclosures which are material by nature. These include the disclosure of Related Parties, Senior Officer’s Remuneration and Members’

Allowances.  These figures have to be accurately recorded.

·         Joint Progress Document (JPD): A number of issues were identified during

our 2015-16 audit which the Council agreed to address for 2016-17 including:

§  classification of Creditor balances;

§  retention of payroll records;

§  transferring legal title of Osbaston School;

§  ensuring Agency income and Expenditure is excluded from the financial statements;

§  cash flow statement is supported by comprehensive working papers; and

§  removal of assets held under operating leases from the fixed asset register.

·         Cardiff Capital Region City Deal arrangements are negotiated with government that give greater accountability for actions in return for new powers to help encourage growth and jobs. The ten South Wales’ local authorities have established a joint committee (the Regional Cabinet) to oversee delivery of a range of programmes which will have financial, governance and delivery risks that need to be managed. There will also be a

number of accounting issues to address. It is envisaged that there will be    central scrutiny and no local audit work this year.

·         Early Closing of year end accounts: As considered earlier, the scale of the

changes required for the Council and WAO means that planning needs to

start now.

Committee were reminded that WAO audits the Welsh Church Fund and Monmouthshire Farm School Endowment Trust. 

The fees are held at same level as last year, any additional services will be billed separately and refunds will be issued for fees not used.

A Member queried if the charges relating to the City Deal would be directed to Cardiff City Deal.  It was confirmed that there would be no charges to Monmouthshire Council.  The central charges are undecided at present.  Clarification was requested when that information is available.

With regard to the Performance Audit, it was explained that there is a significant amount of change in local government at present due to the White Paper, the requirements of the sustainable principles of the Wellbeing of Future Generations Act and continuation of the Local Government Measure. 

The Committee was reminded that WAO had consulted on a programme of studies over three years and a progress report is included.

Additionally included is the Performance Audit Programme for this year consisting of the improvement plan audit and assessment of performance audit (requirements of Local Government Measure) which have to be prepared and certificated.

It was announced that a baseline assessment of wellbeing of future generations is to be completed across all councils and other public bodies.  The scrutiny of wellbeing of future generations will also be under consideration.  For the latter, it is hoped that this element will be supportive to help facilitate how best to provide effective scrutiny of decisions from Public Service Boards (PSB).  There will also be a service user perspective review.

A Member commented that performance is being studied and asked how audit would be undertaken e.g. linking housing to pupil attainment when targets may not be met.  It was responded that this would also be for councils to scrutinise, and attention was drawn to the establishment of more joint committees and arrangements that will create a new arena and the opportunity to design appropriate and accountable programmes. 

A Member suggested that WAO could provide an observer role for the scrutiny of all councils’ PSBs and also for scrutiny of the City Deal.  The importance of sharing ideas was expressed.

The report was noted.