Agenda item

External Audit - Audit Plan 2021/22

This report introduces the finalised External Audit Plan for 2021/22.  The Plan is prepared by the Council’s external auditors, Grant Thornton, ahead of the financial year-end (31 March), and is attached as Appendix A to this report.



The representatives from Grant Thornton introduced the report:  

·        The Audit Plan was issued later than hoped due to the ongoing CIPFA consultation on some accounting policies. Therefore, the report could not be brought to the Committee in March as planned.  

·        Key areas of risk had been identified as had key areas of focus for the audit. Investment Property evaluations were included as a separate item for the first time to give assurance of the value of the investment properties.  

·        There were two items to consider on the value for money segment this included the Commerical Investment Strategy and a new risk on the merging of the local authorities in Somerset. This would be addressed in the auditor’s value for money work.  

·        Detail was provided in the report on how risks would be approached as well as how accounting estimates would be approached.  

·        The audit fee included the costs of an expert being involved in the work on infrastructure assets. There may also be an additional fee dependant on whether auditing was done remotely.  


During the debate the following points were raised:  

·        It was asked who agreed the valuations for properties and whether this was done in conjunction with Somerset County Council given the upcoming transition to a unitary authority. It was responded by Grant Thornton that valuations were carried out by independent valuers, the external auditors then challenged both the valuers and management at the Council and looked at methods used and the assumptions made to review how accurate they were.  

·        It was raised that the valuations were done annually and they were not seen as a risk last year but were this year. It was asked why this was. The Grant Thornton representatives responded that the property, plants and equipment were raised as a risk in the previous year’s audit, but the difference was this year the Commercial Investment assets were included separately due to the level of investment which had doubled since the last financial year. The methods used to value the Commerical Investment properties were different to the methods used to value other assets which was another reason the two risks had been separated.  

Councillors Janet Lloyd and Hazel Prior-Sankey left the room due to a pecuniary interest. Councillor Simon Coles declared an interest due to being the Chair of the Pensions Committee at Somerset County Council. The monitoring officer advised the Councillor Coles could remain in the room as the interest was not a pecuniary interest but instead a personal interest.  

·        It was asked regarding the council’s pension fund net liability if reassurance could be given that the proposed response to the risk would be actioned and reviewed it in detail. It was responded by Grant Thornton that the pension fund net liability had been flagged as an additional risk and additional work was being done around it because it had been identified as an area more likely to have a material area. It would be reviewed in detail.  

Councillors Janet Lloyd and Hazel Prior-Sankey returned to the chamber. 

·        Concerns were raised about a sample being used in terms of housing assets with the valuation of a single property then being extrapolated to estimate the value of other housing properties the Council owned and this not being a very accurate method of valuation. The Grant Thornton Director responded that all local authorities used the same method of valuation for their housing stock, this was a beacon method. Multiple assets, ‘beacons’ would be valued and any other properties within a certain distance of similar type would then be given the same value. This did result in a margin of error, but the CIPFA code specified this method of valuations for local authorities to use.  

·        It was raised that Local Government Reorganisation was flagged as a significant risk in terms of preparations for the transition not being place. It was asked if the work of the external auditors would overlap with work being done by consultations for the new unitary authority. The Grant Thornton Director responded that for the 2021-2022 financial year a single auditor would do all the work for value for money on the transition for all the Somerset authorities whom Grant Thornton did auditing for. The governance and financial arrangements would be considered as would improving economy, efficiency and effectiveness. Local government reorganisation was flagged as a risk because it was an administrative significant risk. 

·        It was asked if Grant Thornton were liaising with PricewaterhouseCooper (PwC) who were the consultants for the local government reorganisation programme. It was responded that members of Grant Thornton would liaise with PwC and would work with to gain necessary information for assurance as they would work with officers of the council to gain information. 


The Committee resolved to note the recommendation in the report:  

2.1 Members are requested to consider and note the SWTC External Audit Plan for the financial year ending 31 March 2022 received from Grant Thornton.


Supporting documents: