Agenda item

(A report by KPMG, External Auditors)

The Engagement Manager, KPMG presented a report which set out the external auditor’s risk assessment, audit plan and strategy for the financial year ending 31 March 2025, including the value for money commentary.

The Engagement Manager, KPMG advised that it was the final version of the audit plan and noted that, in contrast to the previous year when the final plan had not been presented until October, the earlier timing this year indicated a return to a normal audit cycle. She expressed her thanks to officers for their assistance in reaching this stage.

The Engagement Manager, KPMG highlighted the following key points:

·         Materiality for the financial statements had been set at £1.2 million, with a reporting threshold of £60,000.

·         There were no changes to the significant audit risks or audit response compared to the previous year.

·         No significant risks had been identified in the value for money risk assessment.

·         One new performance improvement point had been raised in relation to the formal recording of key decisions made during the identification of efficiencies in the budget setting and monitoring process. A formal management response was awaited and would be included in the final year-end report.

·         A previously reported recommendation to formalise the efficiency programme had been re-included, with a due date of 30^th September 2025.

·         A follow-up of performance improvement observations from the 2023/24 audit had been undertaken. One recommendation relating to budget holder reports had been marked as not implemented, as one of the two samples reviewed had not been signed by the budget manager.

·         The audit timetable indicated that final fieldwork would commence in July 2025, and that the audit remained on track.

Members discussed the report and commented as follows:

·         Clarification was sought on the use of the Depreciated Replacement Cost (DRC) valuation model for land and buildings. The Engagement Manager, KPMG explained that the method was prescribed by the Code of Local Government Accounting Practice and was dependent on the asset type.

·         A Member queried the management override of controls risk and requested further detail on mitigation. The Engagement Manager, KPMG confirmed that it was a presumed significant risk which was required to be addressed in all audits. However, no specific additional risks had been identified for that audit.

·         Concerns were raised regarding the lack of formal governance and tracking of the efficiency programme. The Engagement Manager, KPMG confirmed that it remained an outstanding point and had been linked to the recommendation to formalise the programme.

·         A Member queried the rationale behind the materiality percentage. The Engagement Manager, KPMG explained that the 2.6% benchmark was based on forecasted expenditure and reflected increased confidence in the Council’s financial stability compared to the previous year.

·         Further clarification was sought on the absence of formal records for meetings relating to budget setting and efficiency identification. Officers confirmed that notes were now taken at all Senior Leadership Team meetings, although the absence of records in this instance may have been a one-off.

·         Members raised concerns regarding contract monitoring, particularly in relation to the leisure contract with Parkwood Leisure. Officers undertook to follow up and provide further information at a future meeting.

·         A query was raised regarding the £24.4 million slippage referenced on page 40 of the report. Officers advised that further detail would be provided following a review of the relevant Cabinet papers.

·         A Member queried the unsigned budget holder report referenced on page 48. Officers confirmed that the meeting had taken place but the formal record had not been signed. Work was ongoing to ensure compliance, including the potential use of AI tools such as Copilot to support meeting transcription and action tracking.

The Chairman thanked the Engagement Manager, KPMG for her report and responses to Members’ questions. The Committee noted the report, and the comments made, and agreed that the outstanding matters raised would be followed up as appropriate.

Resolved:

That the report be noted.

[Councillor Anton Dani entered the meeting at 6.16pm p.m. during consideration of the above item.]