Agenda item

Report of the Chamberlain.

Members received a report of the Chamberlain relative to the arrangements for the City Fund and Pension Fund audit.

The Chamberlain informed Members that there was not currently a national agreement on how to treat the valuation of infrastructure assets. The Chamberlain and BDO had been considering ways to navigate this situation in order to get an audit opinion. Their recommended solution was to wait until after CIPFA and the Financial Reporting Council had agreed on what the accounting treatment should be. This would be a qualified opinion on an except for basis. The Chamberlain had consulted the Chairmen of the Finance Committee and the Audit and Risk Management Committee, and they agreed that this was a reasonable and pragmatic solution to closing down the audit for the 2020/21 accounts. This solution would allow for the publication of the 2021/22 draft statement and would allow Grant Thornton to begin the City Fund audit.

Another consideration was that the Pension Fund included admitted bodies who were also waiting on an audit certificate for the pension accounts admitted into the City Fund statement. The Chamberlain said that the report presented at agenda item 7 was a pragmatic solution to how work could begin on this area without waiting for the final audit certificate.

The Chairman confirmed that the Chamberlain had kept him informed throughout this process and agreed that a pragmatic solution had to be the way forward. The Chamberlain added that she did not believe that the City Corporation would be alone in adopting measures like this.

A Member requested for the Chamberlain to lay out the minimum and the maximum levels of materiality in her opinion. The Chamberlain confirmed that this could be included, and officers further confirmed that the level of materiality in the audit was around £10m.

Members heard that officers hoped to have the 20/21 accounts signed off as soon as possible in order to enable Grant Thornton to begin their work. It was estimated that Grant Thornton would be able to bring a timeline to the Committee in March. The City’s Cash and Bridge House Estates fund accounts were scheduled for the November meeting of the Committee, but officers were continually assessing as to whether that would be realistic. Officers undertook to notify Members if any changes were required to these timelines.

Members received an audit progress report and sector update from Grant Thornton.

A Member asked if there were any implications resulting from the delay in completing the housing benefit check. In reply, officers said that the delays had been due to resourcing issues, both internally and with the auditors. The City Corporation had received various extensions and the work had been transferred from BDO to Grant Thornton. Officers from Grant Thornton added that they recognised the challenges faced in delivering housing benefit work across the sector, and now employed a specialist team to deliver this work. They were confident that, subject to the City Corporation’s resources, they could progress this work for 2020/21 and 2021/22 as quickly as possible.

In reply to a Member’s question, officers confirmed that the pension work had been deemed as a non-audit service by the Ethical Standards.

A Member requested that Grant Thornton provide their view on the implications of infrastructure assets for the City Corporation once there was greater clarity on this issue.

RESOLVED, that – Members:

• Note the contents of the report
• Agree to the proposed non-audit services.