The Audit Plan – template user guide
Contents
1. Grant Thornton The Audit Plan for Swale Borough Council Year ended 31 March 2015 March 2015 lain G Murray Engagement Lead T 020 7728 3328 E lain g murray uk gt com Trevor Greenlee Manager T 01293 554071 E trevor greenlee uk gt com The contents of this report relate only to the matters which have come to our attention which we believe need to be reported to you as part of our audit process It is not a comprehensive record of all the relevant matters which may be subject to change and in particular we cannot be held responsible to you for reporting all of the risks which may affect the Council or any weaknesses in your internal controls This report has been prepared solely for your benefit and should not be quoted in whole or in part without our prior written consent We do not accept any responsibility for any loss occasioned to any third party acting or refraining from acting on the basis of the content of this report as this report was not prepared for nor intended for any other purpose Contents Section 1 Understanding your business 2 Developments relevant to your business and the audit 3 Our audit approach 4 An audit focused on risks 5 Significant risks identified 6 Other risks 7 Value for Money 8 Results of interim work 9 Key dates 10 Fees and independence 11 Communication of audit matters with those charged with governance 2015 Grant Thornton UK LLP Understanding2. 9 790 None Nil Total fees excluding VAT 90 775 Our fee assumptions include Fees for other services e Supporting schedules to all figures in the accounts Fees for other services reflect those agreed at the time of issuing our Audit Plan Any changes will be reported in are supplied by the agreed dates and in accordance our Audit Findings Report and Annual Audit Letter with the agreed upon information request list e The scope of the audit and the Council and its Independence and ethics activities have not changed significantl PEE f BeO SIER y We confirm that there are no significant facts or matters that impact on our independence as auditors that we are e The Council will make available management and required or wish to draw to your attention We have complied with the Auditing Practices Board s Ethical accounting staff to help us locate information and Standards and therefore we confirm that we are independent and are able to express an objective opinion on the to provide explanations financial statements Pull details of all fees charged for audit and non audit services will be included in our Audit Findings report at the Grant certification A conclusion of the audit e Our fees for grant certification cover only housing benefit subsidy certification which falls under the remit of Public Sector Audit Appointments Limited as the successor to the Audit Commission in this We confirm that we have implemented policies and procedur
3. your business In planning our audit we need to understand the challenges and opportunities you are facing We set out a summary of our understanding below 1 Regeneration You have worked closely with the private sector over a number of years to help develop a major regeneration programme for Sittingbourne Planning proposals have now been submitted To facilitate the scheme you plan to construct and operate new car parking facilities Subject to obtaining planning approval work on the project will commence in 2015 16 We will monitor the progress of regeneration plans and consider any issues which relate to our value for money conclusion for 2014 15 2015 Grant Thornton UK LLP Challenges opportunities 2 Financial position Local authorities continue to face significant financial pressures following reductions in government funding Under the local government spending settlement authorities are facing an overall reduction in spending power of 1 8 in 2015 16 with an anticipated reduction for Swale of 4 1 A robust medium term financial planning framework is needed to address these pressures We will review your financial planning framework as part of the work to support our value for money conclusion 3 Delivering efficient and effective services In recent years your budget process has been supported by efficiency savings including from new shared services arrangements contract savings and intern
4. al efficiencies The medium term financial plan anticipates that further efficiency savings will be needed in future years We will consider if you continue to have efficient and effective arrangements for the delivery of services as part of the work to support our value for money conclusion 4 Timetable for financial reporting The Accounts and Audit Regulations 2015 come into effect from 1 April 2015 These bring forward the local government reporting timetable for published accounts to 31 July in 2017 18 In 2017 18 draft financial statements will need to be prepared by 31 May Although not an issue for 2014 15 we will continue to work with you to help identify ways of streamlining the process for preparing the financial statements Developments relevant to your business and the audit In planning our audit we also consider the impact of key developments in the sector and take account of national audit requirements as set out in the Code of Audit Practice the code and associated guidance Developments and other requirements 1 Financial reporting e Changes to the CIPFA Code of Practice 2 Legislation e Local Government Finance settlement 3 Corporate governance e Annual Governance Statement AGS e Explanatory foreword 4 Financial Pressures e Managing service provision with less resource e Progress against savings plans 5 Other requirements e The C
5. er ride of controls is present in all b AA testing of journal entries entities e review of accounting estimates judgments and decisions made by management e review of any unusual significant transactions 2015 Grant Thornton UK LLP Other risks identified The auditor should evaluate the design and determine the implementation of the entity s controls including relevant control activities over those risks for which in the auditor s judgment it is not possible or practicable to reduce the risks of material misstatement at the assertion level to an acceptably low level with audit evidence obtained only from substantive procedures ISA 315 In this section we outline the other risks of material misstatement which we have identified as a result of our planning Other risks Description Audit Approach Operating expenses Creditors understated or not recorded in the correct period Work completed to date e Identification and walkthrough of system controls Further work planned e Substantive testing of creditor balances e Cut off testing to ensure that transactions have been recorded in the correct accounting period e Review of yearend reconciliations to ensure completeness of information in the accounts Employee remuneration Employee remuneration accruals understated Work completed to date e Identification and walkthrough of system controls Further work planned e Review of yearend reconciliations to ensure completeness of
6. es nationally prescribed and locally determined work Our work considers the Council s key risks when reaching our conclusions under the Code It is the responsibility of the Council to ensure that proper arrangements are in place for the conduct of its business and that public money is safeguarded and properly accounted for We have considered how the Council is fulfilling these responsibilities 2015 Grant Thornton UK LLP Audit Audit Our communication plan plan findings Respective responsibilities of auditor and management those charged v with governance Overview of the planned scope and timing of the audit Form timing v and expected general content of communications Views about the qualitative aspects of the entity s accounting and v financial reporting practices significant matters and issue arising during the audit and written representations that have been sought Confirmation of independence and objectivity A statement that we have complied with relevant ethical requirements regarding independence relationships and other matters which might be thought to bear on independence Details of non audit work performed by Grant Thornton UK LLP and network firms together with fees charged Details of safeguards applied to threats to independence Material weaknesses in internal control identified during the audit ka Identification or suspicion of fraud involving management and or others which results in material mis
7. es to meet the requirement of the Auditing Practices Board s Ethical Standards area 2015 Grant Thornton UK LLP Communication of audit matters with those charged with governance International Standards on Auditing ISA 260 as well as other ISAs prescribe matters which we are required to communicate with those charged with governance and which we set out in the table opposite This document The Audit Plan outlines our audit strategy and plan to deliver the audit while The Audit Findings will be issued prior to approval of the financial statements and will present key issues and other matters arising from the audit together with an explanation as to how these have been resolved We will communicate any adverse or unexpected findings affecting the audit on a timely basis either informally or via a report to the Council Respective responsibilities This plan has been prepared in the context of the Statement of Responsibilities of Auditors and Audited Bodies issued by the Audit Commission www audit commission gov uk We have been appointed as the Council s independent external auditors by the Audit Commission the body responsible for appointing external auditors to local public bodies in England As external auditors we have a broad remit covering finance and governance matters Our annual work programme is set in accordance with the Code of Audit Practice the Code issued by the Audit Commission and includ
8. he entity Understanding gt the business Understanding _ management s focus gt Evaluating the gt year s results Voyager 2015 Grant Thornton UK LLP the environment Creates and tailors audit programs Global audit technology Inherent Develop audit plan to risks obtain reasonable assurance that the Financial Statements a as a whole are free Significant from material risks misstatement and 3 gt prepared in all material respects Other with the CIPFA Code risks of Practice framework using our global methodology and audit software Material balances Note a An item would be considered material to the financial statements if through its omission or non disclosure the financial statements would no longer show a true and fair view Stores audit evidence Ensures compliance with International Standards on Auditing ISAs Devise audit strategy planned control reliance Extract your data v e Test controls e Substantive analytical review e Tests of detail General audit procedures Financial statements v e Test of detail Anal d e Substantive Report output nalyse data METETE using relevant F to teams review parameters Conclude and report Documents processes and controls Significant risks identified Significant risks often relate to significant non routine transactions and judgmental matters Non routine transactions are transact
9. information in the accounts e Trend analysis to assess completeness of payroll information 2015 Grant Thornton UK LLP Value for money Value for money The Code requires us to issue a conclusion on whether the Council has put in place proper arrangements for securing economy efficiency and effectiveness in its use of resources This is known as the Value for Money V M conclusion Our VfM conclusion is based on the following criteria specified by the Audit Commission VfM criteria The organisation has propet arrangements in place for securing financial resilience The organisation has proper arrangements for challenging how it secures economy efficiency and effectiveness 2015 Grant Thornton UK LLP Focus of the criteria The organisation has robust systems and processes to manage financial risks and opportunities effectively and to secure a stable financial position that enables it to continue to operate for the foreseeable future The organisation is prioritising its resources within tighter budgets for example by achieving cost reductions and by improving efficiency and productivity We have undertaken a risk assessment to identify areas of risk to our VfM conclusion We will undertake work in the following areas to address the risks identified gt review your Medium Term Financial Plan and financial strategy as part of our work to assess your arrangements for financial resilience review
10. ions that are unusual either due to size or nature and that therefore occur infrequently Judgmental matters may include the development of accounting estimates for which there is significant measurement uncertainty ISA 315 In this section we outline the significant risks of material misstatement which we have identified There are two presumed significant risks which are applicable to all audits under auditing standards International Standards on Auditing ISAs which are listed below Significant risk Description Substantive audit procedures The revenue cycle includes Under ISA 240 there is a presumed risk that revenue Having considered the risk factors set out in ISA240 and the nature of the revenue fraudulent transactions may be misstated due to the improper recognition of streams at the Council we have determined that the risk of fraud arising from revenue revenue recognition can be rebutted because This presumption can be rebutted if the auditor e there is little incentive to manipulate revenue recognition concludes that there is no risk of material misstatement opportunities to manipulate revenue recognition are very limited due to fraud relating to revenue recognition e the culture and ethical frameworks of local authorities including those at Swale Borough Council mean that all forms of fraud are seen as unacceptable Management over ride of controls Under ISA 240 the presumption that the risk of Work planned management ov
11. ngs and conclusion Overall we have concluded that the internal audit service continues to provide an independent and satisfactory service to the Council and that internal audit work contributes to an effective internal control environment Our review of internal audit work has not identified any weaknesses which impact on our audit approach Our work has not identified any issues which we wish to bring to your attention Internal controls have been implemented in accordance with our documented understanding Our work has not identified any weaknesses which impact on our audit approach Our work has identified no material weaknesses which are likely to adversely impact on the Council s financial statements Key dates The audit cycle 2015 Grant Thornton UK LLP February March 2015 August 2015 September 2015 October 2015 Interim audit Final accounts Completion visit Visit reporting Sere Date January February 2015 February March 2015 25 March 2015 August 2015 TBA By 30 September 2015 Key phases of our audit Activity Planning Interim site visit Presentation of audit plan to Audit Committee Year end fieldwork Report audit findings to those charged with governance Audit Committee Sign financial statements opinion and VFM conclusion Fees and independence Fees Fees for other services Service Fees Council audit 80 985 Grant certification indicative
12. ouncil is required to submit a Whole of Government accounts pack e The Council completes a claim for housing benefit subsidy grant on which audit certification is required Our response We will e liaise with the s finance team on relevant issues prior to the accounts being prepared e ensure that you comply with the requirements of the CIPFA Code of Practice through our work to review the 2014 15 financial statements We will e discuss the impact of legislative changes through our regular meetings with senior management and those charged with governance providing a view where appropriate We will e review the arrangements in place for the production of the AGS e review the AGS and the explanatory foreword to consider whether they are consistent with our knowledge We will e review your performance against the 2014 15 budget e undertake a wider review of financial resilience issues to support our VFM conclusion e We will carry out work on the WGA pack in accordance with requirements e We will certify the housing benefit subsidy claim in accordance with the requirements specified by Public Sector Audit Appointments Ltd This company will take over the Audit Commission s responsibilities for housing benefit grant certification from 1 April 2015 2015 Grant Thornton UK LLP Our audit approach 1 a Understanding and t
13. statement of the financial statements Non compliance with laws and regulations Expected modifications to the auditor s report or emphasis of matter Uncorrected misstatements Significant matters arising in connection with related parties SI SISI SIS Significant matters in relation to going concern GrantThornton 2015 Grant Thornton UK LLP All rights reserved Grant Thornton means Grant Thornton UK LLP a limited liability partnership Grant Thornton is a member firm of Grant Thornton International Ltd Grant Thornton International References to Grant Thornton are to the brand under which the Grant Thornton member firms operate and refer to one or more member firms as the context requires Grant Thornton International and the member firms are not a worldwide partnership Services are delivered independently by member firms which are not responsible for the services or activities of one another Grant Thornton International does not provide services to clients grant thornton co uk
14. your performance against the 2014 15 budget including the delivery of planned savings The results of our VfM audit work and the key messages arising will be reported in our Audit Findings report and in the Annual Audit Letter Results of interim audit work The findings of our interim audit work and the impact of our findings on the accounts audit approach are summarised in the table below Internal audit Walkthrough testing Entity level controls 2015 Grant Thornton UK LLP Work performed We have completed a high level review of internal audit s overall arrangements Our work has not identified any issues which we wish to bring to your attention We also reviewed internal audit s work on the Council s key financial systems to date We have not identified any significant weaknesses impacting on our responsibilities We have completed walkthrough tests of controls operating in areas where we consider that there is a risk of material misstatement to the financial statements We have obtained an understanding of the overall control environment relevant to the preparation of the financial statements including e Communication and enforcement of integrity and ethical values e Commitment to competence e Participation by those charged with governance e Management s philosophy and operating style e Organisational structure e Assignment of authority and responsibility e Human resource policies and practices Findi
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