Agenda item

The Committee received a report from the External Auditor explaining the scope of the audit, the risks identified and the procedures that will be performed to deliver the audit for Durham County Council (for copy see file of Minutes).

Mr M Kirkham, Mazars, advised that the materiality level was defined with the early stages of the audit.  The benchmark used to calculate materiality was based on the gross revenue expenditure.  2% was applied to get to the materiality figure.

Mr Beavis asked if 2% was a standard rate and was advised that it was the rate used for Local Authorities that had no significant financial problems and had a level of earmarked reserves, and was on par with similar authorities.

Councillor Temple asked if triviality was also driven by a percentage and if so asked what it was.  Mr Kirkham explained that it was 3% of the overall materiality and was at a level at which errors would be reported.

The Chairman thanked Mr Kirkham for providing these assurances.

Mr J Collins, Mazars went on to advise of the significant risks and key judgements.  He referred to the earlier close down of accounts and the team were prepared to do this by the end of July 2017.  The Value for Money Conclusion showed no significant changes and additional audit work around the MTFP savings was highlighted.  Mr Collins added that Mazars had moved to Salvus House, a building owned by Durham County Council.  He pointed out that this had no bearing on the independence provided by the team. 

The Chairman confirmed that this had been discussed fully with him before the move took place and it had been agreed to report this formally to the Committee

Mr Beavis referred to the mitigation of risks in terms of the management override of control and was surprised to see that personal motivation was not included as a risk.  Mr Collins advised that as part of the planning process the team made assessments of the risk of fraud and the incentive of management was taken into account.  Mr Kirkham added that they held a view of scepticism but were also mindful of the financial pressures faced and the risk this could entail.

Resolved:

That the report be noted.