Agenda item

To receive the Annual External Audit Letter for the year ending 31 March 2020, in respect of both Hampshire County Council and Hampshire Pension Fund.

Cllr House declared a non-pecuniary interest in the following item, as a Member of the Board of Public Sector Audit Appointments (PSAA).

The Committee received the external auditors letter for the year ending 31 March 2020.

The auditor highlighted to Members that:

·         As set out within the report, an unqualified opinion was given for the Statement of Accounts for 2020 for both Hampshire County Council and the Hampshire Pension Fund, as well as an unqualified conclusion in respect of the County Council’s value for money.

·         Section seven of the report set out the fee position for both Hampshire County Council and the Pension Fund. It was noted that the Auditors had made a request for an amendment to the scale fee. In the auditors view it was appropriate to rebase the scale fee as audit fees nationally were considered to be divorced from the level of risk and work required for public sector audits. Members heard that the fees would be subject to the PSAA's final decision, however both the County Council and Ernst and Young had taken a constructive approach in airing their respective views which had maintained the existing positive working relationship.

In response to Members questions it was heard that:

·         The final Statement of Accounts are signed off each year by the external auditors, working where possible to the County Council’s preferred deadline, which was set as 30 November for the 2020 accounts. It was noted that there had been a slight delay in signing off the accounts for 2019/20 due to a new requirement, in response to the pandemic, to provide detailed cash flow figures to enable the auditors to assess the going concern. This was a requirement of all organisation across the country and it was noted by the PSAA that circa 60% of local authorities accounts were outstanding sign off as at 30 November. Data needed to be presented in a format not used before and the County Council were able to provide this by mid-December, with the audit resolved quickly thereafter. Members were invited to note that the County Council correctly published its accounts as at 30 November without the audit opinion, in accordance with national requirements, and republished this once the audit opinion was available.

·         The approximate cost for Hampshire County Council’s audit fees was proposed at just over £200k, which included a £56k non-audit fee for controls for the Integrated Business Centre. The auditors noted that the scale fee of £89k was set four years ago, and in their opinion was not a sustainable fee for an organisation the size of Hampshire County Council. Therefore they had proposed an increase of £40k, subject to PSAA approval. It was heard that the County Councils view was that fees should remain at the level agreed when the contract was tendered and Members heard that a report would be submitted to the PSAA in support of the County's position. Whilst it was recognised that audit firms may have met additional demands resulting from the pandemic, savings should also have been generated during the year from reduced travel cost etc.

RESOLVED:

That the Audit Committee receives and notes the Annual Audit Letter for the year ending 31 March 2020.