 Hyfodol, mae'r bobl yn gweithio'r cyfnodd ei wneud a'r gwaith o'i ddoedd y dyfodol. Welch â gweithio'r gweithio'r cyfnodd y Gwylfaith Gweithio. Mae hynny yn ymdweithio'r Comitiddion Llywodraeth, Michael Atkins, a mae'r cyfnodd y mae'r Comitiddion. Please can those present in the council chamber note that everything on your desk, including your laptop screen is likely to be broadcast at some point. The camera follows the microphone being switched on. So counsellors and officers are advised to wait a few seconds before speaking to allow the camera to catch up. If you are participating via the livestream, please indicate that you wish to speak via the chat column and don't use it for any other purpose. Mae'n gweinio'r amser sydd yn gweithio'r amser ac mae'n gweithio, dwi'n ei fwyaf. Mae'n panfio arw PETeau sydd y dylai'r amser ond ond bandai'n cyfimio'r amser ond bod ydynau'r symud gyda'i gyfanyddol. Mae'n gweithio'r amser yn y pethau atnai a gyda'r amser ac mae'n gweithio'r amser yn gweithio'r amser. Yddech chi'n iawn iddyn nhw a gweithio arwetau'r amser, mae o'n gweithio arwet a gael i weld sydd yn gweithio rwyf yn gweithio arwet. ysgrifennidau sydd yn eich blwyddyn yn dweud, yw'r mewn gwirionedd yn gweithio'r gwerthu iawn, yw'r swydd yn gweithio'r gwirionedd yw'r gwirionedd? Mae'r dweud yn gwirionedd yn y cyd-dweithio gyda'r Llywyddyn Gwyneddol. Mae'r ddweud yn gallu'r gyda'r Gwynedd Llywyddyn Gwyneddol, ac mae'r ddweud yn gweithio'r dweud. Yn gweithio, mae'n ei ddefnyddio'r ddweud o'r ddweud o'r ddweud o'r ddweud o'r ddweud o'r ddweud. Gwylw'r cyfnod o'r cyfnod o'r cyfnod o'r yrhywbeth o'r ffaith iawn o'r ffaith iawn. Yn cyfnod, mewn arfer. Eitem 3, a phobl o'r fflawn i'n gweithiwn ar y ddechrau. Mae'n cyfan o'r gweithio'r gweithio ac o'r gweithio'r ddechrau ar y ddweud o'r 23 yma. Mae'n gweithio'r gweithio ar yr adnod o'r ffaith iawn. Rwy'n cael eu cefnod o'r ffaith iawn. Yr ystyried, ddim yn dda i yn fawr, a mae gennym yn ei fawr hun ddim, i fod yn y darllen. Mynd i gyd yn ymddangon y 31 yw ymddangos yma yw'r plan edrygyliau cyffredinol i'w ddweud mwylo'r cyfeirio. Yn amdano, bod ydym yn cy reliant o'r eich ysgol, oedd eich ysgol ar unrhyw, I believe there was a change to Appendix A, which is page 38 of the report, and paper copies of the updated version are available. If there's any confusion about that, we can address that in the discussion. But for now, I'll ask Mark Russell from Princeton Young to please present this report. Thank you. Yes, thank you, Chair. So, as mentioned, I'm here today to present the 2021 audit plan for the audit of the financial statements of 2020. And, as you rightly say, there is a supplement to the original report we sent. The only change to that is on that page in Appendix A related to fees. So that's an additional column that just pulls in the 18-19 fees as a comparison to 1920, and obviously to 2021. But I'll come to that in a little bit more detail moving forward. So, if I can take you to our audit plan, which I'm assuming you have the supplementary pack because it starts on your page three of the supplementary pack, which is obviously our page one. But our audit planning work is complete for 2021. So, therefore, this report summarises the findings of the audit work and, importantly, provides the audit committee information about the risks we've identified from an audit perspective on those financial statements. So, if I could take you to page, our page five, which I think is your page seven in the supplementary pack. Sorry, Mr Russell, could you just pause for one moment? Sorry, Councillor Williams? No, that's fine. Not a problem. Sorry, Mr Russell, if you would carry on. Thank you. Yep, not a problem. So, yes, as I say, our page five, which I think is your page seven in the supplementary. So, this is where we summarise the risks we've identified to the audit. So, the top two risks there are the fraud risks we've identified. Those fraud risks are present in all audits that we do for local government. Those two risks are linked to management override and their unique position where management are able to potentially, should they so choose to override internal control, therefore, perpetrate fraud. One of the key areas for us is the capitalisation of revenue expenditure. So, again, should they choose, management could move revenue expenditure from the income and expenditure statement to the balance sheet, which would therefore inflate your general fund position. But, as I say, these are risks that appear on all audit plans and are not unique to self-cams. The next risk we have is the valuation of investment properties, which we've labelled as a significant risk. So, in 1920, the council purchased three new investment properties, and then in 2021 have purchased a further three investment properties. As you can see from the figures quoted there, they're highly material in regards to the cost of purchase. The valuation at year end for 2021 has shown an increase in circa 24 million from that cost. The valuation of investment properties themselves are judgmental and contain lots of assumptions and methodologies used to derive their valuation, and therefore there's a heightened risk of material misstatement because some of those assets are very new to the council for a start and because of those big movements from year to year. The next risk at the bottom of our page five is regards to COVID grants. So, during 2021, the council received a significant level of government grants and funding regarding COVID due to the nature of them being rolled out in a short time frame. There was relatively large lack of clarity over the restrictions and the conditions applied to those grants. So, there's a risk from an audit perspective that those grants may be misclassified in the financial statements so that inherent risk reflects that. If I can move on to the next page, so our page six, so the top risk there, capital accounting entries, we've reduced the risk from last year, so we had that risk last year as a significant risk, we've now moved that to an inherent risk. So, in 2018-19, the council implemented a new fixed asset register, we identified a large number of adjustments required to the accounts to get the accounts correct. So, therefore in 1920, we had a carry forward with risk, which was significant for that year, but whilst we did find some issues and adjustments required in 1920, we think that's reduced to a low enough level to reduce that risk to inherent. The council is now in year three of using the fixed asset register and hopefully, obviously, I've now got the knowledge to be able to process those transactions accurately. So, the next risk is presentation of disclosure and accounting items. So, again, this is a brought forward of an historic risk, so over the past few years, stepping aside from PPE for the moment, fixed assets. We've found, again, levels of adjustments in disclosures and other balances across the accounts in prior years, so this risk reflects that there is still, for our perspective, the risk that the same types of errors could materialise in the 2021 accounts. I move on to our page seven, so over the page. The final two risks there around the valuation of land and buildings and of the pension liability. So, both of these figures are highly material balances in the council's balance sheet. Again, they're based on judgements, assumptions and various inputs into the estimation to derive those balances. And because of the nature of those assumptions and adjustments, there's a risk that there may be misstatements in there because even a small percentage error in those estimates would lead to a significant or material adjustment to the financial statements. At the bottom of our page seven is a summary of the materiality we've applied to 2021. So, the headline materiality we have set at $2 million and $70,000. I will report to you once the audit completes any adjustments over $103,000. If I could skip forward now to the VFM section, which is on your page 20, our page 18 of the report. Just give you a second to move on. So, the value for money work. So, in 1920 set for at least a new code for value for money. So, it has changed the focus of what we need to do for value for money when compared to prior years. So, that focus now is around three key areas around financial sustainability, governance and improving economic economy efficiency and effectiveness. The work we have to do now is a lot more focused, whereas it was a bit broader previously, but the key change for the audit committee is that once we've completed the value for money work, we will provide what's called an annual auditors report, which will provide our conclusion on value for money, but will also provide what they call VFM commentary. So, there's a list of key questions in those three areas I've just been through and how the council responds to those questions will be formed part of the annual auditors report. So, it will be questions such as how does the council monitor its budgets, how does it develop its medium term financial plan, etc. If I just take you to the final bit on VFM, which is our page 20. So, we have done our initial risk assessment work for value for money and have not identified any risks of weakness other than around informed decision making. So, in prior years, we've qualified VFM for the council because of the ability to produce reliable and timely financial data that clearly remains as a risk for 2021, but we'll need to assess obviously where the council has got to now and how that fits in with the new VFM regime to whether we qualify again or not as the case may be. And then, if I can skip to page 40, I think of your pack, which is the appendix A for fees, although I've just lost it. There it is. Yeah, so our page 38. So, the supplementary includes, as I mentioned before, the column for 2018-19. So, that shows a total additional fee for that year of circa 295,000. We have now concluded on what our fee proposal is for 1920. This has been discussed with Peter and is now with the PSAA for their determination. So, the fee for 1920 is a little bit different from 18-19 because it's split into two separate sections. So, the PSAA for 1920 across all local government audits asked auditors to provide an estimate of what we felt was the increase in the base scale fee. So, that was required because when the fee was set back in 2017, things have moved on in terms of regulatory pressure, new accounting standards, new auditing standards. So, across all of our audits and across the firms as well for local government audits, we've provided the PSAA for an estimate of how we think that fee should be increased in terms of the base scale fee. So, for 1920, we've got an additional fee there of 26,000. There is further details on the next pages of how that 26,000 is derived. The other area of additional fee, which is what is comparable to the additional fee in 18-19, is the section underneath which totals 150,000, which is approximately 50% the fee that we gained for 18-19. So, hopefully showing that progress the council is making in fee terms anyway in regards to how they're dealing with the audit and their ability to answer our queries, etc. So, we've also included there a plan fee for 2021 and put relevant ranges where possible. Some of those ranges are quite large, but obviously at this point in time, having not done the work, it's hard to determine exactly where those fees will land. And as per the notes above the table, PSAA have asked auditors to apply an additional 25% on to our individual hourly rates, so the plan fee for 2021 includes that 25% uplift. But as you can see for 2021, hopefully all things being equal, if the audit runs smoothly, that will again show a lower additional fee than it does in 1920 and the years before that. So, whilst I might not want to leave my presentation on fees, I will do, but I'm happy to take any questions on that report. Thank you very much, Mr Russell, for attending today and presenting the report and for picking out those highlights. I wonder if perhaps I might turn first if Mr Maddock, our head of finance wants to make any comments. Sorry, he's over there. He's not. You've thrown me now. That's all right. If you want to make any comments on any of this before I open it up to members of the committee. I don't think anything in particular, so we did have a discussion about the fees a couple of weeks ago now, and we agreed to make some changes to the original report just to make it a little bit easier to follow what's been happening over the last three years. But other than that, I didn't think there was anything in particular to raise at this point. Thank you very much. So I'll open this up to discussion from members of the committee. I'll start with Councillor Williams. Thank you. Thank you, Chair. If we look at the proposed fee column for 2020 with 2021, with the exception of one's place, we seem to be near the top end of that scale. So you'll say four and a half to six or 15 to 24 and then we're at 20. We don't seem to very often get towards the bottom side of that scale. So I'm wondering if you could provide us an answer as to why it could be because of certain transactions or what have you that we're at the top end and whether you foresee that we will still be towards the higher of those fees. Because it's quite a range, five to 25. It's a range of 20,000 pounds. So it makes a big difference to the final bill. And I'm sure I'm not the only one that's very keen to see us putting less money your way. I appreciate that. That's not good economics for your side of things, but it definitely is for the taxpayer. And also in valuation of the investment properties, a question for our officers, Chair. The amount that's spent on that, I assume, does get included in the costings of the properties when we're looking at how profitable those properties are and not put in just bulk with this scheme of everything else. Thank you, Chair. Thank you. I'll turn to you, Mr Russell, first. So that's all right, and then I'll come back to Mr Medic on the question of what happens to the costs associated with the properties. Yeah, it's fine. Thank you. So just wondering where to take. So the fees for 1920 are the actual clearly the fees we're proposing because of the costs that were incurred in 1920. What we've then tried to do is look to see where that would sit for 2021. Bear in mind, there is that 25% increase I mentioned. So if you took, for example, the group accounts, so in 1920, that was circa £5,000. So we came up with an initial range, which would be lower than the four and a half to £6,250. But obviously that's then increased it by 25%. So the aim is that the lower end of those ranges for 2020 would be if everything goes as planned, there is the reasonable level of audit queries, etc. And we don't find any issues within those distinct areas. Then the fee would end up at the lower end of those ranges. Obviously history has shown for 1920. Obviously going backwards, we've found inherent issues with the work we've been doing. So therefore, the fee we propose for 1920 is the higher end of the range. I agree that the range is a large. As I say, it's difficult to determine exactly where we're going to land and therefore try and squeeze those ranges closer together. Because it really depends on what information and the council's ability to respond to our queries in that timely fashion with quality information. So I would say that 2021 fees, the lower end of those ranges are the start of the fees. And if everything goes well, that will be what we charge. But obviously if we find issues as we have historically, that fee will increase incrementally depending on where we land at the end of the audit. So as part of the audit, I think that £12,000 was spent on audit work in relation to the investment policies. Clearly until a couple of weeks ago, I didn't know what the number was. Historically, we've not included that as part of the cost or part of the checking whether we're done. We're making what sort of surplus we're making on those properties. I suppose all I would say is that normally audit fees are charged centrally as a cost to the management of the organisation. But nevertheless, we can be aware of those sort of costs and can adjust for those if that's helpful. Councillor Williams, you wanted to come back in. Thank you. So first of all, in response to the first question, so I take it then that the plan to be the categories and the scale there is bespoke to this council. What I was trying to understand is was it something that was a general thing, but it sounds like it's bespoke. So we can please take extra care obviously with the capital account entries because that seems to have the biggest gap. And then in relation to our investment properties, I think it would be very wise when things come forward and they're being looked at and analysed whether to invest or not, that we make some provision in those decisions as to the external cost, the on cost of running it when we're calculating what sort of yield we're going to get. I think it would be prudent to include that going forward as we now can see that we're going to have increased costs in that area. Thank you, Chair. I think in relation to the £12,000, given it was the first year that we had investment properties in the camp, I think £12,000 to be seen fairly reasonable. Because there were a lot of questions we would have got in that first year that potentially we won't get in future years. So I think I'm pretty comfortable. Thank you. Councillor Harvey, I believe you indicated to come in. Thank you, Chair. In regard to the valuation of investment properties, I just wondered if you could explain and excuse my ignorance, but does evaluation represent what the best efforts would have been either at the date of, I suppose, the end of year accounts, or is that allowed to have the benefit of a retrospective view? In other words, I suppose at the actual year end, you may or may not be aware of a comparator building that could have actually given you a reliable benchmark rather than sort of an estimate based on market expectations and movements, et cetera. So there's some variability there, and I suppose that also applies to how you think, you know, whether the price paid was a sort of appropriate amount in terms of, and that would affect what it's kind of represented on the books as being valued out before you look at how it might have appreciated or depreciated. And, you know, again there, does that take into account a sort of retrospective view, or is it just what was paid on the day? And therefore, isn't there a sort of quite a lot of variability in this, and then, unless a sort of gross error is identified, you know, can one really justify putting a huge amount of effort into it, given that they're all those undefined effectively both ends? Thanks. Thank you. Mr Russell, any comments? Yeah, sure. So I think I'll come to the last bit first. So obviously the council, Peter, in his offices as we are, as auditors are driven by accounting standards, whilst there is a variability, like with any estimate, clearly, clearly, you know, one person's judgment of an estimate may be slightly different, hopefully, to another person's judgment of the estimate. And in terms of the level of work that's needed to put in, as I say, that is driven by the auditing and accounting standards we follow, whether, you know, you think personally, whether or not that's correct. I think that the difference you're alluding to with your first part is the difference between the accounting valuation and a sale valuation. So the assets are held in the financial statements at fair value, which is on a future income approach. So essentially, the value will look at how much income can be generated with that asset going forward based on, you know, leases that are signed up to the break clauses in leases, et cetera, and then apply a yield to that. And the yield is a reflection on investor confidence, in essence, in that asset. So again, it takes into account how well that asset could be leased in future years. So, you know, is it a well-producing big driver for income and therefore you get a better yield from it? So that is different to market value and clearly when they were purchased, they would have been purchased at market value. So there is a disparity, I suppose, between the market value if you were to sell that asset on 31 March 2021 in this case versus what it is for accounting purposes. But I think Peter may have more knowledge of how they're performing in terms of a true cost to the market and whether that was a worthy asset to purchase or not. So the code tells us that we need to re-value these every year and I think South Kerms is a prime example of why we do need to value these every year because in recent years we've seen some quite big increases in values on the science parking areas like that. So, you know, each year the value will come in, it will consider the properties themselves, it will consider similar properties, it will compare things. But there will always be, you know, there will always be a count taken of what's happening locally because quite clearly a similar property somewhere else has gone down in value. So, you know, we value them every year, we have seen a significant increase but I think we've got enough evidence to demonstrate that that is the case generally in the area and I think it's all well documented the value of properties particularly in the areas of Cainbridge. So, you know, I think it's a true reflection in my opinion of what's been happening locally and obviously between the purchase of the property. So, for example, one of the properties I think we purchased in the summer of 2019, even in that short period of time we saw some quite big increases. Each year they have to reassess them based on fair value which can be very different to the purchase price and I think demonstrates quite clearly why we need to do this on an annual basis. Thank you. I know there's some other members wanting to come in but just on this particular point, I think I'm right in saying that since the period covered by these accounts at least one if not more of these properties have been sold. I don't know if sales post balance sheet date can be used to give the order to any comfort that if those sale prices are comparable to the valuations that there's some comfort there that in this interim period there's some kind of realism to the numbers that you're looking at. Yes, certainly that it lends to that, I guess, body of evidence to support a given valuation. Clearly it will depend on the timing and also I guess the problem with true sale prices is the cost that it's bought of. Is that cost inflated because there's a particular reason a purchaser would want to buy that and therefore they want to pay over the market value for it so there is a, what's the word, not a reluctance, that's not the word I'm looking for but obviously we need to take that stand back to work out where the true value would be but yeah it certainly adds to that body of evidence. Thank you, I mean I can't remember the exact timing for the sales but how they went to this. Yeah so we sold one of the properties and I think it was probably in the following or was it 22, 23, do you know I've lost track of time? Yeah. There might be some evidence there to pull out in any case. I think we had possibly had quite possibly. I think I'll come now to Councillor Stobart who I think wanted to come in. Thank you chair. Two questions. Can I take them in turn? They're quite different topics. First in the, so I'm referring to page seven of the supplementary, the introduction to the risks and in particular the COVID-19 related government grants. Now this is a new risk and I was interested to know from the audit team just what are the technical challenges associated with this. I mean this is new, this is a new kind of a situation. Are there new technical challenges and how might those be dealt with? And are there examples, help coming from other sectors and jurisdictions who may have already been looking at COVID-19 grant related issues that could be helpful in the audit process? So those two questions are technical challenges and some of the lessons learned if you will from other sectors. And then I suppose as an extra thing coming out of that, will that be to supplement some of the other lessons learned in other areas of the council's business? Will this be an opportunity to say there are lessons learned from this which could be helpful in planning or in anticipating future events? Thank you chair. Thank you. Mr Roth, do you want to comment on those? Yep, sure. So there are, I started with COVID-19. So as mentioned, the range of grants that was received by the council were quite far ranging so it's not one or two grants, it's tens of different grants. The guidance provided at that time given the nature of COVID and trying to roll these grants out as quickly as possible meant that some of the guidance that would normally sit behind a grant wasn't. As readily available as it would be under normal grant giving conditions. The key technical challenge is the difference between what's called principle and agency accounting. So whether the council is acting as an agent for central governments, ie they take some money in and they just pay it to a range of individuals with no control over that money whatsoever. So they're essentially the middle man for that transaction. So that's agency accounting versus principal accounting where the council is given a chunk of money and the council is able to pass that money on under their own jurisdiction under how they see fit to best pass that grant on. So it's that split and that classification that's key for 2021. So because that leads to very different accounting treatments. So agency accounting, for example, just sits in your balance sheet to cash in a creditor then cash out once it's paid out. Whereas principal accounting follows the normal counting process for grants that you would see in other financial statements. So hitting balance sheet and CIS etc. In terms of lessons learned, I mean being a later running audit. Obviously many councils have already been through this. We as audit teams have audited other councils that have dealt with this classification issue. Most of the grants turned out to be principle in nature, which is the sort normal route for a grants. There are one or two individual grants that were agency, so it depends on whether the council have received their grants or not. And to be fair, they were mainly more in the bigger county council unitary bodies rather than district councils. There is learning we've taken from it. So whilst it still remains a risk, I think when we were producing audit plans in the middle of COVID for these things, it was a lot different because it was all new to us. Whereas it's a bit more of a standard process and it's now just about checking what the council has done. And the council have already provided up front a paper to tell us as an audit team how they think the classification for each grant should be recorded. So hopefully it'll be a relatively smooth process, but there is, as I say, that possibility of misstatement, which is obviously lending itself to the risk. In regards to other lessons learned, sorry, I wasn't sure what that was specific to. Is that just audit wide or was it another particular area? May I just clarify a little? So what I was thinking was, and this is maybe more a question for the council officers, is in the process of handling grants, of answering questions about them for audit and so on. Are there lessons learned for council operations, for example? It's a very good question. It's a very good question. It's probably something I need to take away and have a bit more of a think about because I suspect there probably are. Can I take that away and have a bit of a think about that? Thank you. Just on this particular point, I noticed in the appendix listing the fees, there isn't a separate line for the COVID-19 grants and the work associated with that. So is that included within the scale fee and the changes in work required in the top half of the fee schedule? So I think that's a reflection of, whilst it is a risk and will take an element of more work, in theory it shouldn't take a significant amount of work to lend to additional fee because given that learning we've had from those previous audits. So, you know, we as an audit team know what should happen. I guess it's then how that just translates with the council. So there shouldn't really be an additional fee associated with it per se, assuming there's no underlying issues with what the council have done in the draft statements. Thank you. Not that I'm encouraging you to add further lines to your fee bill, just checking that something hasn't been missed there. Councilor Leaming, I'm going to come to you now. I think you had some comments. That was going to be one of my questions, actually, which I'm quite glad that that's been covered in that way. Alongside that, which I think you've touched on, is how material are these grants to the accounts? You've talked about different treatments as well between the principal grants and the agency grants. I guess there will touch different bits of the sets of the accounts. Some will be going through reserves and some will be just going through the think and expenditure sheet, I guess. How material are those grants, please? That was my first question. I have other questions as well, but perhaps if we can just stick with the COVID-19 grants first, please. Thank you. I think, sorry, I must make noise to come in at this point. We are talking about quite significant sums of money. I can't remember exactly at the top of my head, but the initial grant scheme that was announced that was linked to business rates, we're talking about tens of millions of pounds were made available for businesses. We had to distribute them in quite a period of time. As Mark says, there is clearly a risk around anything that's delivered in a hurry, but everybody was in the same boat. We are talking quite significant sums of money, yes. Thank you. My second question relates to page 32, which is the timetable of communications and deliverables. At the moment, it sounds like we're on track with our timetable. In June, the substantive testing is going to begin with walkthroughs with key systems and processes. Has that begun yet? Is that going to be happening over the next few weeks? I just wonder whether you could give an update, please, on progress with this timetable. Thank you. Mr Russell? The audit is in essence due to start next week. There will be various elements to that inherently with any audit. There's a touch of set-up time, so in terms of the impact on the council, it's probably more going to start hitting proper in the week after, but we have the teams as set-up for next week to start the audit as per that plan in the audit plan. We're on track at the moment. Yes, I think the key is next week onwards. Could I please check, do you have the working papers that you need? Yes. Is the short answer, I think? Excellent. That's really good news. Thank you to everybody for that. The next question I was going to ask was to do with the value for money qualification. When you spoke earlier, you sounded like that was a judgement that had to be made through the process of this audit. I'm wondering whether there is any work that we can do as part of the audit committee or officers to ensure that we move from having a qualified opinion to an unqualified opinion. What are the factors that would be forming a judgement there, please? The historic factors that have created that qualification have been clearly timing, which we are behind on timing is a key impact, but it's more around the level of support for a set of financial statements. It's that reliability of the financial statements and therefore the level of audit errors, et cetera, and the time it's taken to do an audit. Historically, these audits have taken a large period of time for various reasons. It's really a combination of how quickly can the council prepare, how quickly is probably the wrong term, but how efficiently can the council prepare its accounts and supporting working papers, and then how well do they then support audit through that process for us to get our assurance and obviously provide you with an opinion. As per the slide we were just talking about, the two-month period, if we got to a position where we finished the audit in that two-month period and we were ready to sign, et cetera, that would push us more towards the side of not qualifying. Clearly if we have issues as we've noted in the past and the audit gets longer and longer, then we would be more pushed to the side of qualification again. We do need to loop it in because there is a new regime for the VFM, which is not fully worked through yet, so there's a different set of criteria, but they are largely equivalent to each other. Thank you very much. Thank you, thank you, thank you both. One question from me and then I'll see if there are any final comments from members. Just reviewing the key risks, and if we just put the fraud risks just once for the moment, about half of the remaining risks I think exactly half are around valuation, either of investment properties, land and building pensions. These are all areas where obviously the council has relied on external sort of expert advice in order to arrive at those valuations. Perhaps Mr Russell and then Mr Maddock you could speak to how the communication is going to be established between the audit team and those valuers and indeed the in-house, other in-house experts I believe at Ensign Young, but you wish to call on and how we can ensure that, because those are outside in some ways the direct control of the accounts team at the council, how we can ensure that you can efficiently get the assurances that you require. Sure, so if I start with pensions first. So the pension liability is obviously driven by the Cambridge pension fund, which impacts a number of audits within the obviously part of that pension fund. So a lot of the work with those external experts has already been completed because they supported the other bodies when their audits went back in the past. So we do have all the information already from the experts for the pension fund. It's then just a matter of us as an audit team working through it and linking that obviously to the council specific circumstances. So that shouldn't be an issue, as I say, because that has already been covered in regards to investment property valuations. So again we have requested the information from the council's valuers for those investment properties. We've now received that, and that is with our internal valuers, because our internal valuers are doing a review of those six investment property valuations. In regards to moving forwards, I guess the blockers will be, if our valuers have queries, then that has to come through obviously as an audit team, then go to Peter and his team and then to the council's valuers. So it's making that as smooth a process as possible. Clearly if there's a range of queries, our valuers are more than happy and a lot of the times asked just to have a call directly with a council's valuers to make that process as smooth as possible. And that's something I know we've talked with Peter and officers before anyway about getting our valuers together just to talk it out rather than sending messages backwards and forwards along the communication chains. And I think those are probably the two key ones. There is obviously a valuation expert for the NDR appeals provision, but again we write to them and they've responded to us already I believe. So that again shouldn't be an issue. It's really the investment property valuations where we need to ensure that smooth process. Thank you. Oh sorry, councillor Hal. Just pause for one moment. Thank you councillor Hal. The system didn't think so I'm afraid. I think we now might turn to Mr Malick just if you had any further comments on the valuers. Sorry councillor Stobarton. Chair I'm sorry there was a second question I was going to ask. It's not a great significant. Is it okay to pose it now? It's not a great significant. It's not a great significant. It's not a great significant. It's not a great significant. Is it okay to pose it now? I might just come to Mr Malick first and then I'll come to yourself. Thank you. Just to add that we have spoken to both of our key property valuers and indeed one of those is also the business rates appeals value as well. Put them on notice that the auditors will potentially be contacting them and can they respond as clearly as possible and they're both confirming they can. It's probably fair to say in the past that the question has gone to the valuers and they've not exactly responded in a timely fashion as we would have liked. So they have been put on notice that we need them to turn around queries as soon as possible. So they know that. As regards officers around the council there are one or two key officers around the council who should you get asked for information or should you get questions please answer them as soon as you possibly can. If you're not sure either speak to the auditors or speak to myself or for Zahler if they need some clarity. So we've made it pretty clear you need to treat this as a priority if there's any questions or information requests. Thank you. That's very reassuring. Councillor, I'll come to you now. Chair, I apologise about the timing of my interjection. So I had a question and this is more a kind of tutorial new councillor question around materiality and this is a technical term that's well understood by those in the accountancy business. But there are some special interpretations of materiality here in regard to the way the council operates. And I just wondered if for those of us not so familiar with accounting terms whether this could be a training opportunity, we might look this in with a few other things. But an understanding of this as if you will a degree of freedom around interpretation of figures that might be a starting point and please correct me otherwise. But in fact it's cumulative and this has several dimensions so a simple well this is an error band is obviously not the case. So this might set an agenda for if there were comments about materiality in the process of this committee, then I'd ask complete for a little extra explanation that we could apply or discuss at the time. Thank you councillor. I wonder Mr Russell can you perhaps just perhaps a minute or two on the audit materiality work that you've done and the kind of the significance of some of the key figures that the committee needs to understand and approve? Sure, so I think our page 22, see your page 24 and 25 of the supplementary gives a bit more detail on our materiality than the page I went through earlier. So there are three key levels of materiality which is in the great hexagons. So our materiality is based on the council's gross expenditure which is so the planning materiality which I'll come to in second is based on gross expenditure. So planning materiality is the level of materiality to what we give our opinion on. So our audit opinion essentially says your council's account so true and fair to the level of that materiality. So we are saying there are no errors that we're aware of above that higher level materiality and we can't sign an audit opinion if we're aware of errors or mistakes. If you tell me what to use above that for example on page 24 a 2.07 million. We then assess what we call performance materiality and the performance materiality is the level to what we actually test for in our audit. So that performance materiality is calculated based on our assessment of the risk of any given body and the amount of errors that we could identify. So the range we have there for a normal audit is anywhere between 75 and 50% of PM we can apply to performance materiality because of the issue or because of the level of adjustments we found historically with South Cambridgeshire District Council we applied 50% because that gives us a lower threshold so therefore we have to test to a lower level which means we test more items and therefore it's more likely that we would find if there are any misstatements in any given balance. So planning materiality is the materiality for our opinion. Performance materiality is the materiality we audit to because essentially we give ourselves head room between our opinion and what we audit to to give that again assurance that there's no material errors in the financial statements. The audit difference level is always set at 5% of planning materiality and that's just a level that we deem would be appropriate for communication to those charged with governance so yourselves about any adjusted or unadjusted errors we may have found in our audit work. That helped. Thank you. In your paragraph there it states that the performance materiality percentage is lower than the percentage used in the previous year. So if I'm understanding that so does that mean you're essentially that you are taking your materiality the performance materiality is at a lower level than it was last year and therefore you're having to undertake more extensive testing or does it mean that the discount is lower? That means that sentence is wrong. Apologies that should say so last year we applied 50%. There you go, good spot. So that sentence should say it's the same materiality percentage. Apologies that is an error in our report there. So we should understand it's the same level of rigor if you like as was done in the previous year. Apologies for that. No, no, no problem. Any final comments on the audit report before I close this item? Councillor Williams. Well observed, Chair. I only spotted it because of Councillor Stobach's excellent intervention so it's always worth asking these questions because you never know what you then might find. So we've been asked to just check quickly. We've been asked to note this plan and the plan itself asks us to confirm our understanding of an agreement to the materiality and reporting levels that we have just discussed. Can I take it that we're happy to note and approve those levels? Thank you very much. Mr Russell, for attending today we appreciate your extensive answers and it gives us confidence and all the best for the testing and work over the next couple of weeks. Thank you very much. We now come to item five which is the Audit and Corporate Government Committee annual report. I'm going to ask Mr Tully to introduce this report in the first instance and then we'll open it up for discussion. Thank you. Thank you very much and good afternoon everyone. So we should be back to page 57 of your agenda reports back. So by way of introduction, the reports are a joint piece of work with officers and members both contributing to it. What I'm hoping to do is provide a bit of an overview of the report. It should summarise the work that we completed over the 2022-2023 financial year. Now it's good practice to summarise this work and report it to full council and you might be aware that it's set out in our terms of reference to do that. By doing that the report is helping to improve understanding of the work we do and that helps to raise our profile. Consequently that should give us the potential to be more influential and effective. Now the Chartered Institute of Public Finance and Accountancy set out guidance for Order Committees and we've considered that guidance when drafting our report. So that's quite helpful because it helps to evaluate our impact and it also helps to identify areas where we could improve. So yes, the report starts on page 57. Rather than actually go through the report and read out the words because I hope that it's quite easy to read what I'd like to do is just chat about the style and structure of it because we put a little bit of effort this year into refreshing it. So starting off on page 58 we have an overview of the community where it actually includes who we are. So I hope that should raise our profile. Moving on to page 61 we include a section what we did during the year. Now I would say it'd be very simple and easy to just literally list the committee meetings that we all attended. But I think what adds more value is to look at it from a different perspective. So what we've done is we've mapped it to areas where audit committees can have impact and those are areas which are set out by SIPFA in their guidance and audit committees. So this enables us if you like to be able to have a gap analysis because if there was any gaps in one area we knew that being an area we want to focus on in future. Now I can see that we've quite a lot of content in there so that's quite a good positive sign. Moving on to page 66 we have learning developments. It's important that we undertake that and that reflects we did some learning throughout the year. And also those parts of continuous improvement you can see that we have top tips to things that we can work on going forwards. And then just finding conclusion we get to the summary on page 67. So that was the key points I wanted to highlight but it's all our reports so I'm happy to engage in conversation with people about it. Thank you Mr Tully. So I believe we all saw earlier draft of this and we had some comments beforehand but given that we needed to meet today to discuss the audit plan anyway I thought it couldn't hurt to look at it one last time before we send it off up to the July full council meeting. So do any members wish to come in? I think Councillor Williams had a comment. Thank you. There's been a lot of work done on the presentation. Photos probably aren't necessarily of committee but they're in there because I don't like my photo. So I think just on page 67 one thing for us as committee is we did some work on whistleblowing. We had a task and finish group that looked at whistleblowing policies and things and we looked at the bullying anti-bullying task and finish group which feels like last year but probably was a year before. So one of the piece of work we did there was very much looking at how it's communicated because the whistleblowing policy is only as effective as its communication and I think we did that back then. We had gone through we were sort of in Covid, weren't we? Covid times when we looked at all of that but how with the way people are working now there has been changes to the organisation so I think it would be good for us to look at that again as a committee and have that re-open that discussion over here or sort of re-establish that working group because that sort of worked quite well and to just look at those policies and how they're being implemented and where we think we need to go with it because I think there was a lot of concern with the way of work changing that people wouldn't necessarily know where to go to access it to councillors we did an audit of councillors of whether they knew where to go if they suspected there was a case of fraud councillor Mason sort of said about people having to do sort of annual checks and it would be interesting to see from what we did how that is going and whether we need to do some more so I think that's my main thing chair on here which is based on page 67 the other thing is that last time we did so we were going to try and get this at the AGM so it would go through with the other annual reports we obviously missed that that moment this year but I think it would be good for us to get back into that sequence of this coming to the AGM I appreciate there's always competing competing draws on our time but it would make sense for all members to see this in the context of everything else that has gone on in that annual report setting so that's my two comments chair Thank you I think you make a good point in respect to the AGM I think just the timings of where we were with audits meant that it wasn't a sensible time to be drawing this up but it may well be that by this time next year we're in a position to send a similar report to next year's annual general meeting in terms of the whistle blowing it's highlighted on page 67 but I am interested in your comments that perhaps there was some previous work done on this and it could be looked at again perhaps Mr Maddakor or Mr Tully we can bring that back to perhaps a July committee meeting review the work that was done and consider how this committee might drive that work forward if that's acceptable Do you want to comment on that? Yeah I think we did we update the whistle blowing policy recently Jonathan The update was quite recent and what I would always say it's always good to continue to promote these things there's no harm in that that's the positive thing today Just to help our elaborate because we went through and it was from an anti-bullying task and finish group that looked at how you would raise those sorts of HR functions and we had the whistle blowing but a lot of the task and finish group that was going to be communicated because it's great if we've got no on-stats if you look at the face of it you think no whistle blowings happen that means everything's fine or is it actually that people don't know how to access it and that's why we we were covering I should emphasise it wasn't a task and finish group just to do that it was covering a range of things but I think it is an important conversation for us to have and sometimes the task and finish group is probably a more appropriate place we might want to look at establishing that from the committee again Yeah, thank you Should we bring that to the July meeting perhaps consider re-establishing the task and finish group and picking up that communication piece I was just going to add you mentioned Ford earlier we are planning some Ford training for both members and officers and interestingly we're talking next week to somebody who works within the Ford industry who is well respected and we're intending to get them in to do some training hopefully with all members I'm not quite sure the timing of that we'll need to liaise with Andy Francis around that but certainly we're hoping to deliver that in the next two to three months four months maybe in the door that's coming up Thank you Mr Medic I think you wanted to come in Thank you chair Mark was a more general comment and it's good to see the listing of the learning and development that we did the Treasury Management Session and the Effective Audit Committees They were excellent for Treasury Management of course I wasn't attending but the feedback looked to be very good but the Effective Audit Committees was great and thanks to Mr Tully for organizing that and running it there were some follow-up actions which would be great to revisit and perhaps they become themes for the training for this coming year and I think it would be helpful as a committee to be responsive perhaps to each other's needs if that's chair you could take a lead on that that if there is an expression of interest I know we've looked at Treasury Management maybe there's some of that aspect but there aren't any of the accounts and I think of HRA for example as a kind of specialist area which would be nice to know a little bit more about So are there things coming up but could we set a general kind of atmosphere that if there is a training issue then we could respond to that by planning something and running it in an appropriate time scale Thank you councillor for that yes I'd be very encouraging of that I just mentioned I think some training around counter fraud I suppose strictly speaking is next on the agenda and I think members have expressed an interest in understanding that field of work a little deeper but absolutely we should take on board what came out of that effective audit committee's workshop when we're planning some training for the future year Thank you Thank you for the comments on the report I've spotted a few comments and colons that I want to put in but I won't trouble you with those but if you're happy this report or something almost identical will go to the July committee July council thank you so we've been we've been asked to recommend this report to the council that we're all happy with that thank you very much and thank you Mr Tully Mr Tully for presenting the report Item 6 is massive topical interest I'm going to use this heading to introduce this man sitting very patiently next to me Mr John Murphy joins us as the monitoring officer replacing Rory McKenna we will be seeing Mr Murphy on a regular basis to update us on the council's extensive use of ripper powers which have not yet materialised and of course anything else but Mr Murphy was saying that you wanted to say at this junction that's fine I think a good opportunity for him to meet the members of this committee and understand some of the work that we do are there any additional matters that members wish to raise Councillor Williams just a slight procedure as we're making a recommendation to for council it may be best for the minutes that we propose and second it before we agree to go through understood I think that probably would be sensible I'm happy to propose it somebody happy to second it thank you councillor Sanford can I see votes in favour of the sending the report up to council thank you thank you councillor Williams keeping us on track any other comments from members or officers I was going to ask Mr Maddo if he wanted to talk any more about the kind of communications plan and run up to the audit but I feel like we've mostly covered it because you wanted to say with audit work kind of starting next week that you think the committee should be aware of can't think of anything specifically say we have done a lot of comms across the organisation around the audit much more than we've done previously and we'll keep that up and we'll put a post on the insight and things like that no I don't think so particularly I mean I was just going to respond to councillor Stolbald's question about training on the HRA I mean that's something we can do at fairly quick notice I mean we've got some training materials in relation to that so I'm more than happy to arrange something for members of interest so thank you perhaps after we've scheduled the fraud in potentially in between the two audits there might be a few months there where we can fit some training in that might be of benefit to members and we've also run that second stage to the treasury management training as well I don't know either so I did speak to Fazzana about that and I think we're intending to perhaps run that second stage in the November this coming November if possible but so I think given how well we see the first one was I think that would be sensible to do the second one perhaps if possible I think that's sensible final comments from anybody thank you thank you very much for attending today good to check in on the audit just before it starts the next meeting will be held on Wednesday the 26th of July at 10am in addition to the items you might expect we should have an update by then on how the 2021 audit has gone it won't be fully signed off by then but hopefully the substantive testing will be complete and we can have an updated timeline et cetera from the auditors and officers so with that I will close the meeting thank you very much for coming today thank you chair