The Audit Plan – template user guide
Contents
1. Our audit approach 1 a Understanding and the entity Understanding gt the business Understanding _ management s focus gt Evaluating the gt year s results Voyager 2014 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 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 Y e Test controls e Substantive analytical review e Tests of detail General audit procedures Financial statements Y e Test of detail Anal d e Substantive Report output nalyse data ETEMITE using relevant i to teams review parameters Conclude and report Documents processes and controls Significant risks identified Significant risks often relate to significant non routine transactions2. Grant Thornton The Audit Plan for Tunbridge Wells Borough Council Year ended 31 March 2014 June 2014 Darren Wells Director T 44 0 1293 554 120 E darren wells uk gt com Richard Smith Manager T 44 01293 554 101 E richard c smith uk gt com Graham Short Executive T 44 01293 554 088 E graham short 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 Significant risks identified 5 Other risks 6 Results of interim work 7 Value for Money 8 Logistics and our team 9 Fees and independence 10 Communication of audit matters with those charged
3. information technology controls were observed to have been implemented in accordance with our documented understanding 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 at the Council Our review of internal audit work has not identified any weaknesses which impact on our audit approach 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 Results of interim audit work Journal entry controls Value for money 2014 Grant Thornton UK LLP Work performed We have reviewed the Council s journal entry policies and procedures as part of determining our journal entry testing strategy We have not identified any material weaknesses which are likely to adversely impact on the Council s control environment or financial statements We have completed our initial risk assessment against the criteria specified by the Audit Commission Conclusion We have not identified any material weaknesses which are likely to adversely impact on the Council s control environment or financial statements and will review a sample of journal transactions as part of our financial accounts testing The council has
4. and judgmental matters Non routine transactions are transactions 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 The revenue cycle includes Under ISA 240 there is a presumed risk that revenue fraudulent transactions may be misstated due to the improper recognition of revenue Management over ride of controls Under ISA 240 there is a presumed risk that the risk of management over ride of controls is present in all entities 2014 Grant Thornton UK LLP Substantive audit procedures Work planned e Review and testing of revenue recognition policies e Testing of material revenue streams Work planned e Review of accounting estimates judgments and decisions made by management e Testing of journal entries e Review of unusual significant transactions 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 jud
5. e Review supporting documentation to confirm PPE carrying value at 31 3 2014 does not materially differ from fair value 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 Review of information technology controls 2014 Grant Thornton UK LLP Work performed and findings We have reviewed internal audit s overall arrangements in accordance with auditing standards 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 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 information systems specialist performed a high level review of the general IT control environment From 1 April 2013 the Council s ICT service is provided in partnership with Swale and Maidstone Borough Council s but the Council s main financial systems ledger payroll revenues and benefits continue to be used IT
6. with governance 2014 Grant Thornton UK LLP Understanding your business In planning our audit we need to understand the challenges and opportunities the Council is facing We set out a summary of our understanding below 1 Promoting a prosperous borough e The Council aims to deliver employment opportunities support improvements to the internet and roads and improve the vitality of the town centre Challenges opportunities 2 A Green Borough e The Council aims to improve the environment continue to cut waste and help reduce energy consumption through a variety of planning development and green initiatives NV 3 A confident Borough e The Council has developed a number of work streams to support the Community and widen community engagement including devolution of services to parish and town councils development of youth and cultural activities NVA OTE OLE e We will discuss the Council s plans for regeneration business growth and the opportunity for our wider firm specialists to help the Council and local companies through the Growth Accelerator scheme e Where the Council s plans impact on the accounts for will consider the impact on our audit instance through grants capital or revenue expenditure we 2014 Grant Thornton UK LLP e We will conduct our audit in a sustainable way utilising our software package Voyager to minimise the need
7. ed 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 includes 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 2014 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 eth
8. esources and efficiency and productivity 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 Key dates The audit cycle March June amp August September October Interim audit Final accounts Completion Debrief visit Visit reporting Key phases of our audit Date Activity February Planning March Interim site visit 1 July Presentation of audit plan to Audit Committee June August Year end fieldwork September Audit findings clearance meeting with Head of Finance and Governance 23 September Report audit findings to those charged with governance By 30 September Sign financial statements opinion 2014 Grant Thornton UK LLP Fees and independence Fees Council audit 67 406 Grant certification 18 400 Total fees excluding VAT 85 806 Our fee assumptions include e Supporting schedules to all figures in the accounts are supplied by the agreed dates and in accordance with the agreed upon information request list The scope of the audit and the Council and its activities have not changed significantly e The Council will make available management and accounting staff to help us locate information and to provide explanations 2014 Grant Thornton UK LLP Fees for other services Service Fees None Nil Independence and ethics We confirm that there are no significant
9. established arrangements in place against all of the areas of focus identified We identified the following as areas of risk to review in more detail e Follow up Internal audit s 2013 report on key financial accounting systems which provided limited assurance on compliance with contract procedure rules due to weaknesses in areas such as maintaining the contracts register tender re tender periods and ensuring contracts were signed on completion The level of resource within the finance department was noted as being a significant issue within the annual governance statement e The performance of Internal Audit in delivering against their plan e The Council s reporting on Risk Management and effectiveness of arrangements for managing risk 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 Focus of the criteria The organisation has proper The organisation has robust systems and arrangements in place for securing processes to manage financial risks and financial resilience opportunities effectively and to secure a stable financial position that enables it to continue to operate for the foreseeable future T
10. facts or matters that impact on our independence as auditors that we are required or wish to draw to your attention We have complied with the Auditing Practices Board s Ethical Standards and therefore we confirm that we are independent and are able to express an objective opinion on the financial statements Full details of all fees charged for audit and non audit services will be included in our Audit Findings report at the conclusion of the audit We confirm that we have implemented policies and procedures to meet the requirement of the Auditing Practices Board s Ethical Standards 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 issu
11. for hard copy documents e We will seek to minimise travel and energy consumption e Where the Council s plans impact on the accounts for instance through grants capital or revenue expenditure we will consider the impact on our audit e We will attend and speak at Council meetings that are relevant to our audit role e Our audit reports are published and are made available to the public on the Councils website e We will discuss the Council s plans for alternative service delivery models as part of our audit planning and value for money conclusion 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 2 Legislation 4 Pensions e The impact of 2013 14 3 Corporate governance e Annual Governance 5 Financial Pressures 6 Other requirements e Local Government Finance e The Council is required to e Managing service provision of Practice Clarification of Code requirements around PPE valuations Changes to NDR accounting and provisions for business rate appeals We will ensure that e the Council complies with the requirements of the CIPFA Code of Practice We have discussed the changes to require
12. gment 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 reasonably possible risks Operating expenses Employee remuneration Welfare Expenditure Property Plant amp Equipment Description Creditors understated or not recorded in the correct period Employee remuneration accrual understated Welfare benefit expenditure improperly computed Revaluation measurement not correct 2014 Grant Thornton UK LLP Work completed to date e Identify and walk through activity level controls e Identify and walk through activity level controls Identify and walk through activity level controls Identify and walk through activity level controls Further work planned e Substantive testing of creditor balances e Cut off testing e Performance of substantive testing on payroll expenses e Substantive testing of a sample of benefit claims e Review of reconciliation of benefit expenditure to the benefit subsidy claim e Completion of benefit software diagnostic tool uprating checks and analytical review to prior year subsidy claim e Review qualifications and work of experts e Substantively test revaluations to supporting documentation
13. he organisation has proper The organisation is prioritising its arrangements for challenging how resources within tighter budgets for it secures economy efficiency and example by achieving cost reductions and effectiveness by improving efficiency and productivity 2014 Grant Thornton UK LLP We have undertaken a risk assessment to identify areas of risk to our VfM conclusion The council has established arrangements in place against all of the areas of focus identified We identified the following as areas of risk to review in more detail Follow up Internal audit s 2013 report on key financial accounting systems which provided limited assurance on compliance with contract procedure rules due to weaknesses in areas such as maintaining the contracts register tender re tender periods and ensuring contracts were signed on completion The level of resource within the finance department was noted as being a significant issue within the annual governance statement The performance of Internal Audit in delivering against their plan The Council s reporting on Risk Management and effectiveness of arrangements for managing risk We will undertake work in the following areas to address the risks identified review of key financial indicators strategic financial planning arrangements financial governance arrangements financial control arrangements focusing on follow up of areas commented on in our 2012 13 assessment prioritising r
14. ical 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 misstatement 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 1 le el Significant matters in relation to going concern GrantThornton 2014 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 client
15. ments for PPE valuations with officers We are alert to business rate appeals through discussions with management and our substantive testing 2014 Grant Thornton UK LLP settlement e Welfare reform Act 2012 e We will discuss the impact of the legislative changes with the Council through our regular meetings with senior management and those charged with governance providing a view where appropriate Statement AGS e Explanatory foreword e Wewill review the arrangements the Council has in place for the production of the AGS e Wewill review the AGS and the explanatory foreword to consider whether they are consistent with our knowledge changes to the Local Government pension Scheme LGPS from 1 April 2014 We will discuss with the Council the preparations for the changes occurring in 2014 15 with less resource e Progress against savings plans e We will review the Council s performance against the 2013 14 budget including consideration of performance against the savings plan e We will undertake a review of Financial Resilience as part of our VFM conclusion submit a Whole of Government accounts pack on which we provide an audit opinion The Council completes grant claims and returns on which audit certification is required We will carry out work on the WGA pack in accordance with requirements We will certify grant claims and returns in accordance with Audit Commission requirements
16. s grant thornton co uk
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