The Audit Plan – template user guide
Contents
1. 2014 Grant Thornton UK LLP Thanet District Council Year ended 31 March 2014 1 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 Medium Term Financial Plan MTFP e Despite reductions in funding the Council s current financial position is sound but over the medium term the position is challenging The Council s MTFP includes savings of 3 2m over the next four years We will e review the Council s MTFP in our Financial Resilience review which forms part of our Value for Money conclusion work 2 Local government reforms The Local Government Finance Act 2012 introduced local council tax support and business rates retention These changes have increased the council s exposure to finance risks We will review the Council s management of these risks as part of our value for money conclusion work 2014 Grant Thornton UK LLP Thanet District Council Year ended 31 March 2014 Challenges opportunities 3 Finance Capacity e Increased staffing of the finance function resulted in improved accounts quality but capacity remains tight capacity remains tight at a senior level given the demanding range of complex strategic projects the Council is currently involved in We will e review progress against the Council s closedown action plan and e monitor cap2. 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
3. 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 not identified any weaknesses which impact on our audit approach At our final accounts audit we will undertake detailed testing on journal transactions during the financial year by extracting unusual entries for further review 9 Key dates The audit cycle February 2014 Interim audit visit Aug Sept 2014 September 2014 Final accounts Visit Completion reporting Key phases of our audit September 2014 Debrief Date January 2014 February 2014 March 2014 August September 2014 September 2014 September 2014 By 30 September 2014 2014 Grant Thornton UK LLP Thanet District Council Year ended 31 March 2014 Activity Planning Interim site visit Presentation of audit plan to Audit Committee Year end fieldwork Audit findings clearance meeting with Chief Financial Officer Report audit findings to those charged with governance Governance and Audit Committee Sign financial statements opinion Fees and independence Fees Council audit 87 495 Grant certification 23 700 Total fees excluding VAT 110 495 Our fee assumptions include e Supporting schedules to all figures in the accounts are supplied by the agreed dates and in acco
4. Grant Thornton The Audit Plan for Thanet District Council Year ended 31 March 2014 20 March 2014 Andy Mack Director T 020 7728 3299 E andy mack uk gt com Terry Blackman Audit Manager T 0207 728 3194 E terry blackman uk gt com Matthew Dean Executive T 020 7728 3181 E matthew dean 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 Go Our audit approach Significant risks identified Other risks identified Value for Money Results of interim work oo tk Sy iv Key dates Fees and independence 10 Communication of audit matters with those charged with governance
5. Expenditure expenditure improperly in year controls were operating in accordance with our performance of an analytical review and BENO1 certification computed documented understanding No issues were arising from this This will involve the selection of samples of welfare benefit work expenses from across the year for which the benefit payable will be recalculated to determine whether the amount paid was in accordance with DWP guidelines and welfare legislation 2014 Grant Thornton UK LLP Thanet District Council Year ended 31 March 2014 6 Other risks identified Other risks Description Housing Rent Revenue transactions not Revenue recorded Account Property PPE activity not valid Plant amp Equipment Property Revaluation measurement Plant amp not correct Equipment Work completed to date We have performed a walkthrough to gain assurance that the in year controls were operating in accordance with our documented understanding No issues were arising from this work We have performed a walkthrough to gain assurance that the in year controls were operating in accordance with our documented understanding No issues were arising from this work We have performed a walkthrough to gain assurance that the in year controls were operating in accordance with our documented understanding No issues were arising from this work 2014 Grant Thornton UK LLP Thanet District Council Year ended 31 March 2014 Furth
6. Respective responsibilities of auditor and management those charged with governance Overview of the planned scope and timing of the audit Form timing and expected general content of communications Views about the qualitative aspects of the entity s accounting and 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 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 Significant matters in relation to going concern Audit Audit plan findings v v v v v v v v v GrantThornton 2014 Grant Thornton UK LLP All rights reserved Grant Thornton means Grant Thornton UK LLP a limited liability partnership
7. acity constraints within finance and consider any resulting impact during our accounts and VFM audits e assess how effectively new management structures are implemented 4 Large scale developments e The Council continues to pursue a number of large and complex projects as part of its regeneration agenda such as options for development of the Dreamland and Pleasurama sites and redeveloping the Ramsgate port or securing an alternative ferry provider We will e monitor progress on developments as part of our value for money review and e consider any arising accounting implications as part of our accounts audit 5 Earlier accounts closure e The CLG is proposing to bring forward the timetable for closure of accounts by up to two months This could happen from as early as 2015 16 Implementation will represent a challenge and the Council will need to start identifying now ways in which it can streamline the accounts preparation process We will e We will work with you to discuss how you can streamline your accounts preparation process including reducing any extraneous detail de cluttering the financial statements We will also work with you to further improve the preparation of working papers for year end audit 2 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 requi
8. ating Creditors understated or e We have performed a walkthrough to gain assurance that the e We will review large and unusual items and test a sample of expenses not recorded in the correct in year controls were operating in accordance with our these period documented understanding No issues were arising from this e We will test a sample of items of expenditure to gain assurance work that expenditure has been correctly classified and for occurrence and allocation e We will perform tests of journals on a sample basis to gain assurance that there are adequate controls in place over inputting and processing and that these have operated effectively through the financial year Employee Employee remuneration e We have performed a walkthrough to gain assurance that the e We will test a sample of payroll payments made during the year remuneration accrual understated in year controls were operating in accordance with our to gain assurance that employees have been remunerated at documented understanding No issues were arising from this the correct rates during 2013 14 work e We will perform cut off testing to ensure that transactions have been recorded in the correct accounting period e In addition to a review of the work of the pension fund actuary we will perform substantive tests on the cost of pensions Welfare Welfare benefit e We have performed a walkthrough to gain assurance that the e We will complete modules set by the DWP which include
9. e impact of our findings on the accounts audit approach are summarised in the table below Work performed and findings Internal audit 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 Walkthrough testing 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 Journal entry controls We have reviewed the Council s journal entry policies and procedures as part of determining our journal entry testing strategy and have not identified any material weaknesses which are likely to adversely impact on the Council s control environment or financial statements 2014 Grant Thornton UK LLP Thanet District Council Year ended 31 March 2014 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
10. er work planned We will test a sample of items of revenue to gain assurance that expenditure has been correctly classified and for occurrence and allocation We will review large and unusual items and test a sample of these We will perform substantive audit procedures in this area including reviewing in year additions and disposals to gain assurance that they have been correctly accounted for in the financial statements performing existence testing on a sample of assets to verify their existence and completeness of the Council s fixed asset register We will review the work performed by internal and external valuation specialists including ensuring that all valuations undertaken have been completed in accordance with the requirements of the appropriate accounting and professional standards We will review the Council s fixed asset register to ensure that revised valuations have been correctly accounted for in the financial statements 7 Value for money Value for money We have undertaken a risk assessment to identify areas of risk to our VFM The Code requires us to issue a conclusion on whether the Council has put in conclusion We will undertake work in the following areas to address the risks place proper arrangements for securing economy efficiency and effectiveness in identified its use of resources This is known as the Value for Money V M conclusion Our VfM conclusion is based on the following criteria specif
11. ied by the Audit gt review of the Medium Term Financial Strategy and measures to address the Commission Council s significant funding gap maintain adequate reserves and reduce overall borrowing VfM criteria Focus of the criteria review of the Council s management of the challenges presented by welfare reform and business rates retention review of the quality of reporting of key financial and workforce information The organisation has proper The organisation has robust systems and ia and measures to address sickness absence levels arrangements in place for securing processes to manage financial risks and financial resilience opportunities effectively and to secure a e consideration of the capacity of the finance function to maintain the stable financial position that enables it to improvements noted in 2012 13 continue to operate for the foreseeable future ca 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 The 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 Thanet District Council Year ended 31 March 2014 8 Results of interim audit work The findings of our interim audit work and th
12. ment 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 Thanet District Council Year ended 31 March 2014 Substantive audit procedures Work completed to date e Review and testing of revenue recognition policies e Testing of material revenue streams Further work planned e Review and testing of revenue recognition policies e Testing of material revenue streams Work completed to date e Review of accounting estimates judgments and decisions made by management e Testing of journal entries e Review of unusual significant transactions Further work planned e Review of accounting estimates judgments and decisions made by management e Testing of journal entries e Review of unusual significant transactions 5 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 Work completed to date Further work planned Oper
13. nts would no longer show a true and fair view 2014 Grant Thornton UK LLP Thanet District Council Year ended 31 March 2014 Stores audit evidence Ensures compliance with International Standards on Auditing ISAs Devise audit strategy planned control reliance Extract your data y Y e Test controls e Test of detail e Tests of detail e Other e Other Report output Analyse data Sirians substantive to teams OE ey procedures procedures p General audit procedures Financial statements Conclude and report Documents processes and controls 4 Significant risks identified Significant risks often relate to significant non routine transactions 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 Manage
14. rdance 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 Thanet District Council Year ended 31 March 2014 Fees for other services Service Fees None Nil Independence and ethics We confirm that there are no significant 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 Pull 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 10 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 Finding
15. rements as set out in the Code of Audit Practice the code and associated guidance l Financial reporting e Changes to the CIPFA Code of Practice e Clarification of Code requirements around PPE valuations e 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 and business rate appeals through discussions with management and our substantive testing 2 Legislation e Local Government Finance settlement Welfare reform Act 2012 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 2014 Grant Thornton UK LLP Thanet District Council Year ended 31 March 2014 Developments and other requirements Corporate governance Annual Governance Statement AGS Explanatory foreword We will review the arrangements the Council has in place for the production of the AGS Wewill review the AGS and the explanatory foreword to consider whether they are consistent with our knowledge 4 Pensions e The impact of 2013 14 changes to the Local Government pension Scheme LGPS e We will review how the Council dealt with the impact of the 2013 14 changes through our meetings with senior management 5 Financial Pressures e Managing service provision
16. s 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 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 Thanet District Council Year ended 31 March 2014 Our communication plan
17. with less resource e Progress against savings plans e Wewill review the Council s performance against the 2013 14 budget including consideration of performance against the savings plan e Wewill undertake a review of Financial Resilience as part of our VFM conclusion Other requirements e The Council is required to 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 3 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 _ 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 stateme
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