External Audit Briefing - moderngov.merseytravel.gov.uk · External Audit Briefing Presentation to...
Transcript of External Audit Briefing - moderngov.merseytravel.gov.uk · External Audit Briefing Presentation to...
External Audit
Briefing
Presentation to the inaugural
meeting of the Audit Committee
of Liverpool City Region
Combined Authority
13 January 2015
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Your External Audit
Background
Audit responsibilities
External audit in local government
Quality assurance
Audit outputs
Timing of our work
Role of external audit at the Audit Committee
Audit Committee relationship with external audit
Financial statement opinion risks
Value for Money risks
Your External Audit team
2 © 2014 KPMG LLP, a UK limited liability partnership, and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative, a Swiss entity. All rights reserved. Printed in the United Kingdom.
Background
Appointed by the Audit Commission
Code of Audit Practice
Fees set independently
3 © 2014 KPMG LLP, a UK limited liability partnership, and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative, a Swiss entity. All rights reserved. Printed in the United Kingdom.
Audit Commission Code of Practice
We have two main responsibilities under the Code:
1. Audit of the financial statements
to be satisfied that the accounts comply with statutory requirements;
to be satisfied that proper practices have been observed in compiling
the accounts; and
to express an opinion on the accounts.
2. Use of resources (VFM)
to be satisfied that proper arrangements have been made for securing
economy, efficiency and effectiveness in the use of resources
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External audit in local government
Different models across local government bodies:
Local Government (eg local authorities, fire authorities) – driven by the
Department of Communities and Local Government compliance framework
and the Audit Commission’s external audit regime
Other bodies (eg Combined Authorities and PTEs) – as above but a lighter touch Value for Money role for
auditors.
Future arrangements
From 1 April 2015 a transitional body, Public Sector Audit Appointments Limited (PSAA), will oversee the
Commission’s audit contracts until they end in 2017 or 2020.
PSAA’s responsibilities will include setting fees, appointing auditors and monitoring the quality of auditors’
work.
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Quality assurance
Our audit approach exceeds external standards set by the
Auditing Standards Board.
Audit quality builds on the foundations of a robust methodology and
highly skilled, well trained staff.
Regulator (AC/PSAA)
KPMG peer review
Engagement quality control review
Senior manager and partner review
Our audit methodology
Recruitment and retention of high skilled staff
6 © 2014 KPMG LLP, a UK limited liability partnership, and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative, a Swiss entity. All rights reserved. Printed in the United Kingdom.
Audit outputs
Outputs Comments
Audit fee letter
Issued prior to starting the audit. Sets out the planned fee for the year.
The Audit Commission has agreed a fee of £47,187 for 2014/15 which is
unchanged from that of the ITA. This may change in future if the LCRCA grows.
Audit Plan Sets out our responsibilities in detail, and how our work will be delivered.
Planned issue date January 2015.
ISA+260 Report
(Opinion and VFM
Conclusion)
Reports our findings from our audit of the financial statements and the VFM
conclusion.
Planned issue date September 2015 (to meet Audit Commission deadline).
Annual Audit Letter Provides an overall summary of the audit for the year.
Planned issue date October 2015.
7 © 2014 KPMG LLP, a UK limited liability partnership, and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative, a Swiss entity. All rights reserved. Printed in the United Kingdom.
Timing of our work
Audit
Committee
Apr May Jun Jan 2015
Mar Feb Oct Dec Sep Nov
Interim
Audit Committees
Audit
Committee
Feb/Mar 2014/15
Systems and
governance
audit
Dec/Jan Risk
assessment
and planning
procedures
Jan Finalisation of
external audit
plan for
2014/15
Jul/Aug Completion of
2014/15
accounts audit
including
review of WGA
Aug
Jul
Oct Overall
completion
of the audit
Jan Audit plan and
fees letter
2014/15
Progress
Reports
Sep Audit Opinion,
VFM conclusion
and audit
certificate
ISA+260 report
Audit
Reports
Oct Annual
Audit
Letter
Audit
Milestones
Feb/Mar VFM
conclusion
work
Sep Oct
Audit reports and milestones
8 © 2014 KPMG LLP, a UK limited liability partnership, and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative, a Swiss entity. All rights reserved. Printed in the United Kingdom.
Role of External Audit at the Audit Committee
■ To present completed reports
■ To explain clearly the findings from work undertaken
■ To provide independent assurance to those charged with governance
■ To provide feedback, clarification and additional assurance on any concerns
arising
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Audit Committee relationship with External Audit
■ Discuss audit plans and reports
■ Consider impact of findings
■ Challenge assumptions/assessments made
■ Agree further work
■ Meet with External Audit once a year in private
10 © 2014 KPMG LLP, a UK limited liability partnership, and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative, a Swiss entity. All rights reserved. Printed in the United Kingdom.
Financial statement opinion risks
Growth fund
Interrelationship
with other bodies
Lease
accounting
Provisions
Disclosure
requirements
Compliance
with laws &
regulations
Agreement of
inter-authority
balances
Application
of cut off
Fraud risk
Provisioning for doubtful debtors
Group
reporting
Valuation of tangible assets
High Paid Employees
Prior year
issues
Completion of
WGA return
Segmental
analysis
Pensions
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Value for Money risks
Inspections
Internal audit
roles at CA /
Merseytravel
/ PTE
New body
new risks
Rolling stock
acquisition
PTE Audit Committee
Audit and
Governance Committee
Committee
interaction
Continued
business
development
New
governance
arrangements
Peer review
follow-up
Peer reviews
Regulator reviews
Relationships Eg LEP
Rolle of Non-
Executives
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Audit team
Tel: 0161 246 4774
e-mail: [email protected]
Tel: 0113 231 3611
e-mail: [email protected]
“My role is to lead our team
and ensure the delivery of a
high quality, valued added
external audit opinion.
I will be the main point of
contact for the Audit
Committee and Chief
Executive.”
“”I provide quality assurance
for the audit work and
specifically any technical
accounting and risk areas.
I will work closely with Tim to
ensure we add value.
I will liaise with the Director of
Resources and other
Executive
Directors”
Tel: 0161 838 4653
e-mail: [email protected]
“I am responsible for the
management, review and
delivery of the audit.
I will be responsible for the
on-site delivery of our work
and will supervise the work of
our audit assistants.
I will liaise with the Head of
Accountancy
Tim Cutler Partner
Ian Warwick Manager
Richard Tyler Assistant Manager
Questions
Presentation by
Tim Cutler
Partner
KPMG LLP