Issue - meetings

To present to Members the Audit Commission’s draft Cheshire East Audit fee letter for 2009/10.

Members considered a report on the Audit Commission’s draft Cheshire East Audit fee letter for 2009/10. The letter was appended to the report and set out the proposed audit work for 2009/10 and the associated fee.

Judith Tench of the Audit Commission attended the meeting to present the Commission’s proposal and answer questions.

Keith Ward of Baker Tilly also attended the meeting to advise Members on the audit process.

The draft Audit fee letter set out the audit work to be undertaken during the year in relation to the financial statements, the Use of Resources assessment and Value for Money conclusion (which formed part of the Comprehensive Area Assessment), and certification of grant claims and returns.

Audited bodies were required by statute to meet the cost of audit as specified by the appointed auditors, and the associated charges were therefore unavoidable. The proposed audit fee for 2009/10 was £401,925 (exclusive of VAT). This was based on the Audit Commission’s national fee rate with an uplift of 15% to reflect the perceived risks likely to impact the 2009/10 accounts. The base budget for audit fees, inherited from the predecessor councils, totalled £299,557. The quoted audit fee for 2009/10 therefore exceeded the budget provision by £102,368. This overspend would fall to be met from council balances as there was no contingency provision to cover the additional costs.

The Audit Commission had indicated, however, that the fee would be reviewed throughout the year as their risk assessment was updated and refined. There was scope, therefore, to mitigate the potential budget shortfall. The Officers confirmed that there was scope to reduce the level of fee by adopting the risk management approach outlined in the report. This could eliminate some or all of the 15% risk element of the fee, which would reduce the potential overspend by up to £52,425.

Keith Ward advised that the key risks affecting the Audit Plan were the impact of LGR in terms of transitional and restructuring costs, and the authority’s core financial systems which were still being developed. He added that the Governance Statement was a key component and he needed to be satisfied that it was consistent with the rest of the Plan. He congratulated the Council on maintaining three independent teams for the purpose of producing the final accounts of the former District Councils.

At the conclusion of the discussion, the Chairman thanked Judith Tench and Keith Ward for their attendance.

RESOLVED

That the Audit Commission’s audit fees letter for 2009/10 be received and the proposed work programme, indicative fee and associated budgetary implications be noted.