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

1 © 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.

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


Background

Appointed by the Audit Commission

Code of Audit Practice

Fees set independently


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


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.


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


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.


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


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


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


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


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


Audit team

Tel: 0161 246 4774

e-mail: [email protected]

Tel: 0113 231 3611


“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


“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

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