independent auditor’s report to the … auditor’s report to the members of reading borough...

INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS OF READINGBOROUGH COUNCILIssue of audit opinion on the financial statementsIn our audit report for the year ended 31 March 2016 issued on 17 November 2016we reported that, in our opinion, the financial statements:

· gave a true and fair view of the financial position of Reading Borough Councilas at 31 March 2016 and of its expenditure and income for the year thenended; and

· had been prepared properly in accordance with the CIPFA/LASAAC Code ofPractice on Local Authority Accounting in the United Kingdom 2015/16.

Issue of value for money conclusion on Reading Borough Councilarrangements for securing economy, efficiency and effectiveness in the use ofresourcesIn our audit report for the year ended 31 March 2016 issued on 17 November 2016we reported an adverse value for money conclusion in the following terms:

Basis for Adverse ConclusionInformed decision making

• Understanding and using appropriate and reliable financial and performanceinformation to support informed decision making and performance information.

We found that the financial and performance information used by the Council is notalways accurate and reliable and therefore did not help informed decision making.This is demonstrated by the financial position that the Council currently finds itself inand the need for significant savings.

• Reliable and timely financial reporting that supports the delivery of strategicpriorities.

We found that the financial reporting was not reliable as it did not identify the amountof the financial pressures that the Council faces in 2016/17 and in particular theoverspends in Children’s services.

• Maintaining a sound system of internal control

We found that some of the basic financial controls were not working as expected, forexample, the regular completion of reconciliations was not timely. This increases therisk of fraud errors remaining undetected. The Council recognise the need to improvefinancial controls.

Sustainable resource deployment

• Planning finances effectively to support the sustainable delivery of strategicand maintain statutory functions.

We found that planned action had not been taken to achieve sustainable savingsduring 2016 that may have prevented the need for significant savings to be made asa matter of urgency in the 2016/17 budget.

• Children’s Services

In August 2016, Ofsted issued an inspection report of services for children in need ofhelp and protection, children looked after and care leavers and a review of theeffectiveness of the local safeguarding children board.

It concluded that Children’s services in Reading are inadequate and found serious,persistent and systemic failures in the services provided to children who need helpand protection. The Inspection found that children are left too long in situations ofunknown and acute risk.

The Council have accepted the findings of the Inspection and are developing aresponse to it and will be helped by the appointment of a Commissioner forChildren’s Services.

Adverse conclusionOn the basis of our work, having regard to the guidance issued by the C&AG inNovember 2015, we are not satisfied that, in all significant respects, ReadingBorough Council put in place proper arrangements to secure economy, efficiencyand effectiveness in its use of resources for the year ended 31 March 2016.

CertificateIn our report dated 17 November 2016, we explained that we could not formallyconclude the audit on that date until we had completed the work necessary to issueour assurance statement in respect of the authority’s Whole of Government Accountsconsolidation pack. We have now completed this work.

No matters have come to our attention since that date that would have a materialimpact on the financial statements on which we gave an unqualified opinion or asignificant impact on our conclusion on the authority’s arrangements for securingeconomy, efficiency and effectiveness

We certify that we have completed the audit of the accounts of Reading BoroughCouncil in accordance with the requirements of the Local Audit and AccountabilityAct 2014 and the Code of Audit Practice issued by the National Audit Office.

Maria Grindleyfor and on behalf of Ernst & Young LLP, Appointed Auditor19 January 2017

Ernst & Young LLP

Reading Borough CouncilAnnual Audit Letter for the year ended 31 March 2016

January 2017

Contents

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Contents

Executive Summary ................................................................................................................................................................................ 2

Purpose .................................................................................................................................................................................................. 5

Responsibilities....................................................................................................................................................................................... 7

Financial Statement Audit ..................................................................................................................................................................... 10

Value for Money .................................................................................................................................................................................... 14

Other Reporting Issues .......................................................................................................................................................................... 18

Focused on your future .......................................................................................................................................................................... 21

Appendix A Audit Fees ..................................................................................................................................................................... 23

In April 2015 Public Sector Audit Appointments Ltd (PSAA) issued ‘‘Statement of responsibilities of auditors and audited bodies 2015-16’. It is available from the Chief Executive ofeach audited body and via the PSAA website (www.psaa.co.uk)

The Statement of responsibilities serves as the formal terms of engagement between appointed auditors and audited bodies. It summarises where the different responsibilities ofauditors and audited bodies begin and end, and what is to be expected of the audited body in certain areas.The ‘Terms of Appointment from 1 April 2015’ issued by PSAA sets out additional requirements that auditors must comply with, over and above those set out in the National AuditOffice Code of Audit Practice (the Code) and statute, and covers matters of practice and procedure which are of a recurring nature.

This Annual Audit Letter is prepared in the context of the Statement of responsibilities. It is addressed to the Members of the audited body, and is prepared for their sole use. We, asappointed auditor, take no responsibility to any third party.

Our Complaints Procedure – If at any time you would like to discuss with us how our service to you could be improved, or if you are dissatisfied with the service you are receiving, youmay take the issue up with your usual partner or director contact. If you prefer an alternative route, please contact Steve Varley, our Managing Partner, 1 More London Place, LondonSE1 2AF. We undertake to look into any complaint carefully and promptly and to do all we can to explain the position to you. Should you remain dissatisfied with any aspect of ourservice, you may of course take matters up with our professional institute. We can provide further information on how you may contact our professional institute.

Executive Summary

Annual Audit Letter for the year ended 31 March 2016 – Reading Borough Council

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Executive Summary

We are required to issue an annual audit letter to Reading Borough Council (the Council) following completion of our audit procedures for the year ended 31March 2016. This has been a difficult and time consuming audit to complete and whilst we recognise that the finance team has been underconsiderable pressure we have had to spend a substantial amount of additional time on the audit. Apart from the additional time spent up to theend of September we have had a full team working through October and into November and this will result in an additional audit fee.We will work through the learning from the audit process with the finance team to ensure that the lessons from the 2015/16 audit and fed intothe planning and preparation work for the current 2016/17 accounts process and audit to ensure that appropriate supporting working papers areavailable and the process runs more smoothly.Below are the results and conclusions on the significant areas of the audit process.

Area of Work Conclusion

Opinion on the Council’s and the Pension Fund’s :► Financial statements

Unqualified – the financial statements give a true and fair view of the financial position of theCouncil and Pension Fund as at 31 March 2016 and of its expenditure and income for the yearthen ended.

► Consistency of other information publishedwith the financial statements

Other information published with the financial statements was consistent with the AnnualAccounts.

Conclusion on the Council’s arrangements forsecuring economy, efficiency and effectiveness

We are not satisfied that the Council has put in place proper arrangements to secure economy,efficiency and effectiveness in its use of resources for the year ended 31 March 2016 and weissued an adverse value for money conclusion.


Reports by exception:► Consistency of Governance Statement The Governance Statement was consistent with our understanding of the Council.

► Public interest report We had no matters to report in the public interest.

► Written recommendations to the Council,which should be copied to the Secretary ofState

We had no matters to report.


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► Other actions taken in relation to ourresponsibilities under the Local Audit andAccountability Act 2014

We had no matters to report.


Reporting to the National Audit Office (NAO) onour review of the Council’s Whole of GovernmentAccounts return (WGA).

We have not yet completed our work on the WGA return.

As a result of the above we have also:


Issue a report to those charged with governanceof the Council communicating significantfindings resulting from our audit.

Our Audit Results Report was issued to the Council on 17 November 2016.

Issue a certificate that we have completed theaudit in accordance with the requirements of theLocal Audit and Accountability Act 2014 and theNational Audit Office’s 2015 Code of AuditPractice.

We will issue our certificate following completion of our WGA work.

We would like to take this opportunity to thank the Council’s staff and for their assistance during the course of our work.

Maria Grindley

Executive DirectorFor and on behalf of Ernst & Young LLP

Purpose


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Purpose

The Purpose of this LetterThe purpose of this annual audit letter is to communicate to Members and external stakeholders, including members of the public, the key issuesarising from our work, which we consider should be brought to the attention of the Council.

We have already reported the detailed findings from our audit work in our 2015/16 Audit Results Report to the 17 November 2016 Audit andGovernance Committee, representing those charged with governance. We do not repeat those detailed findings in this letter. The matters reportedhere are the most significant for the Council.

Responsibilities


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Responsibilities

Responsibilities of the Appointed AuditorOur 2015/16 audit work has been undertaken in accordance with the Audit Plans that we issued on 15 March 2016 and is conducted inaccordance with the National Audit Office 2015 Code of Audit Practice, International Standards on Auditing (UK and Ireland), and other guidanceissued by the National Audit Office.

As auditors we are responsible for:

► Expressing an opinion:

► on the 2015/16 financial statements; and

► on the consistency of other information published with the financial statements.

► Forming a conclusion on the arrangements the Council has to secure economy, efficiency and effectiveness in its use of resources.

► Reporting by exception:

► if the annual governance statement is misleading or not consistent with our understanding of the Council;

► any significant matters that are in the public interest;

► any written recommendations to the Council, which should be copied to the Secretary of State; and

► if we have discharged our duties and responsibilities as established by thy Local Audit and Accountability Act 2014 and Code of AuditPractice.

Alongside our work on the financial statements, we also review and report to the National Audit Office (NAO) on your Whole of GovernmentAccounts return.


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Responsibilities of the CouncilThe Council is responsible for preparing and publishing its statement of accounts accompanied by an Annual Governance Statement (AGS). In theAGS, the Council reports publicly each year on how far it complies with its own code of governance, including how it has monitored and evaluatedthe effectiveness of its governance arrangements in year, and any changes planned in the coming period.

The Council is also responsible for putting in place proper arrangements to secure economy, efficiency and effectiveness in its use of resources.

Financial StatementAudit


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Financial Statement Audit

Key IssuesThe Statement of Accounts is an important tool for the Council to show how it has used public money and how it can demonstrate its financialmanagement and financial health.

The Council missed the deadline of 30 September 2016 for the delivery of their audited accounts. The audit started on time and as planned,however we were not provided with the information needed or responses to our queries in a timely manner and by the deadline there was asubstantial amount of work outstanding. We were therefore not able to complete our work and report to the meeting of the Audit and GovernanceCommittee on the 29 September 2016. We recognised the capacity issues that some of the Council’s key members of staff were experiencing.Council staff have since worked hard to respond to our queries and we were able to issue an unqualified opinion on the statement of accounts on17 November 2016.

The key issues identified as part of our audit were as follows:

Significant Risk Conclusion

Management override of controlsA risk present on all audits is that management is in aunique position to perpetrate fraud because of its abilityto manipulate accounting records directly or indirectly,and prepare fraudulent financial statements by overridingcontrols that otherwise appear to be operatingeffectively.Auditing standards require us to respond to this risk bytesting the appropriateness of journals, testingaccounting estimates for possible management bias andobtaining an understanding of the business rationale forany significant unusual transactions.

We obtained a full list of journals posted to the general ledger during the year, andanalysed these journals using criteria we set to identify any unusual journal types oramounts. We then tested a sample of journals that met our criteria and tested theseto supporting documentation.We considered accounting estimates relating to the Local Government PensionScheme and Property, Plant and Equipment and found that estimates are reasonable,and there was no indication of bias in the calculation of the estimates.We did not identify any:► material weaknesses in controls or evidence of material management override;► instances of inappropriate judgements being applied; or► transactions during our audit, which appeared unusual, or outside the Council’s

normal course of business.


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Revenue and expenditure recognitionUnder ISA240 there is a presumed risk that revenue maybe misstated due to improper recognition of revenue.In the public sector, this requirement is modified byPractice Note 10, issued by the Financial ReportingCouncil, which states that auditors should also considerthe risk that material misstatements may occur by themanipulation of expenditure recognition.

We completed our planned work, we:· reviewed revenue and expenditure recognition policies;· reviewed and discussed with management accounting estimates on revenue

or expenditure recognition for evidence of bias;· tested of material revenue and expenditure streams; and· reviewed and tested revenue cut-off at the period end date.

The fraud on s106 monies was identified during the year and we completedadditional procedures to gain assurance on the response to this.No other significant issues were identified.

Other Key Findings Conclusion

Risk of understatement of Equal Pay provisionWe reviewed the equal pay provision and found that theamount disclosed in the statement of accounts wasunderstated when compared to the predicted amount thatthe Council may have to pay out.

We identified that the provision disclosed was understated. At our request,management revised the value of the provision and associated disclosures. Weconclude that the balance is now fairly stated.

Reliance on one contractor to prepare year-endfinancial informationWe reviewed the work of the contractor by reviewing hiswork for correctness and completeness, includingwhether the balances are consistent with ourunderstanding of the entity’s business and underlyingdata and testing recorded amounts. We identified nosignificant issues.

We identified no significant issues and concluded that the work produced by thecontractor could be relied on for our purposes.

Valuation of Property Plant and Equipment (PPE)We found that PPE had been valued in line with guidance.We did have problems in obtaining supporting informationfor some items and for others could not confirm theirexistence.

Following amendment, due to some assets not being separately identifiable, we areable to conclude that the balance is now fairly stated.


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Valuation of Investment PropertiesWe reviewed the valuation of investment properties andfound that one had been sold during the year.

Following the amendment of the disclosure we are satisfied that the balance is fairlystated.

Control themes and observationsIt is the Council’s responsibility to develop and implement systems of internal financial control and to have proper arrangements to monitor their actualadequacy and effectiveness. Our responsibility as auditor is to consider whether the Council has arrangements to satisfy itself that this is indeed the case.

We reported to the Audit and Governance Committee on 19 April 2016 in our updated audit plan that during the financial year control accounts had notbeen maintained on a regular basis and these are an important element of internal control which we seek to rely on. Management agreed to implementimproved monitoring of the completion and review of control accounts.

We found at our year end audit visit that reconciliations for a number of control accounts were still not up to date when we started the audit and thiscaused us further delays. In particular, we experienced difficulty auditing cash. As shown in Appendix B to this report, during the course of our audit, eightadjustments to the year-end value of cash and cash equivalents were identified and required to be made. These adjustments were made by managementand cash was restated from £1,759K to £8,324K as a result. In addition, cash balances of a further £2,010K held by the Council on an appointee ordeputy basis on behalf of others were identified during the audit and amended to ensure they are disclosed in Note 35 of the accounts. We note that onthe main bank account held with Lloyds bank, a difference of £35K remains unreconciled by the Council.

Governance Issue

We were not notified by management of the fraud that occurred with the S106 income during the financial year of audit. We were informed of it throughan internal EY press sweep. It is important that we are informed of all such frauds particularly when we are undertaking work on the financial statements.This also contributed to the delay in the completion of the audit as we needed to undertake work to provide us with assurance that similar frauds did notremain undetected. Following a review of action taken by the Council we asked for some additional procedures to be undertaken. We have receivedassurances that these have been undertaken successfully and no further frauds have come to light.

We identified that both the Leader and the Deputy Leader are members of the Audit and Governance Committee. Guidance issued by CIPFA indicates thatleadership of the Council should not be represented on the Committee. We recommend that the composition of the Committee is reviewed.

We have been copied into requests for information from a member of the public concerning Mapledurham Trust. Whilst recognising that the Councilofficers have been busy on other issues the length of time it has taken to respond to the request has increased the concerns of the member of the public.We recommend that prompt action is taken to respond to such requests and that the initial response in such cases should be delegated to allow theresponse to be reviewed by a senior manager.

Value for Money


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Value for Money

We are required to consider whether the Council has put in place ‘proper arrangements’ to secure economy, efficiency and effectiveness on its useof resources. This is known as our value for money conclusion.

Proper arrangements are defined by statutory guidance issued by the National Audit Office. They comprise your arrangements to:

· Take informed decisions;· Deploy resources in a sustainable manner; and· Work with partners and other third parties.

Proper arrangements forsecuring value for money

Informeddecision making

Working withpartners andthird parties

Sustainableresource

deployment


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We issued an adverse value for money conclusion on 17 November 2016. Key findings are set out below:

Delivering financial resilience

We performed the procedures as outlined in our audit plan. We identified the following significant weaknesses in the Council’s arrangements toensure it took properly informed decisions and deployed resources to achieve planned and sustainable outcomes for taxpayers and local people:

Informed decision making

• Understanding and using appropriate and reliable financial and performance information to support informed decision making andperformance information.

We found that the financial and performance information used by the Council was not always accurate and reliable and therefore did not helpinformed decision making. This is demonstrated by the financial position that the Council currently finds itself in and the need for significantsavings.

• Reliable and timely financial reporting that supports the delivery of strategic priorities.

We found that the financial reporting was not reliable as it did not identify the amount of the financial pressures that the Council faces in 2016/17and in particular the overspends in Children’s services. The overspend in Children’s services was greater than predicted at the beginning of theyear and Officers are working hard to identify the true extent of it.

• Maintaining a sound system of internal control.

We found that some of the basic financial controls were not working as expected, for example, the regular completion of reconciliations was nottimely. This increases the risk of fraud and error remaining undetected. The Council recognise the need to improve financial controls.

Sustainable resource deployment

• Planning finances effectively to support the sustainable delivery of strategic and maintain statutory functions.

We found that planned action had not been taken to achieve sustainable savings during 2016 that may have prevented the need for significantsavings to be made as a matter of urgency in the 2016/17 budget.

• Children’s Services


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In August 2016, Ofsted issued an inspection report of services for children in need of help and protection, children looked after and care leaversand a review of the effectiveness of the local safeguarding children board.

It concluded that Children’s services in Reading are inadequate and found serious, persistent and systemic failures in the services provided tochildren who need help and protection. The Inspection found that children are left too long in situations of unknown and acute risk.

The Council have accepted the findings of the Inspection and are developing a response to it and will be helped by the appointment of aCommissioner for Children’s Services.

Other ReportingIssues


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Other Reporting Issues

Whole of Government AccountsWe are required to perform procedures by the National Audit Office on the accuracy of the consolidation pack prepared by the Council for Whole ofGovernment Accounts purposes.

Due to the issues and delays with the financial statement audit, we have not yet completed our work on the WGA return.

Annual Governance StatementWe are required to consider the completeness of disclosures in the Council’s annual governance statement (AGS), identify any inconsistencies withthe other information of which we are aware from our work, and consider whether it is misleading.

We completed this work and following amendment the AGS now better reflects the current position of the Council.

Report in the Public InterestWe have a duty under the Local Audit and Accountability Act 2014 to consider whether, in the public interest, to report on any matter that comesto our attention in the course of the audit in order for it to be considered by the Council or brought to the attention of the public.

We did not identify any issues which required us to issue a report in the public interest.

Written RecommendationsWe have a duty under the Local Audit and Accountability Act 2014 to designate any audit recommendation as one that requires the Council toconsider it at a public meeting and to decide what action to take in response.

We did not identify any issues which required us to issue a written recommendation.

Objections ReceivedWe did not receive any objections to the 2015/16 financial statements from members of the public.

Other Powers and DutiesWe identified no issues during our audit that required us to use our additional powers under the Local Audit and Accountability Act 2014.


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IndependenceWe communicated our assessment of independence in our Audit Results Reports to the Audit Committee on 17 November 2016. In ourprofessional judgement the firm is independent and the objectivity of the audit engagement partner and audit staff has not been compromisedwithin the meaning regulatory and professional requirements.

Control Themes and ObservationsAs part of our work, we obtained an understanding of internal control sufficient to plan our audit and determine the nature, timing and extent oftesting performed. Although our audit was not designed to express an opinion on the effectiveness of internal control, we are required tocommunicate to you significant deficiencies in internal control identified during our audit.We have not identified any significant deficiencies in the design or operation of an internal control that might result in a material misstatement inthe financial statements and which the Council does not know about. However, during the audit we identified some issues on management’sfinancial processes and controls.In particular, we are concerned over the operation of the Cash and Bank reconciliation. We note that a number of amendments have been madeto the Cash balance and it has taken a lot of time and detailed testing to be satisfied that the balance is fairly stated.

Focused on yourfuture


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Focused on your future

Area Issue Impact

Faster close From the 2017/18 financial year, the deadline for preparing theCouncil’s financial statements will move to 31 May from 30 June. Inaddition, the deadline for completing the statutory audit will move to31 July from 30 September.

The faster closedown timetable requires the Council toadjust its timetable for preparing the accounts, as wellas the budget setting process and the timing ofcommittee meetings.It requires upfront planning to identify areas of theaccounts that can be prepared earlier, before the 31March, and there will be a need to establish robustbasis for estimations across a wider number of entriesin the financial statements.For the 2016/17 audit, we are working with officers tobring our work forward to support the transition aheadof the new deadlines in 2017/18.

Appointment ofauditors

The current audit contracts expire on the completion of the 2017/18audit. The expiry of contracts also marks the end of the currentmandatory regime for auditor appointments.After this the Council exercise choice about whether it decides to optin to the authorised national scheme, or whether to make otherarrangements to appoint its own auditors.In July 2016, the Secretary of State for Communities and LocalGovernment specified Public Sector Audit Appointments limited(PSAA) as an appointing person under regulation 3 of the Local Audit(Appointing Person) Regulations 2015.PSAA will be able to appoint an auditor to relevant authorities thatchoose to opt into its national collective scheme.

Appointment of auditors for the 2018/19 financialyear is required by 31 December 2017.The Council should consider whether it intends to optinto the appointed person scheme to appoint yourauditors from 2018/19 or whether the Council shouldmake its own arrangements following the legislativerequirements.

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Audit Fees

Appendix A


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Appendix A Audit Fees

The table below sets out the scale fee and our final proposed audit fees

DescriptionFinal Fee 2015/16£

Planned Fee 2015/16£

Scale Fee 2015/16£

Final Fee 2014/15£

Total Audit Fee – Code work TBC* 108,938 108,938 145,250

Total Audit Fee – Certification of claimsand returns - Housing Benefits

TBC* 20,187 20,187 16,610

*When we have completed our WGA work we will be able to finalise our audit fees for 2015/16

We confirm we have not undertaken any non-audit work outside of the PSAA’s requirements.

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EY | Assurance | Tax | Transactions | Advisory

Ernst & Young LLP

© Ernst & Young LLP. Published in the UK.All Rights Reserved.

ED None

The UK firm Ernst & Young LLP is a limited liability partnership registered in England and Waleswith registered number OC300001 and is a member firm of Ernst & Young Global Limited.

Ernst & Young LLP, 1 More London Place, London, SE1 2AF.

ey.com

Ernst & Young LLP

Reading Borough CouncilYear ending 31 March 2017

Audit Plan

19 January 2017

The UK firm Ernst & Young LLP is a limited liability partnership registered in England and Wales with registered number OC300001 and is a member firm of Ernst & Young Global Limited.A list of members’ names is available for inspection at 1 More London Place, LondonSE1 2AF, the firm’s principal place of business and registered office.

Members of the Audit and Governance CommitteeReading Borough CouncilCivic OfficesBridge StreetReadingRG1 2LU

19 January 2017

Dear Committee Members

Audit Plan

We are pleased to attach our Audit Plan which sets out how we intend to carry out our responsibilities asyour auditor. Its purpose is to provide the Audit and Governance Committee with a basis to review ourproposed audit approach and scope for the 2016/17 audit in accordance with the requirements of theLocal Audit and Accountability Act 2014, the National Audit Office’s 2015 Code of Audit Practice, theStatement of Responsibilities issued by Public Sector Audit Appointments (PSAA) Ltd, auditingstandards and other professional requirements. It is also to ensure that our audit is aligned with theCommittee’s service expectations.

This plan summarises our initial assessment of the key risks driving the development of an effectiveaudit for Reading Borough Council and outlines our planned audit strategy in response to those risks.

We welcome the opportunity to discuss this Audit Plan with you on 26 January 2017 and to understandwhether there are other matters which you consider may influence our audit.

Yours faithfully

Maria GrindleyExecutive DirectorFor and behalf of Ernst & Young LLPEnc

Ernst & Young LLPApex PlazaForbury RoadReadingRG1 1YE

Tel: + 44 118 928 1599Fax: + 44 118 928 1101ey.com

Tel: 023 8038 2000

Contents

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Contents

1. Overview ..................................................................................................................... 12. Financial statement risks ........................................................................................... 23. Value for money risks ................................................................................................. 54. Our audit process and strategy.................................................................................. 65. Independence............................................................................................................ 10Appendix A Fees .......................................................................................................... 12Appendix B UK required communications with those charged with governance .... 13

In April 2015 Public Sector Audit Appointments Ltd (PSAA) issued ‘‘Statement of responsibilities of auditors andaudited bodies ’. It is available from the Chief Executive of each audited body and via the PSAA website(www.psaa.co.uk).The Statement of responsibilities serves as the formal terms of engagement between appointed auditors and auditedbodies. It summarises where the different responsibilities of auditors and audited bodies begin and end, and what isto be expected of the audited body in certain areas.The ‘Terms of Appointment from 1 April 2015’ issued by PSAA sets out additional requirements that auditors mustcomply with, over and above those set out in the National Audit Office Code of Audit Practice (the Code) and statute,and covers matters of practice and procedure which are of a recurring nature.This Audit Plan is prepared in the context of the Statement of responsibilities. It is addressed to the Audit Committee,and is prepared for the sole use of the audited body. We, as appointed auditor, take no responsibility to any thirdparty.Our Complaints Procedure – If at any time you would like to discuss with us how our service to you could beimproved, or if you are dissatisfied with the service you are receiving, you may take the issue up with your usualpartner or director contact. If you prefer an alternative route, please contact Steve Varley, our Managing Partner, 1More London Place, London SE1 2AF. We undertake to look into any complaint carefully and promptly and to do allwe can to explain the position to you. Should you remain dissatisfied with any aspect of our service, you may ofcourse take matters up with our professional institute. We can provide further information on how you may contactour professional institute.

Overview

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1. Overview

This Audit Plan covers the work that we plan to perform to provide you with:

► Our audit opinion on whether the financial statements of Reading Borough Council (theCouncil) give a true and fair view of the financial position as at 31 March 2017 and of theincome and expenditure for the year then ended; and

► Our conclusion on the Council’s arrangements to secure economy, efficiency andeffectiveness.

We will also review and report to the National Audit Office (NAO), to the extent and in theform required by them, on the Council’s Whole of Government Accounts return.

This plan reflects the difficulties and issues we identified in our 2015/16 audit. Additionalsignificant risks have identified and documented. Our testing strategy will also reflect theerrors we found in last year’s audit with more testing in the areas where we found problems.We will look to work with the Council and its finance team during the coming year and provideearly indication of problems to Management.

Our audit will also include the mandatory procedures that we are required to perform inaccordance with applicable laws and auditing standards.

When planning the audit we take into account several key inputs:

► Strategic, operational and financial risks relevant to the financial statements;

► Developments in financial reporting and auditing standards;

► The quality of systems and processes;

► Changes in the business and regulatory environment; and,

► Management’s views on all of the above.

By considering these inputs, our audit is focused on the areas that matter and our feedback ismore likely to be relevant to the Council.

Financial statement risks

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2. Financial statement risks

We outline below our current assessment of the financial statement risks facing the Councilidentified through our knowledge of the Council’s operations and discussion with thosecharged with governance and officers.

At our meeting, we will seek to validate these with you.

Significant risks (including fraud risks) Our audit approach

Risk of fraud in revenue and expenditure recognition

Under ISA240 there is a presumed risk thatrevenue may be misstated due to improperrecognition of revenue.In the public sector, this requirement ismodified by Practice Note 10, issued by theFinancial Reporting Council, which statesthat auditors should also consider the riskthat material misstatements may occur by themanipulation of expenditure recognition.

We will► Review and test revenue and expenditure

recognition policies;► Review and discuss with management

any accounting estimates on revenue orexpenditure recognition for evidence ofbias;

► Develop a testing strategy to test materialrevenue and expenditure streams; and

► Review and test revenue cut-off at theperiod end date.

Risk of management override

As identified in ISA (UK and Ireland) 240,management is in a unique position toperpetrate fraud because of its ability tomanipulate accounting records directly orindirectly and prepare fraudulent financialstatements by overriding controls thatotherwise appear to be operating effectively.We identify and respond to this fraud risk onevery audit engagement.For local authorities, the potential for theincorrect classification of revenue spend ascapital is a particular area where there is arisk of management override.

Our approach will focus on:► Testing the appropriateness of journal

entries recorded in the general ledger andother adjustments made in thepreparation of the financial statements;

► Reviewing accounting estimates forevidence of management bias;

► Evaluating the business rationale forsignificant unusual transactions; and

► Review capital expenditure on property,plant and equipment to ensure it meetsthe relevant accounting requirements tobe capitalised.

Final Accounts closedown

We experienced significant delays in incompleting our audit of the Statement ofAccounts in 2015/16. We experienced delaysin receiving the working papers we neededand the required supporting information.We raised a number of recommendations inour Audit Results Report and managementhave committed to improve performance thisyear. It is unlikely that all the issues will havebeen rectified in the time available since weissued the report therefore there is still a riskof issues arising from our audit.

Our approach will focus on:► Discussing our requirements with the

finance team before the Council startsclosedown work;

► Reviewing progress against therecommendations and improvementsneeded;

► Reviewing working papers when availableto ensure that they are appropriate;

► Evaluating the evidence to support entriesin the accounts to ensure it is what weneed; and

► Informing management of any concernswhen they arise.


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Completion of the bank reconciliation and control accounts

We found that the completion of the bankaccount was not done properly or timely in2015/16. We spent a lot of timeunderstanding what had gone wrong and thecash balance in the Statement of Accountschanged significantly before we weresatisfied with it.We also found that completion and review ofcontrol accounts was not timely.We consider the timely completion andreview of the bank reconciliation and controlaccounts as important controls that help toensure sound financial control.

Our approach will focus on:► Reviewing reconciliations to ensure that

they are being completed properly and ina timely manner;

► Ensuring that balancing items are clearedon a regular basis and are not carriedforward from one reconciliation to anotherwithout good cause;

► Confirming that reviews are carried out ona timely basis and are evidenced oncompletion; and

► Informing management of any concernswhen they arise.

We have also identified the following other risks.

Risk of understatement of Equal Pay provision

The equal pay provision was understated in2015/16. Given the potential value of thesettlement and the complexity of thecalculations there is a risk that the provisionmay miss-stated.

Our approach will focus on:► Obtaining the schedule of equal pay

provision, and agree amounts to thegeneral ledger accounts;

► Reviewing schedule for correctness andcompleteness, including whether theunequal pay provision is consistent withour understanding of the entity’sbusiness, and test recorded amounts;and

► Enquiring with management around theprocess controls and policy that wereused and implemented regarding theequal pay provision.

Valuation of Property Plant and EquipmentWe found errors in 2015/16 balance andfound it difficult to find supporting evidencefor the some items. There is a risk thatsupporting information is not available tosupport items in the accounts

Our approach will focus on:► Reviewing the proposed accounting

treatment in 2016/17;

► Reviewing the valuer’s report; and

► Reviewing the disclosure to ensure thatit is appropriate.

Financial statements presentation – Expenditure and funding analysis andComprehensive income and expenditure statementAmendments have been made to the Codeof Practice on Local Authority Accounting inthe United Kingdom 2016/17 (the code) thisyear changing the way the financialstatements are presented.

The new reporting requirements impact the

Our Approach will focus on:► Review of the expenditure and funding

analysis, CIES and new notes to ensuredisclosures are in line with the code,

► Review of the analysis of how thesefigures are derived, how the ledger


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Comprehensive Income and ExpenditureStatement (CIES) and the Movement inReserves Statement (MiRS), and include theintroduction of the new ‘Expenditure andFunding Analysis’ note as a result of the‘Telling the Story’ review of the presentationof local authority financial statements.

The Code no longer requires statements ornotes to be prepared in accordance withSeRCOP. Instead the Code requires that theservice analysis is based on theorganisational structure under which theauthority operates. We expect this to showthe Council’s segmental analysis.

This change in the code will require a newstructure for the primary statements, newnotes and a full retrospective restatement ofimpacted primary statements. Therestatement of the 2015/16 comparatives willrequire audit review, which could potentiallyincur additional costs, depending on thecomplexity and manner in which the changesare made.

system has been re-mapped to reflectthe Council’s organisational structureand how overheads are apportionedacross the service areas reported; and

► Agreement of restated comparativefigures back to the Council’s segmentalanalysis and supporting working papers.

2.1 Responsibilities in respect of fraud and errorWe would like to take this opportunity to remind you that management has the primaryresponsibility to prevent and detect fraud. It is important that management, with the oversightof those charged with governance, has a culture of ethical behaviour and a strong controlenvironment that both deters and prevents fraud.

Our responsibility is to plan and perform audits to obtain reasonable assurance aboutwhether the financial statements as a whole are free of material misstatements whethercaused by error or fraud. As auditors, we approach each engagement with a questioningmind that accepts the possibility that a material misstatement due to fraud could occur, anddesign the appropriate procedures to consider such risk.

Based on the requirements of auditing standards our approach will focus on:

► Identifying fraud risks during the planning stages;

► Enquiry of management about risks of fraud and the controls to address those risks;

► Understanding the oversight given by those charged with governance of management’sprocesses over fraud;

► Consideration of the effectiveness of management’s controls designed to address the riskof fraud;

► Determining an appropriate strategy to address any identified risks of fraud, and

► Performing mandatory procedures regardless of specifically identified risks.

Value for money risks

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3. Value for money risks

We issued an adverse value for money conclusion in 2015/16 reflecting the difficulties thatthe Council faced. For that reason and for the continuing pressures the Council has we haveidentified a significant value for money risk in 2016/17.

We are required to consider whether the Council has put in place ‘proper arrangements’ tosecure economy, efficiency and effectiveness on its use of resources.For 2016-17 this is based on the overall evaluation criterion:

“In all significant respects, the audited body had proper arrangements to ensure it tookproperly informed decisions and deployed resources to achieve planned and sustainableoutcomes for taxpayers and local people”

Proper arrangements are defined by statutory guidance issued by the National Audit Office.They comprise your arrangements to:

· Take informed decisions;

· Deploy resources in a sustainable manner; and

· Work with partners and other third parties.

In considering your proper arrangements, we will draw on the requirements of theCIPFA/SOLACE framework for local government to ensure that our assessment is madeagainst a framework that you are already required to have in place and to report on throughdocuments such as your annual governance statement.

We are only required to determine whether there are any risks that we consider significant,which the Code of Audit Practice which defines as:

“A matter is significant if, in the auditor’s professional view, it is reasonable to conclude thatthe matter would be of interest to the audited body or the wider public”

Our risk assessment supports the planning of sufficient work to enable us to deliver a safeconclusion on arrangements to secure value for money and enables us to determine thenature and extent of further work that may be required. If we do not identify any significantrisks there is no requirement to carry out further work.

Our risk assessment has therefore considered both the potential financial impact of theissues we have identified, and also the likelihood that the issue will be of interest to localtaxpayers, the Government and other stakeholders and we have identified the followingsignificant risk.

Significant risk Our audit approach

Delivering financial resilience

The Council financial position remains acause for concern. Children’s Social Careis overspending by around £6m out of atotal overspend of £7.6m. The Councilhave calculated savings needed of £42mfrom 2017 to 2020. The Council is reportingagreed plans to save £23.4m and isproposing additional savings of £18.6m.This presents a significant challenge.

Our approach will focus on:

► Reviewing action taken in response toour adverse conclusion in 2015/16 andrevised budget and savings plans; and

► Assessing the robustness of processesfor identifying, implementing andmonitoring savings.

Our audit process and strategy

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4. Our audit process and strategy

4.1 Objective and scope of our auditUnder the Code of Audit Practice our principal objectives are to review and report on theCouncil’s:

► Financial statements; and

► Arrangements for securing economy, efficiency and effectiveness in its use of resourcesto the extent required by the relevant legislation and the requirements of the Code.

We issue an audit report that covers:

1. Financial statement audit

Our objective is to form an opinion on the financial statements under International Standardson Auditing (UK and Ireland).

We report to you by exception in respect of your governance statement and otheraccompanying material as required, in accordance with relevant guidance prepared by theNAO on behalf of the Comptroller and Auditor General.

Alongside our audit report, we also review and report to the NAO on the Whole ofGovernment Accounts return to the extent and in the form they require.

2. Arrangements for securing economy, efficiency and effectiveness (valuefor money)

We are required to consider whether the Council has put in place ‘proper arrangements’ tosecure economy, efficiency and effectiveness on its use of resources.

4.2 Audit process overviewProcessesOur initial assessment of the key processes across the Council is that we will have to take asubstantive approach. If we find that the operation of controls has improved then we will lookto rely on controls.

AnalyticsWe will use our computer-based analytics tools to enable us to capture whole populations ofyour financial data, in particular journal entries. These tools:

► Help identify specific exceptions and anomalies which can then be subject to moretraditional substantive audit tests; and

► Give greater likelihood of identifying errors than random sampling techniques.

We will report the findings from our process and analytics work, including any significantweaknesses or inefficiencies identified and recommendations for improvement, tomanagement and the Audit Committee.

Internal auditAs in prior years, we will review internal audit plans and the results of their work. We willreflect the findings from these reports, together with reports from any other work completed inthe year, in our detailed audit plan, where we raise issues that could have an impact on theyear-end financial statements.


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Use of specialists

When auditing key judgements, we are often required to rely on the input and adviceprovided by specialists who have qualifications and expertise not possessed by the core auditteam. The areas where either EY or third party specialists provide input for the current yearaudit are:

Area Specialists

Pensions The pension fund’s actuary and EY pensions team

Valuations The Councils valuer and our third party specialists

In accordance with Auditing Standards, we will evaluate each specialist’s professionalcompetence and objectivity, considering their qualifications, experience and availableresources, together with the independence of the individuals performing the work.

We also consider the work performed by the specialist in light of our knowledge of theenvironment and processes and our assessment of audit risk in the particular area. Forexample, we would typically perform the following procedures:

► Analyse source data and make inquiries as to the procedures used by the specialist toestablish whether the source date is relevant and reliable;

► Assess the reasonableness of the assumptions and methods used;

► Consider the appropriateness of the timing of when the specialist carried out the work;and

► Assess whether the substance of the specialist’s findings are properly reflected in thefinancial statements.

4.3 Mandatory audit procedures required by auditing standardsand the CodeAs well as the financial statement risks (section two) and value for money risks (sectionthree), we must perform other procedures as required by auditing, ethical and independencestandards, the Code and other regulations. We outline below the procedures we willundertake during the course of our audit.

Procedures required by standards► Addressing the risk of fraud and error;

► Significant disclosures included in the financial statements;

► Entity-wide controls;

► Reading other information contained in the financial statements and reporting whether itis inconsistent with our understanding and the financial statements; and

► Auditor independence.

Procedures required by the Code► Reviewing, and reporting on as appropriate, other information published with the

financial statements, including the Annual Governance Statement; and


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► Reviewing and reporting on the Whole of Government Accounts return, in line with theinstructions issued by the NAO.

Finally, we are also required to discharge our statutory duties and responsibilities asestablished by the Local Audit and Accountability Act 2014 and Code of Audit Practice.

4.4 MaterialityFor the purposes of determining whether the financial statements are free from material error,we define materiality as the magnitude of an omission or misstatement that, individually or inaggregate, could reasonably be expected to influence the users of the financial statements.Our evaluation requires professional judgement and so takes into account qualitative as wellas quantitative considerations implied in the definition.

We have determined that overall materiality for the financial statement of the Council is£3,874,160 based on 1% of gross expenditure. We will communicate uncorrected auditmisstatements greater than £1,937,080 to you.

The amount we consider material at the end of the audit may differ from our initialdetermination. At this stage, however, it is not feasible to anticipate all the circumstances thatmight ultimately influence our judgement. At the end of the audit we will form our final opinionby reference to all matters that could be significant to users of the financial statements,including the total effect of any audit misstatements, and our evaluation of materiality at thatdate.

4.5 FeesThe duty to prescribe fees is a statutory function delegated to Public Sector AuditAppointments Ltd (PSAA) by the Secretary of State for Communities and Local Government.PSAA has published a scale fee for all relevant bodies. This is defined as the fee required byauditors to meet statutory responsibilities under the Local Audit and Accountability Act 2014 inaccordance with the NAO Code. The indicative fee scale for the audit of Reading BoroughCouncil is £109,938.

4.6 Your audit teamThe engagement team is led by Maria Grindley, who has significant experience on ReadingBorough Council. Maria Grindley is supported by Alan Witty who is responsible for the day-to-day direction of audit work and is the key point of contact for the Council.

4.7 Timetable of communication, deliverables and insightsWe have set out below a timetable showing the key stages of the audit, including the valuefor money work and the Whole of Government Accounts. The timetable includes thedeliverables we have agreed to provide to the Council through the Audit and GovernanceCommittee’s cycle in 2016/17. These dates are determined to ensure our alignment withPSAA’s rolling calendar of deadlines.

From time to time matters may arise that require immediate communication with the Auditand Governance Committee and we will discuss them with the Chair as appropriate.

Following the conclusion of our audit we will prepare an Annual Audit Letter to communicatethe key issues arising from our work to the Council and external stakeholders, includingmembers of the public.


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Audit phase Timetable

AuditCommitteetimetable Deliverables

High levelplanning

April 2016 April 2016 Audit Fee Letter

Risk assessmentand setting ofscopes

December2016

January2017

Audit Plan

Testing routineprocesses andcontrols

January 2017and March2017

April 2017 Progress Report

Year-end audit July 2017Completion ofaudit

August 2017 September2017

Report to those charged withgovernance via the Audit ResultsReportAudit report (including our opinion onthe financial statements; [our opinionon the regularity of your expenditureand income]; and, [by exception]overall value for money conclusion).Audit completion certificateReporting to the NAO on the Whole ofGovernment Accounts return.

Conclusion ofreporting

October 2017 November2017

Annual Audit Letter

In addition to the above formal reporting and deliverables we will seek to provide practicalbusiness insights and updates on regulatory matters.

Independence

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5. Independence

5.1 IntroductionThe APB Ethical Standards and ISA (UK and Ireland) 260 ‘Communication of audit matterswith those charged with governance’, requires us to communicate with you on a timely basison all significant facts and matters that bear on our independence and objectivity. The EthicalStandards, as revised in December 2010, require that we do this formally both at the planningstage and at the conclusion of the audit, as well as during the audit if appropriate. The aim ofthese communications is to ensure full and fair disclosure by us to those charged with yourgovernance on matters in which you have an interest.

Required communications

Planning stage Final stage

► The principal threats, if any, to objectivity andindependence identified by EY includingconsideration of all relationships between you, youraffiliates and directors and us;

► The safeguards adopted and the reasons why theyare considered to be effective, including anyEngagement Quality Review;

► The overall assessment of threats and safeguards;and

► Information about the general policies and processwithin EY to maintain objectivity and independence.

► A written disclosure of relationships (including theprovision of non-audit services) that bear on ourobjectivity and independence, the threats to ourindependence that these create, any safeguards thatwe have put in place and why they address suchthreats, together with any other informationnecessary to enable our objectivity andindependence to be assessed;

► Details of non-audit services provided and the feescharged in relation thereto;

► Written confirmation that we are independent;► Details of any inconsistencies between APB Ethical

Standards, the PSAA Terms of Appointment andyour policy for the supply of non-audit services byEY and any apparent breach of that policy; and

► An opportunity to discuss auditor independenceissues.

During the course of the audit we must also communicate with you whenever any significantjudgements are made about threats to objectivity and independence and the appropriatenessof our safeguards, for example when accepting an engagement to provide non-audit services.

We also provide information on any contingent fee arrangements, the amounts of any futurecontracted services, and details of any written proposal to provide non-audit services.

We ensure that the total amount of fees that EY and our network firms have charged to youand your affiliates for the provision of services during the reporting period are disclosed,analysed in appropriate categories.

5.2 Relationships, services and related threats and safeguardsWe highlight the following significant facts and matters that may be reasonably considered tobear upon our objectivity and independence, including any principal threats. However wehave adopted the safeguards below to mitigate these threats along with the reasons why theyare considered to be effective.

Self-interest threats

A self-interest threat arises when EY has financial or other interests in your entity. Examplesinclude where we have an investment in your entity; where we receive significant fees inrespect of non-audit services; where we need to recover long outstanding fees; or where weenter into a business relationship with the Council.

At the time of writing, there are no long outstanding fees.

Independence

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We believe that it is appropriate for us to undertake permissible non-audit services, and wewill comply with the policies that the Council has approved and that are in compliance withPSAA Terms of Appointment.

A self-interest threat may also arise if members of our audit engagement team haveobjectives or are rewarded in relation to sales of non-audit services to the Council. Weconfirm that no member of our audit engagement team, including those from other servicelines, is in this position, in compliance with Ethical Standard 4.

There are no other self-interest threats at the date of this report.

Self-review threats

Self-review threats arise when the results of a non-audit service performed by EY or otherswithin the EY network are reflected in the amounts included or disclosed in the financialstatements.

There are no other self-review threats at the date of this report.

Management threats

Partners and employees of EY are prohibited from taking decisions on behalf of managementof your entity. Management threats may also arise during the provision of a non-audit servicewhere management is required to make judgements or decisions based on that work.

There are no management threats at the date of this report.

Other threats

Other threats, such as advocacy, familiarity or intimidation, may arise.

There are no other threats at the date of this report.

Overall AssessmentOverall we consider that the adopted safeguards appropriately mitigate the principal threatsidentified, and we therefore confirm that EY is independent and the objectivity andindependence of Maria Grindley, the audit engagement Director and the audit engagementteam have not been compromised.

5.3 Other required communicationsEY has policies and procedures that instil professional values as part of firm culture andensure that the highest standards of objectivity, independence and integrity are maintained.

Details of the key policies and processes within EY for maintaining objectivity andindependence can be found in our annual Transparency Report, which the firm is required topublish by law. The most recent version of this report is for the year ended June 2016 andcan be found here:

http://www.ey.com/uk/en/about-us/ey-uk-transparency-report-2016

Fees

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Appendix A Fees

A breakdown of our agreed fee is shown below.

PlannedFee

2016/17£

Scale fee2016/17

£

Outturn fee2015/16

£Explanation

Opinion Audit and VFMConclusion

108,938 108,938 186,144 Additional fee of£77,206 with PSAAfor their approval

Certification of housingbenefit subsidyclaim

12,458 12,458 34,591 Additional fee of£14,404 with PSAAfor their approval

Total Audit Fee – Codework

121,396 220,735

All fees exclude VAT.

* We produced a limited assurance engagement report for the Council in respect of certification of the Council’s2015-16 return to Teachers’ Pensions. At the date of this Audit Plan the Council have not engaged us formally tocertify the 2016-17 return.

The agreed fee presented above is based on the following assumptions:

► Officers meeting the agreed timetable of deliverables;

► The operating effectiveness of the internal controls for the key processes outlined insection 4.2 above;

► We can rely on the work of internal audit as planned;

► Our accounts opinion and value for money conclusion being unqualified;

► Appropriate quality of documentation is provided by the Council; and

► The Council has an effective control environment.

If any of the above assumptions prove to be unfounded, we will seek a variation to the agreedfee. This will be discussed with the Council in advance.

Fees for the auditor’s consideration of correspondence from the public and formal objectionswill be charged in addition to the scale fee.

UK required communications with those charged with governance

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Appendix B UK required communications withthose charged with governance

There are certain communications that we must provide to the Audit and GovernanceCommittee. These are detailed here:

Required communication Reference

Planning and audit approachCommunication of the planned scope and timing of the audit including any limitations.

► Audit Plan

Significant findings from the audit► Our view about the significant qualitative aspects of accounting practices

including accounting policies, accounting estimates and financial statementdisclosures

► Significant difficulties, if any, encountered during the audit► Significant matters, if any, arising from the audit that were discussed with

management► Written representations that we are seeking► Expected modifications to the audit report► Other matters if any, significant to the oversight of the financial reporting process► Findings and issues regarding the opening balances on initial audits [delete if not

an initial audit]

► Audit Results Report

Misstatements► Uncorrected misstatements and their effect on our audit opinion► The effect of uncorrected misstatements related to prior periods► A request that any uncorrected misstatement be corrected► In writing, corrected misstatements that are significant


Fraud► Enquiries of the Audit and Governance Committee to determine whether they

have knowledge of any actual, suspected or alleged fraud affecting the entity► Any fraud that we have identified or information we have obtained that indicates

that a fraud may exist► A discussion of any other matters related to fraud


Related partiesSignificant matters arising during the audit in connection with the entity’s relatedparties including, when applicable:► Non-disclosure by management► Inappropriate authorisation and approval of transactions► Disagreement over disclosures► Non-compliance with laws and regulations► Difficulty in identifying the party that ultimately controls the entity


External confirmations► Management’s refusal for us to request confirmations► Inability to obtain relevant and reliable audit evidence from other procedures


Consideration of laws and regulations► Audit findings regarding non-compliance where the non-compliance is material

and believed to be intentional. This communication is subject to compliance withlegislation on tipping off

► Enquiry of the Audit and Governance Committee into possible instances of non-compliance with laws and regulations that may have a material effect on thefinancial statements and that the Audit and Governance Committee may beaware of.


UK required communications with those charged with governance

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Required communication Reference

IndependenceCommunication of all significant facts and matters that bear on EY’s objectivity andindependenceCommunication of key elements of the audit engagement director’s consideration ofindependence and objectivity such as:► The principal threats► Safeguards adopted and their effectiveness► An overall assessment of threats and safeguards► Information about the general policies and process within the firm to maintain

objectivity and independence

► Audit Plan► Audit Results Report

Going concernEvents or conditions identified that may cast significant doubt on the entity’s ability tocontinue as a going concern, including:► Whether the events or conditions constitute a material uncertainty► Whether the use of the going concern assumption is appropriate in the

preparation and presentation of the financial statements► The adequacy of related disclosures in the financial statements


Significant deficiencies in internal controls identified during the audit ► Audit Results Report

Fee Information► Breakdown of fee information at the agreement of the initial audit plan► Breakdown of fee information at the completion of the audit

► Audit Plan► Audit Results Report► Annual Audit Letter if

considered necessary

EY | Assurance | Tax | Transactions | Advisory

Ernst & Young LLP

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The UK firm Ernst & Young LLP is a limited liability partnership registered in England and Waleswith registered number OC300001 and is a member firm of Ernst & Young Global Limited.

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