In relation to matters on the agenda, seek declarations of interest from Members, in accordance with the provisions of the Fire Authority’s Code of Conduct for Members

There were none.

There were none.

Any Members wishing to raise urgent items are asked, wherever possible, to notify the Chairman before the start of the meeting. In so doing, they must state the special circumstances which they consider justify the matter being considered urgently

The Chairman informed the Panel of a change of membership for the Labour Group.  The Panel welcomed Cllr Scott to his new role as panel member and recorded their thanks for Cllr Evans for her hard work during her time as a panel member.

The Chairman welcomed representatives from EY who were attending the meeting to inform on the results of their audit and to respond to any questions from the panel.

The Chairman will call the item numbers of the remaining items on the open agenda. Each item which is called by any Member shall be reserved for debate. The Chairman will then ask the Panel to adopt without debate the recommendations and resolutions contained in the relevant reports for those items which have not been called

Members reserved the following items for debate:

34.       External Auditor’s Audit Results Report and Statement of Accounts 2019/20

35.       Public Sector Audit Appointments (PSAA) Consultation on Audit Fee Variations

The Panel received the report of the Assistant Director Resources/Treasurer (ADR/T) presenting the results of the External Auditor’s Results Report (ISA 260) and to report an unqualified opinion on the Authority’s 2019/20 Statement of Accounts.  The Authority’s External Auditor, Ernst & Young (EY), was obliged to produce an Audit Results Report on the outcome of the audit of the Authority’s financial statements.  EY had substantially completed its audit and, subject to concluding some outstanding matters, expected to issue an unqualified audit opinion in advance of the statutory deadline.  It had been a most challenging year in terms of getting both the Accounts and Audit completed largely to the impacts of the Covid-19 pandemic.  The report also included a proposed fee variation, at the request of Panel members, it was agreed to discuss this separately to the audit and accounts.

The ADR/T recorded his thanks to ESFRS, Orbis and EY colleagues for all their work in this challenging year.  Helen Thompson, Associate Partner EY, presented the audit results report to the panel.  Stephan van der Merwe was introduced having joined EY during the Covid-19 lockdown.  EY reiterated there had been unprecedented challenges this year which had significantly impacted the audit work, this had been recognised nationally by changing the deadline from 31 July to 30 November for all local authority bodies. 

The Panel were informed of some key changes to EY’s risk assessment as a result of Covid-19, these included valuation of property plant and equipment (regarding the uncertain impact on markets) and disclosures on going concern (financial plans for 20/21 and medium term financial plans would need revision for Covid-19).  The complexity of the East Sussex Pension Fund’s investments had also impacted the completion of the report, EY were reliant on the work of Grant Thornton, and were still awaiting a letter of assurance.  It was made clear that there were no known issues.   Therefore, they intended to issue an unqualified opinion in time to meet the deadline.

The areas of focus during the audit had been the risk of fraud and error in revenue and expenditure, net pension liability, valuation of property and equipment.  The audit should be free of fraud and error, although management roles were in a unique position to commit fraud, the audit tested journals and estimates for any evidence of management bias.  No evidence had been identified of any management override, bias or any unusual transactions.  The audit had also focused on net pension liability and actuaries had been engaged to test both Local Government and the Firefighter pension schemes.  Whilst they were still awaiting the assurance letter, the conclusion was that there was no indication that net liability had been misstated.  With regards to valuation of property, plant and equipment, the audit had focussed on the work of the Authority’s valuer and assets not subject to revaluation throughout the year.  Finally with regards the matter of Going Concern the audit had assessed this and the management’s assessment set out in the Financial Statement was sufficient.  ...  view the full minutes text for item 34.

Report of the Assistant Director Resources/Treasurer

The Panel considered the Report of the Assistant Director Resources/Treasurer informing them of the PSAA (Public Sector Audit Appointments) consultation on audit fee variations and to seek its views on the questions asked by the PSAA.  The PSAA was consulting on proposed new arrangements for determining fee variations for local audits of opted-in bodies from audits of 2020/21 accounts onwards.  The current fee variations process required the auditor to discuss all proposed variations with the audited body before submitting them to PSAA for determination.  Feedback from both auditors and audited bodies frequently referred to the practical challenges and limited value of local discussions about proposed variations which relate to those factors which affect most or all audited bodies.  Many contributors had asked PSAA to take a national lead on additional fees, where possible removing the need for local negotiations.

PSAA was proposing a new approach, based on two types of variation:

·        national variations, required for changes that relate to the conduct of all or most audits, such as changes to the auditing and accounting codes, standards and regulatory requirements, where a standard cost can be reasonably estimated; and

·        local variations, required for issues that relate to local factors arising from the conduct of a particular audit, such as the additional audit work required if accounts reflect complex transactions that are not built into the scale fee, or where working papers are poorly prepared, or for work relating to an auditor’s statutory responsibilities such as objections, statutory recommendations or public interest reports.

The Panel was asked to give its thoughts on the consultation questions and the proposals in order that a response could be submitted.  The ADR/T reminded Members of the context of this consultation, particularly in relation to the Redmond Review which the Panel had considered at its meeting on 12 November 2020. By and large, Officers were supportive of the proposal to base the new approach on the national local variations detailed above. 

There were some concerns about the suggestion to increase Day rates by 25%, it was not clear where this percentage had come from, it was recognised that there were increasing costs, but there was a desire for PSAA to be clear on the basis of 25% and why they were reasonable.

There were two issues presented to the Panel, these were that the PSAA ought to work with the regulator to reduce the impact of regulations on costs, there was a need to consider how these would impact on Public Sector organisations, the impact would not be the same as it would in the Private Sector.  The second issue was targeted at central Government, the changes felt like a new burden and therefore, the costs should be borne by them. 

The CFO added that the accessibility of audit and accounts reports needed to be considered, in order to allow proper public scrutiny.  The current format could be impenetrable even to professionals.  The ADR/T confirmed that this was an issue raised in the Redmond Review  ...  view the full minutes text for item 35.