Report of the Assistant Director Resources/Treasurer
The Panel considered the report of the Assistant Director Resources/Treasurer (ADR/T) which presented Members with the results of the External Auditor’s Results Report (ISA 260) (Appendix 1) and the Authority’s 2018/19 Statement of Accounts (Appendix 2). (Copy in Minute Book)
The Authority’s External Auditor, Ernst & Young (EY), was obliged to produce an Audit Results Report (ISA 260) which reported formally on the outcome of the audit of the Authority’s financial statements.
EY had substantially completed its audit of the Authority’s financial statements for the year ended 31 March 2019. The ADR/T confirmed that there had been no material issues with the Accounts at the time of reporting.
Ahead of the meeting, the ADR/T had brought to Members’ attention details of a pensions-related matter which might delay EY from completing its audit of the Accounts and issuing an audit certificate by the date of the Scrutiny & Audit Panel meeting. The ADR/T reminded Members of the background; that there had been a legal case challenging the transitional protections put in place by the Government as a number of public sector pension schemes moved from final salary to career average basis over recent years. Specifically, judgment had been given against the transitional protections in a case called McCloud/Sargeant which covered the pension schemes for judges and firefighters (FPS), but had implications for a wider range of schemes including the Local Government Pension Scheme (LGPS).
At the time the draft accounts had been issued (31 May 2019) the Government was still considering leave to appeal against the judgment, and accordingly the Authority had included a Contingent Liability note in the Accounts (LGPS Note 36 on page 69 and FPS Note 4 on page 76) setting out a high level assessment of the potential impact on scheme liabilities based on reports provided by and commissioned from GAD (Government Actuary Department) and using wording agreed at sector (FPS) and local (LGPS) level.
On 27 June 2019, the Supreme Court refused the Government leave to appeal the original decision and as a result it was necessary for the Authority to commission its actuary to reassess the Authority’s pension liabilities and this was achieved through an IAS19 report. The updated reports had been received from the actuary on 10 July 2019 and updated accounts provided to EY on 14 July 2019.
The ADR/T updated Members that EY had now received national guidance from their pension team on their approach to auditing the revised IAS19 figures and the Authority was waiting for EY to carry out their internal checks and provide its audit certificate by the 31 July 2019 statutory deadline.
In conclusion, the ADR/T had set out amended recommendations for the Panel’s consideration (as detailed in Resolutions i) to iv) below) to approve the publication of the unaudited accounts by the statutory deadline and to ensure that the Accounts could be re-issued once the audit certificate was provided.
Helen Thompson (Associate Partner, EY LLP) thanked the ADR/T for his summary. She understood that, in a change to previous years, the Audit Commission would not be making public a list of those authorities who had not published audited accounts either by 31 July 2019 or by 30 September (previous statutory deadline), in acknowledgement of a particularly challenging year for auditors and authorities. She confirmed that EY now had all the information needed in respect of the pensions matter and, subject to a non-material outcome of the outstanding work, EY expected to issue an unqualified opinion on the Accounts and intended to issue its audit certificate by 31 July 2019.
Ms Thompson highlighted to Members the salient points of EY’s Audit Results Report (ISA 260) and thanked the ADR/T, Jo Knightley (Accountant, East Sussex County Council) and Warren Tricker (Finance Manager, East Sussex Fire & Rescue Service) for their patience and support to EY throughout the audit process. The Panel thanked Ms Thompson and acknowledged that there were no areas of concern within the Accounts at the time of reporting.
RESOLVED – That the Panel:
(i) Approved the 2018/19 Statement of Accounts (the Accounts) for publication by 31 July 2019, without the audit certificate if necessary;
(ii) Agreed that if the audit certificate was not forthcoming before 31 July 2019, the Authority would publish the Accounts and, in line with the Accounts and Audit Regulations 2015, also publish a notice explaining why there was no audit certificate;
(iii) Approved delegation to the Assistant Director Resources/Treasurer to re-issue the Accounts with an audit certificate if there were no material changes (after consultation with the Chief Fire Officer/Chief Executive and the Chairman of the Scrutiny & Audit Panel); and
(iv) Noted that if, on receiving the audit certificate, there were material changes to the Accounts then those would need to be presented for re-approval by the Fire Authority at its scheduled meeting on 5 September 2019.