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Agenda item

Audit of Statement of Accounts To Those Charged with Governance

To receive the final Statement of Accounts for the year ended 31 March 2015 incorporating the Annual Governance Statement together with the annual report to those charged with governance following their scrutiny by External Audit.



The Corporate Director Resources and Financial Services Manager introduced the report to Audit Committee Members on the Audit of Statement of Accounts (SoA), which was in line with the regular pattern of reporting on the Council’s financial position.  The Corporate Director Resources also advised Audit Committee Members that there had been a difference of opinion held between Peterborough City Council (PCC) and external auditors PwC in respect of the Council’s valuation and accounting treatment for schools.  Members of the Audit Committee also received an amendment to the statement of accounts report, which had been circulated prior to the meeting and attached at appendix one of these minutes.


Julian Rickett from (PWC), also highlighted a number of key points for Members attention in relation to the Audit of Statement of accounts report.


Key points highlighted included:


  • Report to those charged with governance;
  • The majority of outstanding matters had been satisfactorily resolved and ahead of deadlines, however, there were some outstanding issues in relation to bank loans and two minor queries in relation to employees salary;
  • There had been some changes made in relation to risk assessments for ISAs for property, plant and equipment.  This was a national approach by PwC;
  • Significant risks audit and accounting matters such as valuation of property, plant and equipment.  It was appreciated by PwC that different valuers applied a different approach;
  • Land valuations were within an acceptable range;
  • School valuation treatment;
  • Pension liability and the actuary valuation;
  • Corrected and uncorrected misstatements in the accounts, which PwC had credited the PCC Finance Team for;
  • Appropriate treatment of school title deeds;
  • Value for money of service for the work undertaken by PwC;
  • Risk of fraud; and
  • PwC fees and expected outturn.


The Corporate Director Resources and Financial Services Manager and Julian Rickett (PwC), responded to comments and questions raised by Members. A summary of responses included:


  • The £6,669 fee for assessing the accounting treatment of schools  had related to the additional work undertaken by PwC which followed CIPFA rulings and did not cover the audit of individual schools; 
  • Each school asset in relation to the different types of schools such as Local Authority (LA) or foundation required a different audit treatment;
  • The pension liability amount would always be audited regardless of the size of the figure and PwC’s responsibility would be to ensure that it was outlined correctly within the statement of accounts;
  • PwC would comment on the property, plant and equipment outlined within the statement of accounts as it was such a large figure within PCC’s financial accounts;
  • PwC would comment on the budget gap in terms of a conclusion for the delivery of value for money in relation to securing financial resilience;
  • The higher PCC increased payments into pension funds to remove the gap, the wider the budget deficit would be within the current financial year;
  • PCC relied on the tri-annual valuation of the pension fund set by the actuary to determine PCCs financial commitments for pensions;
  • There had been a pot of money, assets and investments to help meet the future pension liabilities gap, however, the funds were not enough to cover the full obligation; 
  • The Local Authority pension scheme had been nationally defined by the Government and was not something that could be changed at a local level;
  • The LA pension scheme had been changed by the Government over the years in terms of when staff could retire and the level of contributions they may wish to pay in; 
  • It was anticipated that there would be further changes to the LA pension scheme made by the Government in future; 
  • The next pension valuation from the actuary was due in 2017/2018, which would feed into the Medium Term Financial Plan process; 
  • Councillor Seaton the Cabinet Member for Resources commented that the pension deficit was shared between PCC and the County Council and that the deficit was a fairly a common issue across all Councils;
  • The pension liability amount of £75.3m which was outlined within the SoA report on page 30,  had demonstrated that the figure was beneficial due to the gain of £19m from the previous year’s actuary valuation;
  • The methods used to work out the pension figure were met by taking into account mortality rate and investments, which were variable and would drive the deficit figure to escalate; and
  • The change in range of discounting the pension scheme liabilities had impacted the Local Authority from 4.3% in previous year to 3.2% when predicting the pension amount payable in the future.


      The Committee:


  1. Received and approved the “Report to those charged with governance (ISA260) 2014/15 Audit” from PricewaterhouseCoopers (PwC), the Council’s external auditors; and
  2. Received and approved the audited Statement of Accounts 2014/15.


Supporting documents: