The Audit Director - KPMG presented a report to the Committee the purpose of which is to submit the External Auditor’s Annual Financial Audit outline for 2013-14 for noting.

            He explained that the outline has been prepared to meet the requirements of the auditing standards and proper audit practices and sets out KPMG’s work to be undertaken for 2013-14.  The document is attached at Appendix 1.

            The Audit Director - KPMG advised that a summary of main audit risks and proposed responses are listed on page 8 of the appendix.  He explained that the Local Government Pension Scheme for Rhondda Cynon Taf County Borough Council of which Bridgend County Borough Council is a member has undergone a triennial valuation.  This will require a large volume of data being provided to one actuary and, KPMG will liaise with the Appointed Auditor for the Pension Fund and test the accuracy of the data relating to Bridgend. There were no other significant risks identified for the period.

            In terms of other work undertaken the Audit Director - KPMG drew the Committee’s attention to the risk area, in relation to Catalogue Supplies Service Joint Committee and Coychurch Crematorium Joint Committee detailed on page 10 paragraphs 19-22 of the appendix.  He assured the Committee that these areas have only been identified as risks due to the nature of their business; Catalogue Supplies is a sales based concern and the Crematorium’s income is anticipated to rise above the £1m threshold this year and will therefore require a full audit.

            The Audit Director - KPMG explained that he was currently unable to provide the Committee with an estimate of the audit fee for 2013 - 14 as the fee scale has not yet been finalised.  He advised that he would report back when fees have been set.

            A Member of the Committee asked if in relation to the Crematorium’s income any work had previously been carried out on the accounts.

            The Audit Director - KPMG responded that a full set of accounts have been produced previously the difference this year is that they will be examined by the external auditor.  The Chief Internal Auditor advised that as part of the annual plan internal audit would look at the control environment.

            The Committee asked if KPMG were concerned about the risk of “Material Mistreatment due to Fraud” detailed in paragraph 20 of appendix.

            The Audit Director - KPMG explained that they were not concerned but they were obliged to consider this a risk due to the fact that fraud around revenue could be perpetrated as Catalogue Supplies is a business that generates stock and income.  The suggestion is not that fraud is being undertaken but that the Audit Plan recognises this as an inherent risk.

            A Member commented that as the Authority’s representative on the Catalogue Supplies Service Joint Committee he could assure Members that there was always a vigorous challenge by the partner Authorities on the financial statements and a definite audit trail.

            The Committee asked if the Authority was putting itself at risk by entering into a contract with the external auditors when the fees were not finalised.

            The Audit Director - KPMG explained that the Authority’s external auditors were appointed by the Auditor General and that this was a statutory function not contractual.   The Welsh Audit Office consulted widely across Wales on fee levels therefore local Authorities would have a general idea of the level of financial commitment.

            The Chief Accountant asked the committee if they would like the financial summary for the Joint Committees to be included in the Statement of Accounts which are to be considered at its September meeting.  The Committee agreed that it would be useful to incorporate this information.

RESOLVED:         That the Committee reviewed and noted the content of the report.