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Report No F80/16

Eden District Council

Accounts and Governance Committee

29 September 2016

Audit of Annual Accounts 2015-2016

Reporting Officer: Director of Finance

1 Purpose of Report

1.1 The report sets out the audited accounts for 2015-2016 and the report of the external auditor, Grant Thornton, on the accounts.

2 Recommendations

1 The auditor’s report on the accounts (Appendix A) is noted.

2 The Letter of Representation (Appendix B) is approved on behalf of the Council.

3 The audited accounts (Appendix C) are approved.

4 The Annual Governance Statement signed at this Committee on 30 June 2016 is confirmed for publication as the final version.

3 Audit of the Accounts

3.1 The Accounts and Audit Regulations state that, although draft accounts do not require agreement by Members, they must be made available to the auditors by 30 June of the year following the year of account. This deadline was met in respect of the annual accounts for 2015-2016 and copies of the draft accounts were made available on the Members’ Bulletin Board and placed on the Council’s website by that date. A local authority’s accounts must be approved by the designated member body (at Eden, it is this Committee) before 30 September 2016 for the year 2015-2016.

3.2 The external auditor is required to report to the member body approving the accounts on the conclusions of the audit, in particular, noting any adjustments made to the draft accounts as published. This is the Audit Findings Report (AFR) attached at Appendix A. This report is largely concerned with the audit of the accounts but it does cover the auditor’s judgement on value for money and financial resilience.

3.3 The Council’s Director of Finance prepared the accounts for 2015-2016 and will answer any questions Members may have on the accounts. The Council’s external auditor (Grant Thornton) will attend to present the report of the external auditor and answer any questions that Members may have on this. The following will attend:

Jackie Bellard - Engagement Lead

Angela Pieri - Manager

Gareth Kelly – Associate Director

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3.4 Subject to Members agreeing the recommendations in Section 2 above, the auditor will give an unqualified audit opinion. The auditor has also concluded that the Council has made proper arrangements to secure value for money.

3.5 There was one primary statement classification misstatement in the financial statements. This related to £1m being classified as cash and cash equivalent, when it should have been a short term investment. This was corrected. Seven changes were required (relating to disclosure and classification) in the notes to those statements. These have been corrected in the final accounts set out at Appendix C. This is explained in more detail at paragraph 4.5 below.

3.6 The audit team from Grant Thornton has undertaken the audit in a professional, consultative and pragmatic manner. The Council is happy with the service provided. The Council's staff have, as always, worked constructively with the auditor and her team throughout the year.

3.7 It is very pleasing that the external auditor reports that (Appendix A, page 6):

‘the Council has again achieved early closedown, with accounts authorised for issue on 10 June 2016, which is 3 weeks ahead of the specified deadlines.’

‘decluttering of the accounts occurred prior to the compilation of the statements to aid readability and remove non-material disclosure notes.’

‘working papers were to a good standard.’

3.8 The auditor’s report is a good one for the Council, which is shown to be financially sound and providing value for money.

4 The Accounts

4.1 The audited accounts are attached at Appendix C.

4.2 Local authority accounts are complex and difficult for the layman to follow. A training session for Members and standing deputies of this Committee was held on 5 September 2016, to go through the accounts in detail, explain key points, and give Members the opportunity to raise queries. In approving the accounts, Members are not expected to have an accountant’s grasp of the detail; they are asked to run a critical eye over them using their knowledge of the Council and the auditor’s report and to raise any questions they may have.

4.3 The key areas to look at in the accounts are:

Narrative Statement (page 5 in the accounts) - this explains the key issues in drawingup and understanding the accounts. From 2015-2016, it has been expanded to providefurther non-financial information on the Council’s performance during the year;

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Comprehensive Income and Expenditure Statement (page 38 in the accounts) - the Comprehensive Income and Expenditure Statement shows a net surplus of £5,511,000. The ‘real’ position was a surplus of £1,380,000 (as reported to Executive on 5 July 2016). The main reason for this difference is the net impact of the following notional amounts that are included in the accounts but not the ‘real’ position:

Surplus on asset revaluations £2,750,000 Decrease in pensions liability - £2,064,000

The difference between the notional position shown in the Comprehensive Income and Expenditure Statement and the ‘real’ position is seen as a major obstacle to the lay person readily understanding the accounts;

Balance Sheet (page 39 in the accounts) - the Council’s net worth (total assets less liabilities) has increased from £38.2m to £43.7m. This is explained by the notional surplus on the General Fund noted above.

4.4 Section 3 of the Narrative Statement sets out the revenue outturn against the revised budget. A detailed report on the outturn was presented to the Executive on 5 July 2016, explaining the reasons for this variance. This report can be viewed at the following link:Agenda for Executive, 5 July 2016

4.5 Changes to the Accounts

4.5.1 Misstatements

There was one in 2015-2016. As stated at paragraph 3.5, this concerned the misposting of £1m to cash and cash equivalents which was a short term investment. This has been corrected in the accounts. It has no effect on the revenue outturn or balance sheet.

4.5.2 Changes to Notes

There have been seven changes to the Notes to the Financial Statements. These are explained on pages 20 to 21 of Appendix A.

5 Annual Governance Statement

5.1 The Annual Governance Statement (AGS) has to be published alongside the accounts, although it does not form part of the accounts. The Annual Governance Statement was agreed at this Committee on 30 June 2016. The Council's Director of Finance, being also a member of the Council’s Management Team, confirms that nothing has occurred since that date which would require that the AGS be changed. The AGS, dated 29 September 2016, will be signed again by the Leader and Chief Executive.

6 Policy Framework

6.1 The Council has four corporate priorities which are:

Decent Homes for All

Strong Economy, Rich Environment

Thriving Communities

Quality Council

https://democracy.eden.gov.uk/ieListDocuments.aspx?CId=131&MId=2039

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7 Implications

7.1 Legal

7.1.1 As the Council’s external auditor will sign-off the Council’s accounts by 30 September 2015, the Council will meet its obligations under the Accounts and Audit Regulations 2011.

7.1.2 The Council’s Constitution delegates approval of the accounts to this Committee.

7.2 Financial

7.2.1 Any decision to reduce or increase resources must be made within the context of the Council’s stated priorities, as set out in its Council Plan 2015-2019, as agreed at Council on 17 September 2015.

7.2.2 The production of timely and accurate accounts helps to underpin good financial management.

7.3 Equality and Diversity

7.3.1 The Council has to have regard to the elimination of unlawful discrimination and harassment and the promotion of equality under the Equality Act 2010 and related statutes.

7.3.2 There are no implications.

7.4 Environmental

7.4.1 The Council has to have due regard to conserving bio-diversity under the Natural Environment and Rural Communities Act 2006.


7.5 Crime and Disorder

7.5.1 Under the Crime and Disorder Act 1998 the Council has to have regard to the need to reduce crime and disorder in exercising any of its functions.


7.6 Children

7.6.1 Under the Children Act 2004 the Council has to have regard to the need to safeguard and promote the welfare of children in the exercise of any of its functions.


7.7 Risk Management

7.7.1 If the Council does not implement any recommendations made by the auditor, there will be an adverse impact on the audit of the 2015-2016 accounts. Progression of any recommendations is monitored by this Committee. There are two recommendations arising from the audit: see page 34 in Appendix A.

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8 Conclusions

8.1 The Council’s Statement of Accounts for the year ending 31 March 2016 has now been audited. The auditor will issue an unqualified audit opinion.

8.2 The auditor's opinion on the accounts, and on the Council’s Value for Money, is summarised on pages 35 and 36 of her report (Appendix A).

C W Howey Director of Finance

Governance Checks:

Checked by, or on behalf of, the Chief Finance Officer

✓

Checked by, or on behalf of, the Monitoring Officer

✓

Background Papers:

CIPFA Code of Practice on Local Authority Accounting in the United Kingdom 2015-2016

Final Accounts working papers

Contact Officer: Clive Howey Telephone Number: 01768 212213

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Intentionally Blank

Appendix A

The Auditor's Report on the Accounts

Intentionally Blank

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The Audit Findings Report for Eden District Council

Yea r ended 31 Ma rch 2016

Septe mber 2016

Jack ie Bellard Engageme nt Lead T 0 161 2 34 6394 M 0 788 0 45 6195 E [email protected]

Ange la Pieri Engageme nt Manager T 0 141 2 23 0887 M 0 755 4 33 8555 E [email protected]

Ja mie Wright In-Ch arge Auditor T 0 141 2 23 0603 E [email protected]

© 2016 Grant Thornton UK LLP | Audit Findings Report for Eden District Council | 2015/16

mailto:[email protected]:[email protected]:[email protected]

Gran t Thorn ton UK LL P 4 Hardm an Square

Spinningfields Manchester M 3 3EB www.grant-thornton.co.uk

Eden District Council Town Hall Penrith Cumbria CA11 7QF

29 September 2016

Dear Members of the Accounts and Governance Committee Audit Findings for Eden District Council for the year ending 31 March 2016

This Audit Findings report highlights the key findings arising from the audit for the benefit of those charged with governance (in the case of Eden District Council, the Accounts and Governance Committee), as required by International Standard on Auditing (UK & Ireland) 260, the Local Audit and Accountability Act 2014 and the National Audit Office Code of Audit Practice. Its contents have been discussed with management.

As auditors we are responsible for performing the audit, in accordance with International Standards on Auditing (UK & Ireland), which is directed towards forming and expressing an opinion on the financial statements that have been prepared by management with the oversight of those charged with governance. The audit of the financial statements does not relieve management or those charged with governance of their responsibilities for the preparation of the financial statements.

The contents of this report relate only to those matters which came to our attention during the conduct of our normal audit procedures which are designed primarily for the purpose of expressing our opinion on the financial statements and giving a value for money conclusion. Our audit is not designed to test all internal controls or identify all areas of control weakness. However, where, as part of our testing, we identify any control weaknesses, we will report these to you. In consequence, our work cannot be relied upon to disclose defalcations or other irregularities, or to include all possible improvements in internal control that a more extensive special examination might identify. We do not accept any responsibility for any loss occasioned to any third party acting, or refraining from acting on the basis of the content of this report, as this report was not prepared for, nor intended for, any other purpose.

We would like to take this opportunity to record our appreciation for the kind assistance provided by the finance team and other staff during our audit.

Yours sincerely

Jackie Bellard Chartered Accountants

Grant Thornton UK LLP is a limited liability partnership registered in England and Wales: No.OC307742. Registered office: Grant Thornton House, Melton Street, Euston Square, London NW1 2EP. Engagement Lead A list of members is available from our registered office. Grant Thornton UK LLP is authorised and regulated by the Financial Conduct Authority. Grant Thornton UK LLP is a member firm of Grant Thornton International Ltd (GTIL). GTIL and the member firms are not a worldwide partnership. Services are delivered by the member firms. GTIL and

its member firms are not agents of, and do not obligate, one another and are not liable for one another’s acts or omissions. Please see grant-thornton.co.uk for further details..

© 2016 Grant Thornton UK LLP | Audit Findings Report for Eden District Council | 2015/16 2

http:grant-thornton.co.ukhttp:www.grant-thornton.co.uk

Contents

Section Page

1. Executive summary 4

2. Audit findings 8

3. Value for Money 22

4. Other statutory powers and duties 27

5. Fees, nonaudit services and independence 29

6. Communication of audit matters 31

Appendices

A Action plan 34

B Draft proposed audit opinion 35


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Section 1: Executive summary

. Executive summary

. Audit findings

. Value for Money

. Other statutory powers and duties

. Communication of audit matters

. Fees, non audit services and independence

We plan to give an unmodified opinion on the financial statements. We identified one primary statement classification misstatement, but this does not impact upon the net reserves position.

We are satisfied that in all significant respects, Eden District Council put in place proper arrangements to secure value for money through economic, efficient and effective use of its resources for the year ended 31 March 2016.


Executive summary

Purpose of this report This report highlights the key issues affecting the results of Eden District Council ('the Council') and the preparation of the Council's financial statements for the year ended 31 March 2016. It is also used to report our audit findings to management and those charged with governance in accordance with the requirements of International Standard on Auditing (UK & Ireland) 260, and the Local Audit and Accountability Act 2014 ('the Act').

Under the National Audit Office (NAO) Code of Audit Practice ('the Code'), we are required to report whether, in our opinion, the Council's financial statements give a true and fair view of the financial position of the Council and its income and expenditure for the year and whether they have been properly prepared in accordance with the CIPFA Code of Practice on Local Authority Accounting.

We are also required to consider other information published together with the audited financial statements, to determine whether it is consistent with the financial statements and in line with relevant guidance.

We are required to carry out sufficient work to satisfy ourselves on whether the Council has made proper arrangements to secure economy, efficiency and effectiveness in its use of resources ('the value for money (VFM) conclusion').

Auditor Guidance Note 7 (AGN07) clarifies our reporting requirements in the Code and the Act. We are required to provide a conclusion whether in all significant respects, the Council has put in place proper arrangements to secure value for money through economic, efficient and effective use of its resources for the relevant period.

The Act also details the following additional powers and duties for local government auditors, which we are required to report to you if applied: • a public interest report if we identify any matter that comes to our attention in the course of the audit that in our opinion should be considered by the Council or brought to the public's attention (section 24 of the Act);

• written recommendations which should be considered by the Council and responded to publicly (section 24 of the Act);

• application to the court for a declaration that an item of account is contrary to law (section 28 of the Act);

• issue of an advisory notice (section 29 of the Act); and • application for judicial review (section 31 of the Act)

We are also required to give electors the opportunity to raise questions about the accounts and consider and decide upon objections received in relation to the accounts under sections 26 and 27 of the Act.

Introduction In the conduct of our audit we have not had to alter or change our audit approach, which we communicated to you in our Audit Plan dated 25 February 2016.

Our audit is substantially complete although we are finalising our procedures in the following areas; • awaiting two investment confirmations from Standard Life and Goldman Sachs; • review of the final version of the financial statements; • obtaining and reviewing the management letter of representation; and • updating our post balance sheet events review, to the date of signing the opinion.

We received draft financial statements and accompanying working papers well in advance of the 30 June 2016 statutory deadline.


Executive summary

Key audit and financial reporting issues

Financial statements opinion Subject to the completion of our final procedures, we anticipate providing a unqualified audit opinion in respect of the financial statements (see Appendix B).

We identified one misstatement to the balance sheet, but this was a classification error only and did not impact upon the net reserves position. £1 million was moved from cash and cash equivalents to shortterm investments on the face of the balance sheet and accompanying disclosure notes. The adjustment was required due to the length of time the funds were held, as the £1 million was invested for 100 days, and therefore did not meet the definition of a cash and cash equivalent balance. All other related disclosures within the cashflow statement and financial instruments notes were also adjusted as a result.

Any other adjustments identified were all amended by management and relate to disclosure notes only, and do not impact upon the primary statements. Key disclosure note adjustments identified relate to:

• Note 12 for surplus property and Note 13 for investment properties had additional reporting requirements due to IFRS13 changes. This included a requirement to disclose the fair value hierarchy as levels 1, 2 or 3. Adjustments were made to increase the level of narrative and tabular information disclosed in both notes, and to reclassify the hierarchy from level 1 to level 2 for all surplus and investment properties;

• Note 15 for financial instruments had £0.2 million classified as a creditor when it should have been disclosed within the borrowings category; and

• accounting policies were added for material balance items relating to investments, debtors and creditors.

Other key messages arising from our audit of the Council's financial statements are: • the Council has again achieved early closedown, with accounts authorised for issue on 10 June 2016, which is 3 weeks ahead of the specified deadlines;

• decluttering of the accounts occurred prior to the compilation of the statements to aid readability and remove nonmaterial disclosure notes; and

• working papers were to a good standard.

No unadjusted errors have been identified during the audit.

We have also recommended a number of other adjustments to improve the presentation of existing disclosure within the financial statements, but these are minor in nature and do not require further reporting.

Other financial statement responsibilities As well as an opinion on the financial statements, we are required to give an opinion on whether other information published together with the audited financial statements is consistent with the financial statements. This includes:

• if the Annual Governance Statement does not meet the disclosure requirements set out in the CIPFA/SOLACE guidance or is misleading or inconsistent with the information of which we are aware from our audit; and

• if the information in the Narrative Report is materially inconsistent with the information in the audited financial statements or our knowledge of the Council acquired in the course of performing our audit, or otherwise misleading.

The Narrative Statement is a new requirement for 2015/16, and the draft version presented for audit was to a good standard. Minor amendments were identified to improve presentation, with further narrative added on value for money and post balance sheet events.

Further details of disclosure note adjustments are set out in section two of this report at pages 20 to 21. © 2016 Grant Thornton UK LLP | Audit Findings Report for Eden District Council | 2015/16 6


Executive summary

Controls Roles and responsibilities The Council's management is responsible for the identification, assessment, management and monitoring of risk, and for developing, operating and monitoring the system of internal control.

Our audit is not designed to test all internal controls or identify all areas of control weakness. However, where, as part of our testing, we identify any control weaknesses, we report these to the Council.

Findings Our work has not identified any control weaknesses which we wish to highlight for your attention.

Value for Money Based on our review, we are satisfied that, in all significant respects, the Council had proper arrangements to secure economy, efficiency and effectiveness in its use of resources.

Further detail of our work on Value for Money are set out in section three of this report.

Other statutory powers and duties We have not identified any issues that have required us to apply our statutory powers and duties under the Local Audit and Accountability Act 2014.

Further details of our work on other statutory powers and duties is set out in section four of this report.

Grant certification In addition to our responsibilities under the Code, we are required to certify the Council's Housing Benefit subsidy claim on behalf of the Department for Work and Pensions. At present our work on this claim is in progress and is not due to be finalised until 30 November 2016.

To date, there are no issues to report from the work completed. We will report the final outcome of this certification work through a separate report to the Accounts and Governance Committee in February 2017.

The way forward Matters arising from the financial statements audit and our review of the Council's arrangements for securing economy, efficiency and effectiveness in its use of resources have been discussed with the Director of Finance.

Acknowledgement We would like to take this opportunity to record our appreciation for the assistance provided by the finance team and other staff during our audit.

Grant Thornton UK LLP September 2016

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Section 2: Audit findings

. Executive summary

. Audit findings

. Value for Money

. Other statutory powers and duties

. Fees, non audit services and independence

. Communication of audit matters

We identified one primary statement classification misstatement, but this did not impact upon the net reserves position.

There are seven errors within disclosure notes, all of which management has amended.

The Narrative Statement is a new requirement for 2015/16 and

the statement presented for audit was to a good standard, with some amendments made to improve the overall disclosure.


Audit findings

Materiality In performing our audit, we apply the concept of materiality, following the requirements of International Standard on Auditing (UK & Ireland) (ISA) 320: Materiality in

planning and performing an audit. The standard states that 'misstatements, including omissions, are considered to be material if they, individually or in the aggregate, could reasonably be expected to influence the economic decisions of users taken on the basis of the financial statements'.

As we reported in our audit plan, we determined overall materiality to be £0.460 million (being 2% of gross revenue expenditure). We have considered whether this level remained appropriate during the course of the audit and have made no changes to our overall materiality.

We also set an amount below which misstatements would be clearly trivial and would not need to be accumulated or reported to those charged with governance because we would not expect that the accumulated effect of such amounts would have a material impact on the financial statements. We reported in our audit plan the amount below which misstatements would be clearly trivial to be £0.023 million. This remains the same as reported in our audit plan.

As we reported in our audit plan, we identified the following items where we decided that lower materiality levels were appropriate. These remain the same as reported in

our audit plan.

Balance/transaction/disclosure Explanation

Related party transactions. Due to public interest in these disclosures and the statutory requirement for them to be made.

Disclosures of officers' remuneration, salary bandings and exit packages in notes to the statements.

Due to public interest in these disclosures and the statutory requirement for them to be made.

Disclosure of auditors' remuneration in notes to the statements. Due to public interest in these disclosures and the statutory requirement for them to be made.


Audit findings

Audit findings against significant risks "Significant risks often relate to significant nonroutine transactions and judgemental matters. Nonroutine transactions are transactions that are unusual, either due to size or nature, and that therefore occur infrequently. Judgemental matters may include the development of accounting estimates for which there is significant measurement uncertainty" (ISA (UK&I) 315).

In this section we detail our response to the significant risks of material misstatement which we identified in the Audit Plan. As we noted in our plan, there are two presumed significant risks which are applicable to all audits under auditing standards as outlined below.

Risks identified in our audit plan Work completed Assurance gained and issues arising

1. The revenue cycle includes fraudulent transactions

Under ISA (UK&I) 240 there is a presumed risk that revenue may be misstated due to the improper recognition of revenue.

This presumption can be rebutted if the auditor concludes that there is no risk of material misstatement due to fraud relating to revenue recognition.

Having considered the risk factors set out in ISA240 and the nature of the revenue streams at Eden District Council, we have determined that the risk of fraud arising from revenue recognition can be rebutted, because:

• there is little incentive to manipulate revenue recognition, • opportunities to manipulate revenue recognition are very

limited, and • the culture and ethical frameworks of local authorities,

including Eden District Council, means that all forms of fraud are seen as unacceptable.

Our audit work has not identified any issues in respect of revenue recognition.

2. Management over-ride of controls

Under ISA (UK&I) 240 it is presumed that the risk of management over-ride of controls is present in all entities.

We have undertaken the following work in relation to this risk:

• reviewed entity level controls;

• tested journal entries;

• reviewed accounting estimates, judgements and decisions made by management, and

• reviewed unusual significant transactions.

Our audit work has not identified any evidence of management over-ride of controls. In particular, the findings of our review of journal controls and testing of journal entries has not identified any significant issues.

We set out later in this section of the report our work and findings on key accounting estimates and judgements.


2015/16, in response to the move to earlier close-down, there is a greater degree of estimation in the information provided to the actuary.

Audit findings

Audit findings against significant risks continued We have also identified one other significant risk of material misstatement from our understanding of the entity. We set out below the work we have completed to address this risk below.

Risks identified in our audit plan Work completed Assurance gained and issues arising

3. Valuation of pension fund net liability

The Council's pension fund assets and liabilities as reflected in its balance sheet represent significant estimates in the financial statements. In 2015/16, in response to the move to earlier close-down, there is a greater degree of estimation in the information provided to the actuary.

The work we have performed on this risk includes:

• documented the key controls that were put in place by management to ensure that the pension fund liability was not materially misstated;

• walked through the key controls to assess whether they were implemented as expected in order to mitigate the risk of material misstatement in the financial statements;

• reviewed the competence, expertise and objectivity of the actuary who carried out the Council's pension fund valuation;

• gained an understanding of the basis on which the IAS 19 valuation was carried out, undertaking procedures to confirm the reasonableness of the actuarial assumptions made; and

• reviewed the consistency of the pension fund asset and liability and disclosures in notes to the financial statements with the actuarial report from the Council’s actuary.

Our audit work has not identified any issues in respect of the valuation of the pension fund net liability.


Audit findings

Audit findings against other risks In this section we detail our response to the other risks of material misstatement which we identified in the Audit Plan.

Transaction cycle Description of risk Work completed Assurance gained & issues arising

Employee remuneration Employee remuneration accruals understated (Remuneration expenses not correct)

We have undertaken the following work in relation to this risk:

• documented our understanding of processes and key controls over the transaction cycle the payroll system;

• undertaken walkthrough of the key controls to assess the whether those controls were in line with our documented understanding;

• substantive testing of year end payroll accruals; • testing of salary payments; and • trend analysis of payroll costs over the period and year

on-year analysis.

Our audit work has not identified any significant issues in relation to the risk identified.

Operating expenses Creditors understated or not recorded in the correct period (Operating expenses understated)

• We have undertaken the following work in relation to this risk:

• documented our understanding of processes and key controls over the transaction cycle,

• undertaken walkthrough of the key controls to assess the whether those controls were in line with our documented understanding,

• reviewed accounting estimates, judgements and the accruals accounting process including the processes for accruing goods received not invoiced,

• Tested post year end payments to confirm the completeness of accruals, and

• tested expenditure and accruals to goods receipt and subsequent invoice and payment.

Our audit work has not identified any significant issues in relation to the risk identified.


Audit findings

Audit findings against other risks continued In this section we detail our response to the other risks of material misstatement which we identified in the Audit Plan.

Transaction cycle Description of risk Work completed Assurance gained & issues arising

Property, Plant and The Council revalues its assets on a rolling We have undertaken the following work in relation to this risk: Our audit work has not identified any Equipment and investment properties

basis. The Code requires that the Council ensures that the carrying value at the balance sheet date is not materially different from the current value. This represents a significant estimate by management in the financial statements.

For 2015/16 there are new accounting standards on fair value (IFRS 13). There are also adaptations to International Accounting Standard (IAS) 16 on property, plant and equipment that apply in 2015/16, including

• reviewed management's processes and assumptions for the calculation of the estimate, new accounting standards and impact of flooding;

• reviewed the competence, expertise and objectivity of any management experts used;

• reviewed the instructions issued to valuation experts and the scope of their work;

• discussed with the Council's valuer about the basis on which the valuation was carried out, challenging the key assumptions;

issues in respect of the valuation of PPE or investment properties.

Our audit work did identify some disclosure issues within Note 12 surplus properties and Note 13 investment properties, and these are set out fully on page 20.

We set out later in this section of the report our work and findings on key accounting estimates and judgements.

additional disclosure requirements.

Cumbria experienced severe flooding in several areas during December 2015 impacting on some Council services, buildings and infrastructure. We will gain an understanding of management's processes to account for the impact on asset valuations due to the flooding.

• reviewed and challenged the information used by the valuer to ensure it was robust and consistent with our understanding;

• tested revaluations made during the year to ensure they were input correctly into the Council's asset register; and

• evaluated of the assumptions made by management for those assets not revalued during the year and how management satisfied themselves that these were not materially different to current value.



Audit findings

Accounting policies, estimates and judgements In this section we report on our consideration of accounting policies, in particular revenue recognition policies, and key estimates and judgements made and included with the Council's financial statements.

Accounting area Summary of policy Comments Assessment

Revenue recognition • Revenue from provision of services is recognised when the percentage completion of the transaction can be reliably measured and it is probable that the economic benefits or service potential associated with the transaction will flow to the Council.

• Grants and contributions are recognised when there is reasonable assurance the monies will be received and that any conditions attached will be met.

• Expenditure is recognised when goods or services are received rather than when payments are made.

Our review of revenue recognition policies has not highlighted any issues which we wish to bring to your attention. �

Green

Judgements and estimates Key estimates and judgements not already included within other sections of this report are: • useful life of PPE; • debtors and creditors; • provisions and contingent liabilities, and • accounting for NNDR appeals.

Work on other judgements and estimates has not highlighted any issues which we wish to bring to your attention.

Work on IAS19 and asset valuation judgements and estimates are reported on pages 11 and 13.

� Green

Assessment • Marginal accounting policy which could potentially attract attention from regulators • Accounting policy appropriate but scope for improved disclosure • Accounting policy appropriate and disclosures sufficient

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Audit findings

Accounting policies, estimates and judgements continued Accounting area . Summary of policy Comments Assessment

Going concern The Director of Finance, as the s151 officer has a reasonable expectation that the services provided by the Council will continue for the foreseeable future. Members concur with this view. For this reason, the Council continue to adopt the going concern basis in preparing the financial statements.

We have reviewed the Council's assessment and are satisfied with management's assessment that the going concern basis is appropriate for the 2015/16 financial statements.

� Green

Other accounting policies We have reviewed the Council's policies against the requirements of the CIPFA Code and accounting standards.

There is an accounting policy for Property Plant and Equipment componentisation within the financial statements. No assets fall within the remit of being componentised due to the levels chosen in the policy. It is expected that some assets would be subject to componentisation as a result of the full revaluation programme during 2014/15. From the work we have carried out we are assured that this does not have a material impact upon the financial statements for 2015/16, but the Council should revisit the policy during 2016/17.

Accounting policies were added for the following material balances,

• investments;

• debtors; and

• creditors.

A separate accounting policy included for fair value measurement was merged into the relevant PPE and investment property accounting policies in the final set of financial statements.

Our review of accounting policies has not highlighted any further issues, which we wish to bring to your attention on the disclosure of accounting policies.

� Amber

Assessment • Marginal accounting policy which could potentially attract attention from regulators • Accounting policy appropriate but scope for improved disclosure • Accounting policy appropriate and disclosures sufficient

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Audit findings

Other communication requirements We set out below details of other matters which we, as auditors, are required by auditing standards and the Code to communicate to those charged with governance.

Issue Commentary

1. Matters in relation to fraud We have previously discussed the risk of fraud with the Accounts and Governance Committee and we have not been made aware of any incidents in the period, and no other issues have been identified during the course of our audit procedures.

2. Matters in relation to related parties

From the work we carried out, we have not identified any related party transactions which have not been disclosed.

3. Matters in relation to laws and regulations

The Council has not made us aware of any significant incidences of non-compliance with relevant laws and regulations and we have not identified any incidences from our audit work.

During the year we received correspondence from a local elector relating to the operation of the planning committee. We have considered the information provided and concluded that there is no action to take that falls within our duties as external auditor.

4. Written representations A standard letter of representation has been requested from the Council,

5. Confirmation requests from third parties

We obtained direct confirmations for loans, investments and bank accounts. This permission was granted by management and the requests were sent, and all but two have been received. We are following up the two confirmations that are still outstanding.

6. Disclosures Our work on accounting policies on page 15 discloses the omissions in accounting policies, and no other omissions were identified in the financial statements.

The full detail of any amendments within existing disclosure notes are detailed on pages 20 to 21.


Audit findings

Other communication requirements continued

Issue Commentary

7. Matters on which we report by exception

We are required to report on a number of matters by exception in a number of areas:

• If the Annual Governance Statement does not meet the disclosure requirements set out in the CIPFA/SOLACE guidance or is misleading or inconsistent with the information of which we are aware from our audit

• The information in the Narrative Report is materially inconsistent with the information in the audited financial statements or our knowledge of the Council acquired in the course of performing our audit, or otherwise misleading.

No amendments were identified within the Annual Governance Statement.

The Narrative Statement is a new requirement for 2015/16. The narrative statement presented to audit was to a good standard. Minor amendments were made to improve presentation with further narrative on value for money and post balance sheet events added.

8. Specified procedures for Whole of Government Accounts

We are required to carry out specified procedures (on behalf of the NAO) on the Whole of Government Accounts (WGA) consolidation pack under WGA group audit instructions.

Note that no work is required as the Council does not exceed the threshold.


Audit findings

Internal controls The purpose of an audit is to express an opinion on the financial statements.

Our audit included consideration of internal controls relevant to the preparation of the financial statements in order to design audit procedures that are appropriate in

the circumstances, but not for the purpose of expressing an opinion on the effectiveness of internal control. We considered and walked through the internal controls for Employee Remuneration, Operating Expenses, IAS19 and Property Plant and Equipment as set out on pages 11 to 13.

The controls were found to be operating effectively and we have no matters to report to the Accounts and Governance Committee.


Audit findings

Adjusted misstatements A number of adjustments to the draft accounts have been identified during the audit process. We are required to report all nontrivial misstatements to those charged with governance, whether or not the accounts have been adjusted by management. The table below summarises the one adjustment arising from the audit which has been processed by management as it impacts upon the primary statements.

Impact of adjusted misstatements The one adjusted misstatement is set out in detail below along with the impact on the key statements for the year.

Detail Comprehensive Income and Expenditure Statement

£'000

Balance Sheet £'000

Impact on total net expenditure

£000

1 £1 million was included in the Balance Sheet within cash and cash 0 1,000 0 equivalents, however, the funds were held within a 100 day notice 1,000 account which is above the 90 day limit for classification as cash and cash equivalents. Therefore, the correct classification of this balance is within shortterm investments. This is a classification issue only within the balance sheet, and has no net impact on the Council’s reported position. All other associated disclosures within the cash flow statement and financial instruments notes were also amended.

Overall impact £ 0 £0 £ 0


Adjustment type Value Account balance Impact on the financial statements £'000

Audit findings

Misclassifications and disclosure changes The table below provides details of misclassification and disclosure changes identified during the audit which have been made in the final set of financial statements.

1 Disclosure n/a Narrative Statement Disclosure was added to the narrative statement to include a post balance sheet note, and to enhance the references to value for money. A number of other minor amendments were added to improve the overall presentation and disclosures made within the Narrative Statement.

2 Disclosure n/a Accounting policies Financial Disclosure was added to include an accounting policy for the material balances of Instruments investments, debtors and creditors.

3 Disclosure n/a Accounting policies A separate accounting policy included for fair value measurement was merged into Investment Property and the relevant PPE and investment property accounting policies in the final set of Property, Plant and financial statements. Equipment

4 Disclosure n/a Note 12 – Surplus property and Note 13 Investment property

5 Classification 200 for 2015/16 Note 15 – Financial 200 for 2014/15 Instruments – fair value of

financial liabilities

Note 12 for surplus property and Note 13 for investment properties had additional reporting requirements due to IFRS13 changes. This included a requirement to disclose the fair value hierarchy as levels 1, 2 or 3. Adjustments were made to increase the level of narrative and tabular information disclosed in both notes to be fully compliant with the Code, and to reclassify the hierarchy from level 1 to level 2 for all surplus and investment properties.

The borrowings balance for both 2015/16 and 2014/15 was incorrect as an item included for £200,000 should have been classified as creditor. The 2015/16 borrowings balance was adjusted to decrease it from £395,000 to £195,000. The compensating adjustment was made to the creditors balance to increase it from £1,157,000 to £1,357,000. Comparators balances were also adjusted for 2014/15 to increase the creditors balance from £58,000 to £258,000, and to decrease the borrowings balance from £1,565,000 to £1,365,000.


Audit findings


Misclassifications and disclosure changes continued . Adjustment Value Account balance Impact on the financial statements

type £'000

5 Classification 200 for 2015/16 Note 15 – Financial The borrowings balance for both 2015/16 and 2014/15 was incorrect as an item Instruments – fair value of included for £200,000 should have been classified as creditor. The 2015/16

financial liabilities borrowings carrying value balance was adjusted to decrease it from £395,000 to £195,000. The compensating adjustment was made to the creditors balance to increase it from £1,157,000 to £1,357,000. The same £200,000 adjustment was made

to the fair value balance taking borrowings from £402,000 to £202,000 and creditors from £1,157,000 to £1,357,000.

6 Classification 176 for 2015/16 Note 15 – Financial The balance for interest received of £302,000 was incorrectly classified in the loans 117 for 2014/15 Instruments – gains and losses and receivables category. £176,000 of the interest received was from the long term

investment, which is an available for sale asset. Therefore £176,000 was moved into the available for sale category. The comparator note for 2014/15 was also amended

to move £117,000 from loans and receivables to the available for sale category.

7 Disclosure 244 Note 15 – Financial The age debt analysis was amended to change the total and mix of the note from Instruments – aged debt £636,000 to £392,000 as an incorrect split in all age categories of the debt had been analysis included.

21

01. Executiv e summary

02. Audi t findings

03. Valu e fo r Money

04. Other statutor y power s an d duties

05. Fees, non-audi t servic es an d independence

06. Communicatio n of audit matters

Section 3: Value for Money

We are satisfied that in all significant respects, Eden District Council put in place proper arrangements to secure value for money through economic, efficient and effective use of its resources for the year ended 31 March 2016.


Value for Money

Background We are required by section 21 of the Local Audit and Accountability Act 2014 ('the Act') and the NAO Code of Audit Practice ('the Code') to satisfy ourselves that the Council has put in place proper arrangements for securing economy, efficiency and effectiveness in its use of resources. This is known as the Value for Money (VFM) conclusion.

We are required to carry out sufficient work to satisfy ourselves that proper arrangements are in place at the Council. The Act and NAO guidance state that for local government bodies, auditors are required to give a conclusion on whether the Council has put proper arrangements in place.

In carrying out this work, we are required to follow the NAO's Auditor Guidance Note 3 (AGN 03) issued in November 2015. AGN 03 identifies one single criterion for auditors to evaluate:

In all significant respects, the audited body had proper arrangements to ensure it took properly informed decisions and deployed resources to achieve planned and sustainable outcomes for taxpayers and local people.

AGN03 provides examples of proper arrangements against three subcriteria but specifically states that these are not separate criteria for assessment purposes and that auditors are not required to reach a distinct judgement against each of these.

Risk assessment

We carried out an initial risk assessment in June 2016 and identified one significant risk, which we communicated to you in our external audit update report to the Accounts and Governance Committee on 30 June 2016. The significant risk identified was:

• The MTFP from January 2016 and September 2016 covers the financial years 2016/17 to 2019/20. There are considerable uncertainties over the next few years, and the Council apply estimates and key judgements to compile the MTFP.

We identified risks in respect of specific areas of proper arrangements using the guidance contained in AGN03.

We have continued our review of relevant documents up to the date of giving our report, and have not identified any further significant risks where we need to perform further work.

We carried out further work only in respect of the significant risk we identified from our initial and ongoing risk assessment. We have not identified any gaps in proper arrangements.


Value for Money

Significant qualitative aspects

AGN 03 requires us to disclose our views on significant qualitative aspects of the Council's arrangements for delivering economy, efficiency and effectiveness.

We have focused our work on the significant risk that we identified in the Council's arrangements. In arriving at our conclusion, our main considerations were:

• processes put in place to identify and implement programmes and projects to address any ongoing budget deficit as outlined in the MTFP;

• reporting and monitoring of the financial position during the financial year; and

• the robustness of assumptions made.

We have set out more detail on the risk we identified, the results of the work we performed and the conclusions we drew from this work later in this section on page 25.

Overall conclusion

Based on the work we performed to address the significant risks, we concluded that the Council had proper arrangements in all significant respects to ensure it delivered value for money in its use of resources. The text of our proposed report can be found at Appendix B.


Value for Money

Key findings

We set out below our key findings against the significant risk we identified through our initial risk assessment.

Significant risk Work to address Findings and conclusions

Medium Term Financial Plan (MTFP) The MTFP from January 2016 and updated in September 2016 covers the financial years 2016/17 to 2019/20. There are considerable uncertainties over the next few years, and the Council apply estimates and key judgements to compile the MTFP.

We will review the arrangements the Council has in place to compile the MTFP. This includes a review of how the Council is identifying, managing and monitoring financial information in order to regularly update the MTFP including reporting outcomes to Executive and Full Council.

This links to the Council's arrangements for planning finances effectively to support the sustainable delivery of strategic priorities and using appropriate cost and performance information to support informed decision making.

The Council continues to face a challenging internal and external environment in the short to medium term. The MTFP approved by Council in January 2016 and September 2016 demonstrated that appropriate steps are being taken to ensure a balanced budget position against a background of reduced government funding and balancing the priorities identified in the Council Plan 2015-2019. The Council is planning to take the offer from the Department for Communities and Local Government (DCLG) to provide certainty of government funding for the period 2017 to 2020.

The MTFP for 2016/17 to 2019/20 in September 2016 identifies a cumulative deficit of £1.887 million over the 4 year period before any transfers from reserves. It is noted that £2.136 million of the expenditure over the 4 year period is from non recurring expenditure schemes, including £0.345 million for the impact of flooding budgeted in 2016/17. During 2016/17 the Council has created an earmarked business rates reduction scheme (BRSS) reserve for £0.843 million, which will be utilised during 2017/18 and 2018/19 when an anticipated reduction in BRSS income is expected. The £0.843 million represents the overachieved level during 2015/16 compared to the budgeted levels, in part due to the technical accounting of NNDR costs and income. The general fund balance is high for the Council, with a £6.3 million balance projected for the period of the 2016/17 to 2019/20 MTFP, which is significantly above the minimum level set at £1.5 million. The general fund balance at 31 March 2016 is £8.1 million and other earmarked reserves at £3.8 million.

The Council has a history of underspends in their revenue and capital budgets The revenue budget for 2015/16 before transfers was a £0.6 million deficit, whereas a surplus of £1.4m was achieved. This represents a £2 million underspend when compared to the budget in 2015/16. There are various reasons for the underspend. £0.35 million was due to slippage, and the expenditure has been committed and re-profiled into 2016/17. £0.9 million was due to higher levels of income than budgeted for business rates retention scheme and recovery of overpaid housing benefits and as already noted this has been set aside into a reserve in 2016/17. £0.2 million was also achieved from vacancy management.

The delivery of the capital programme in 2015/16 showed a £0.8 million underspend against the £1.6 million budget, with £0.8 million of this due to slippage and the expenditure committed and re-profiled into 2016/17. The major capital scheme for the one site project has been put on hold. The Council depot will now not be relocated, but the existing site is to be refurbished.

The Council has a comprehensive approach to its medium term financial planning, budgeting and identification of plans, which are agreed at a corporate level, by senior officers and Members. The strategy is aligned to the Council's corporate priorities, highlights the key financial risks, and adopts a prudent approach to funding streams. The Council has taken this approach to allow it to have the flexibility and resilience in order to address the variable nature of future funding. The Council has good planning assumptions built into the annual and four year budget processes. The Council is responsive to changes required as the strategic planning process considers sensitivity analysis.

Based on the review of the arrangements in place during 2015/16 for the compilation of the MTFP including identified savings we concluded that the risk was sufficiently mitigated and that the Council has proper arrangements in this area.


Value for money

Significant difficulties in undertaking our work

We did not identify any significant difficulties in undertaking our work on your arrangements which we wish to draw to your attention.

Significant matters discussed with management

There were no matters where no other evidence was available or matters of such significance to our conclusion or that we required written representation from management or those charged with governance.

Any other matters

There were no other matters from our work which were significant to our consideration of your arrangements to secure value for money in your use of resources.


Section 4: Other statutory powers and duties

01. Executiv e summary

02. Audit findings

03. Valu e fo r Money

04. Other statutor y power s an d duties

05. Fees, no n audit servic es an d independence

06. Communicatio n of audit matters

This section sets out our other statutory powers and duties. There are no issues to report.


Other statutory powers and duties

We set out below details of other matters which we, as auditors, are required by the Act and the Code to communicate to those charged with governance.

Issue Commentary

1. Public interest report • We have not identified any matters that would require a public interest report to be issued.

2. Written recommendations • We have not made any written recommendations that the Council is required to respond to publicly.

3. Application to the court for a declaration that an item of account is contrary to law

• We confirm that we have not used this duty.

4. Issue of an advisory notice • We confirm that we have not used this duty.

5. Application for judicial review • We confirm that we have not used this duty.


01. Executive summary

02. Audit findings

03. Value for Money

04.

05.

Other statutory powers and duties

Fees, non audit services and independence

06. Communication of audit matters

Section 5: Fees, nonaudit services and independence

This section sets out the audit fee and our independence considerations. There are no changes to the audit fee or independence considerations as previously reported to you in the audit plan.


Fees, non audit services and independence

We confirm below our final fees charged for the audit We confirm there were no fees for the provision of non audit services.

Fees

Budget £ Actual £

Council audit 41,943 41,943

Grant certification 8,646 8,646

Total audit fees (excluding VAT) 50,589 50,589

There is no variation in the actual fee against the planned fee for the 2015/16 Council audit.

Grant certification Our fees for grant certification cover only housing benefit subsidy certification, which falls under the remit of Public Sector Audit Appointments Limited.

Our grant certification fee is still an estimate, as our work on the Council's housing subsidy claim is still ongoing and will not be finalised until November 2016.

Fees for other services

There are no other services provided.

Independence and ethics

We confirm that there are no significant facts or matters that impact on our independence as auditors that we are required or wish to draw to your attention. We have complied with the Auditing Practices Board's Ethical Standards and therefore we confirm that we are independent and are able to express an objective opinion on

the financial statements.

Full details of all fees charged for audit and nonaudit services will be included in our Audit Findings Report at the conclusion of the audit.

We confirm that we have implemented policies and procedures to meet the requirements of the Auditing Practices Board's Ethical Standards.


Section 6: Communication of audit matters

01.

02.

03.

Executive summary

Audit findings

Value for Money

04. Other statutory powers and duties

05. Fees, non audit services and independence

06. Communication of audit matters This section summarises our communication requirements to you as 'those charged with governance'. We confirm that all required reporting is included within the audit plan or this audit findings report.


Communication of audit matters

Communication to those charged with governance

Internation al Standard s o n Auditin g ISA (UK&I ) 260, as we ll a s othe r ISAs, prescrib e matt ers whic h w e are require d t o communicat e wit h thos e charg ed wit h governance, and whic h w e set ou t in t he ta ble opposite.

The Au dit Plan outline d o ur au dit strateg y a nd plan t o deliv er th e audit, w hile this Au dit Findings rep ort presents t he k ey issues an d othe r matters aris ing f rom t he audit , togeth er wit h an explanat ion a s t o ho w thes e hav e be en resolved.

Respective responsibilities

The Au dit Findings Rep ort h as bee n prep ared in t he context o f t he Statement of Responsibilities of Audito rs and Audited Bodie s issu ed by Pu blic Sect or Audit Appointment s Limited (http://www.psaa.co.uk/appointing-auditors/terms-ofappointment/)

We have been appoint ed a s t he Council' s independent externa l auditors b y th e Audit Commission, the bo dy responsible for appointin g exte rnal auditors t o loc al public bodie s in England at the tim e of o ur appointment. As externa l auditors, w e hav e a broad remit cov ering financ e a nd governanc e matters.

Our annual work programm e is se t in accordanc e wit h th e Cod e o f Audit Practic e ('the Code') issued b y the N AO (https://www.nao.org.uk/code-audit-practice/aboutcode/). Our work considers the Council's k ey risks when reachin g our conclusions under th e Code.

I t is th e responsibilit y of t he Counc il t o ens ure that prop er arrangement s are in plac e for th e conduct o f it s business, a nd that pub lic mon ey is safeguarde d a nd prope rly account ed for. W e hav e consid ered how t he Counc il is fulf illing thes e responsibilities.

fid

Arb

n

I

E

S

S

Our communication plan Audit Plan

Audit Findings

Respective responsibilities of auditor and management/those charged with governance

�

Overview of the planned scope and timing of the audit. Form, timing and expected general content of communications

�

Views about the qualitative aspects of the entity's accounting and nancial reporting practices, significant matters and issues arising uring the audit and written representations that have been sought

�

Confirmation of independence and objectivity � �

statement that we have complied with relevant ethical requirements egarding independence, relationships and other matters which might e thought to bear on independence.

Details of non-audit work performed by Grant Thornton UK LLP and etwork firms, together with fees charged

Details of safeguards applied to threats to independence

� �

Material weaknesses in internal control identified during the audit �

dentification or suspicion of fraud involving management and/or others which results in material misstatement of the financial statements

�

Non compliance with laws and regulations �

xpected modifications to auditor's report �

Uncorrected misstatements �

ignificant matters arising in connection with related parties �

ignificant matters in relation to going concern �


Appendices

Appendices


Appendices

Appendix A: Action plan

Priority High - Significant effec t on contro l system Medium - Effec t on cont rol system Low - Best practice

Rec No. Recommendation Priority Management response

Implementation date & responsibility

1 Review the componentisation policy to ensure some assets would fall under the remit of the policy when they are next revalued.

Medium A review will be undertaken in advance of preparing the 2016/17 financial statements.

Financial Services Manager

January 2017

2 Carry out a quality assurance review of the financial instruments and IFRS13 disclosures.

Medium A review will be undertaken in advance of preparing the 2016/17 financial statements.

Financial Services Manager

March 2017


Appendices

Appendix B: Draft proposed audit opinion

We anticipate we will provide an unqualified opinion

INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS OF EDEN DISTRICT COUNCIL

We have audited the financial statements of Eden District Council (the "Authority") for the year ended 31 March 2016 under the Local Audit and Accountability Act 2014 (the "Act"). The financial statements comprise the Movement in Reserves Statement, the Comprehensive Income and Expenditure Statement, the Balance Sheet, the Cash Flow Statement, the Collection Fund, the Statement of Accounting Policies and the related notes. The financial reporting framework that has been applied in their preparation is applicable law and the CIPFA/LASAAC Code of Practice on Local Authority Accounting in the United Kingdom 2015/16.

This report is made solely to the members of the Authority, as a body, in accordance with Part 5 of the Act and as set out in paragraph 43 of the Statement of Responsibilities of Auditors and Audited Bodies published by Public Sector Audit Appointments Limited. Our audit work has been undertaken so that we might state to the members those matters we are required to state to them in an auditor's report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the Authority and the Authority's members as a body, for our audit work, for this report, or for the opinions we have formed.

Respective responsibilities of the Director of Finance and auditor

As explained more fully in the Statement of Responsibilities for the Statement of Accounts, the Director of Finance is responsible for the preparation of the Statement of Accounts, which includes the financial statements, in accordance with proper practices as set out in the CIPFA/LASAAC Code of Practice on Local Authority Accounting in the United Kingdom 2015/16, which give a true and fair view. Our responsibility is to audit and express an opinion on the financial statements in accordance with applicable law and International Standards on Auditing (UK and Ireland). Those standards require us to comply with the Auditing Practices Board’s Ethical Standards for Auditors.

Scope of the audit of the financial statements

An audit involves obtaining evidence about the amounts and disclosures in the financial statements sufficient to give reasonable assurance that the financial statements are free from material misstatement, whether caused by fraud or error. This includes an assessment of whether the accounting policies are appropriate to the Authority’s circumstances and have been consistently applied and adequately disclosed; the reasonableness of significant accounting estimates made by the Director of Finance; and the overall presentation of the financial statements. In addition, we read all the financial and nonfinancial information in the Narrative Report and the Annual Governance Statement to identify material inconsistencies with the audited financial statements and to identify any information that is apparently materially incorrect based on, or materially inconsistent with, the knowledge acquired by us in the course of performing the audit. If we become aware of any apparent material misstatements or inconsistencies we consider the implications for our report.

Opinion on financial statements

In our opinion the financial statements: • present a true and fair view of the financial position of the Authority as at 31 March 2016 and of its

expenditure and income for the year then ended; and • have been prepared properly in accordance with the CIPFA/LASAAC Code of Practice on Local Authority

Accounting in the United Kingdom 2015/16 and applicable law.

Opinion on other matters

In our opinion, the other information published together with the audited financial statements in the Narrative Report and the Annual Governance Statement is consistent with the audited financial statements.

Matters on which we are required to report by exception

We are required to report to you if: • in our opinion the Annual Governance Statement does not comply with the guidance included in ‘Delivering

Good Governance in Local Government: a Framework’ published by CIPFA/SOLACE in June 2007; or • we issue a report in the public interest under section 24 of the Act; or • we make a written recommendation to the Authority under section 24 of the Act; or • we exercise any other special powers of the auditor under the Act.

We have nothing to report in these respects.
