Agenda item

Report of the Chief Financial Officer to inform the Committee of the proposed audit and inspection fees for 2010/11 to be charged by Grant Thornton and the Audit Commission.

Kevin Bartle, Head of Corporate Finance, presented the report on Audit and Inspection Fees for 2010/11 and confirmed that officers were satisfied with the level of fees proposed. Paul Dossett, Grant Thornton, reported that the letter attached to the report was the indicative fee letter, as required by the Audit Commission. This would then be revised to take into account the outcome of the previous year’s audit, once completed. Although the Use of Resources scored assessment had been withdrawn, it was reported that the majority of the work had already been undertaken and that a significant reduction in fee in respect of this was therefore unlikely in the current year. A reduction in fee would, however, be seen in 2011/12. It was reported that the Audit Commission would be issuing a fees consultation in the next month to consider the impact of recent changes by the Government. Grant Thornton offered to share the Audit Commission consultation document with the Committee, via officers, once it was published

In response to a question from the Committee, it was reported that the proposed fees for Haringey were 5% below the Audit Commission scale fee.

The Committee expressed the view that the abolition of the CAA should be reflected in a substantial reduction in audit fees for local authorities, and requested that these views be fed back to the Audit Commission. The Committee noted that in the current financial climate, the proposed expenditure of amounts such as those represented by the fees in the report had to be scrutinised closely.

In response to a question from the Committee regarding why a significant proportion of the Use of Resources work had already been carried out, Paul Dossett reported that although the scored assessment had been abolished, it was still a requirement as part of the audit process for the external auditors to form a conclusion regarding whether the Council was achieving value for money. In response to a question from the Committee regarding the engagement of officers with the progress, it was confirmed that officers worked together with Grant Thornton on this.

In response to a question from the Committee as to whether the fees outlined in the report had already been spent, it was confirmed that they were in the process of being paid. It was reported that the fees charged to the 2010/11 budget related to work already completed to the end of April 2010. The Committee expressed the hope that 2011/12 would see a significant reduction in fees. Kevin Bartle advised that the fee for certification of claims and returns was estimated, and that officers were working to increase the quality of these areas to ensure that the actual fee required was lower than the estimate. Mr Bartle reported that the number of areas which could be challenged in respect of the Audit fees was limited.

The Committee expressed concerns that the fees exceeded the amount budgeted, and asked what assumptions were used in setting the budget in this area, and how this could be avoided in future. Mr Bartle advised that it was usual for the budget to increase incrementally during the course of the year. It was reported that risk-based inspection work directed by the Audit Commission could not be anticipated or budgeted for, as a result of which it represented an overspend which could not be controlled in advance, but which officers were working to manage internally.

The Chair noted that the indicative fees reported would be reviewed during the year, and that the Committee would be advised of any changes or further details. The Chair advised the Committee that, although the CAA scoring system had been abolished, the need to scrutinise performance was still there. It was noted that it was not yet clear what the charges would be for any new system, but the Chair requested that Grant Thornton feed back to the Audit Commission Members’ opinion that fees should be substantially reduced. While hoping that fees would be reduced, the Chair requested that officers carefully scrutinise the fees already set to ensure that the Council was receiving best value and report back to the Committee periodically regarding any changes determined by the Audit Commission.

Taking into account the comments made during the discussion it was:

RESOLVED

That the proposed audit and inspection fees for 2010/11 from Grant Thornton and the Audit Commission be noted, as recommended, subject to further scrutiny by the Section 151 Officer of the Council, given the Members’ opinion that fees should be substantially reduced.