23.1. It was confirmed that the Annual Audit Letter 2018/19 would be considered at the Audit & Governance Committee meeting in December 2019.
23.2. The External Auditor, Ms Hanson, introduced the Audit Results Report which had been completed by Ernst & Young LLP and confirmed that an unqualified opinion of the financial statements had been achieved.
23.3. Ms Hanson advised that key areas of focus for the audit of the Councils financial statements had been identified which included misstatements due to fraud or error (in which no errors had been identified) and incorrect capitalisation of revenue expenditure, in which an amendment had been required, although this hadn’t had any impact on the Council’s revenue and had not indicated any misreporting of the Council’s financial position.
23.4. Specialists had been involved in the audit of the Pension Liability Valuation and the key judgements used by the actuary and how reasonable these were. Following the review, the draft Ipswich Borough Council Group Accounts had been amended to reflect changes in the company auditors assessment of Ipswich Buses Ltd.’s pension arrangements, as this had been re-defined as a defined contribution scheme. Therefore, as this was in line with Ernst & Youngs and the Council auditors assessments, there would now be a consistent treatment in the accounts of Ipswich Busses and of Ipswich Borough Council. In response to a question from Councillor Fisher, Ms Hanson confirmed that the change in definition of Ipswich Busses would not have any affect on the beneficiaries of the scheme.
23.5. Ms Hanson confirmed that specialists had reviewed the Council’s retail park assets and identified that the valuation of the retail parks had not deducted the purchaser costs and this had led to a material overstatement of the assets value. Therefore, the audit difference for this had been adjusted.
23.6. With regards to the Martlesham Heath Retail Park, the valuation for this had been above the expected range of the internal valuer and the Council had chosen not to adjust for this audit difference. Mr Minnican, Operations Manager – Finance, confirmed that the reason the Council had chosen not to adjust their figures had been because third party valuers and specialists with local knowledge had been involved with the valuation of the retail park and they had agreed that this had been a realistic figure.
23.7. A value for money risk assessment had been undertaken which focussed on the governance and decision making arrangements between the Council and their subsidiaries, of which they had been satisfied that appropriate provisions had been implemented.
23.8. Updated guidance stated that ‘authorities must not borrow more than or in advance of their needs purely in order to profit from the investment of the extra sums borrowed’ however, should a local authority choose to disregard this guidance, the Council had to ensure that their investment strategy included the reasons why and how the risks associated with this would be minimised. It had therefore been recommended that, due to the scale of the borrowing and the increased risk to the Council, Ipswich’s strategy be updated. A satisfactory conclusion had been given as the Council had shown robust decision making however, due to the possible significant changes to the guidance in the future, the Council would need to remain mindful of this.
23.9. Discussion took place around whether the Audit & Governance Committee could consider the subsidiary accounts at a future meeting and any adjustments made/ differences identified following the audit processes. It was suggested that further discussion take place outside of the meeting to consider this request.
that the Annual Audit Results Report as at 31st March 2019 be noted.