External Audit updates
This page gives details of any meetings held which will, or did, discuss the matter, and includes links to the relevant Papers, Agendas and Minutes.
Note: Meeting Agenda can change at short notice. Particularly where future meeting dates are indicated more than a week in advance. Please check before planning to attend a Committee Meeting that the item you are interested in has not been moved.
Consider External Audit opinion (ISA 260 Report) for the financial year 2022-23
ARAC (23-03) Paper 5a – ISA 260 Report
5.1 An interim Audit of Accounts (ISA 260) Report and Management Letter was circulated prior to the meeting. Clare highlighted the areas of work that remained outstanding; the most concerning one for the Committee was receipt of the Auditor’s Expert’s report on the work of the Senedd Members Pension Fund Actuary.
5.2 There was one uncorrected misstatement in the accounts. This related to classification of capital expenditure and was not material but over the threshold for reporting. A recommendation on this had been included in the report.
5.3. Audit Wales thanked the Senedd Commission’s Finance team for their support.
5.4 The Committee challenged one recommendation which was the ‘Identification of related party transactions’ and asked for clarification on who this related to. It was noted that Members of the Senedd already completed a register of interest and similar controls and checks were also in place within the Commission for staff. Audit Wales agreed to discuss this recommendation with officials in due course.
5.5 The Committee expressed concern at the unsatisfactory position they had been put in by the Audit Wales delays which prevented them giving a clear recommendation to the Accounting Officer. Delays in presenting the accounts to the Commission and signing them threatened the tight timetable for publishing all of the end of year reports. The Chair, Committee members and Simon paid tribute to the Finance team for delivering to such tight timescales. They noted that the Chief Finance Officer would be holding a lessons learned meeting with Audit Wales and the Committee would return to the outcome of this at its November meeting.
5.6 The Committee recommended to the Accounting Officer that the financial statements for 2022-23 should be signed as long as no issues were raised following receipt of the Expert’s actuarial report. Committee members would be asked to confirm their agreement on recommending the signing of the accounts on receipt of the final ISA 260 Report.
Audit Wales update
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ARAC (23-03) Paper 4 - Audit Wales update - June 2023
4.1 The Chair welcomed Ann-Marie Harkin and Clare James to the meeting. Clare reported that her team had almost completed their audit of the 2022-23 financial statements and remained on track for certification by the Auditor General for Wales on 22 June 2023.
4.2 The Committee thanked Clare for her update and noted the paper.
Audit Wales update
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ARAC (23-01) Paper 9 - AW Detailed Audit Plan-2022-23
9.1 The Chair welcomed Clare James to the meeting.
9.2 Clare presented the 2022-23 audit plan, outlined the materiality levels, and highlighted three significant financial statement risks and the other areas of focus. She also shared the audit timetable which would be tight but achievable with certification by the Auditor General for Wales scheduled for 22 June.
9.3 The estimated audit fee for 2023 would be £68,985 (2021-2022 £59,987) but Clare explained that, as the planning was ongoing, changes to the programme of audit work may be required if any key new risks emerged, which could in turn affect the estimated fee. In relation to the risk around key changes to finance personnel, she highlighted that such changes always posed a risk to accounts preparation and could therefore increase the risk of material misstatements.
9.4 Clare confirmed that the interim Head of Finance had already provided information related to the new IFRS16 Leases accounting standard which would be reviewed and tested as part of the audit to ensure expenditure was appropriately classified in the 2022-23 financial statements.
9.5 The Committee welcomed the clear and helpful format of the document and noted the tight timetable. The Chair urged the early identification of issues to allow time for these to be resolved. The specific dates were also noted, with the audit due to commence on 9 May, presentation of a draft set of accounts to Audit Wales by 12 May and plans to issue a draft opinion in time for issuing the Committee papers on 5 June.
Joint working protocol
10.1 Clare James explained that the joint working protocol between Audit Wales and the Commission’s Head of Internal Audit, which had been in place for a number of years, was reviewed annually. She also explained that, since it was last reviewed in 2022, new auditing standards did not allow as much formal reliance on the work of internal audit work for assurance purposes, although Audit Wales could still take this into account. It was agreed that an updated and simplified joint working protocol would be produced and shared with the Committee before Gareth’s departure.
· Gareth Watts and Clare James to provide briefing for the Committee on the joint working protocol.
Update on progression of audit planning for audit of 2022-23 Commission accounts
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ARAC (23-01) Paper 4 – outline audit plan
4.1 The Chair welcomed Ann-Marie Harkin and Clare James to the meeting. Clare had replaced Gareth Lucey as Audit Manager as part of the rotation policy. Ann-Marie confirmed that the rest of the team would remain unchanged.
4.2 Clare introduced an outline audit plan which was very high level and welcomed feedback from the Committee. It included the proposed fee and details of the audit team. Audit Wales had estimated that the audit fee would be £68,985, which represented a 15% increase. This was based on an early estimate of the impact of the new auditing standard ISA 315 which required more detailed risk assessments by more experienced and skilled auditors. Detailed planning work in the coming weeks would inform a more accurate estimate. Audit Wales confirmed there would be no change to the materiality threshold of 1% of gross expenditure.
4.3 Historically, a complete set of audited accounts had been presented to ARAC at the June meeting and Audit Wales were mindful of the impact on the Commission if this should move to July. However, given the added complexity and new approach due to the new ISA 315 standard, and issues with recruitment of more experienced auditors, they had stated July in the paper as they could not guarantee completion in time for the June meeting. They would provide Simon and the Finance team with a more detailed timeline once the planning work was underway and Simon would ensure that ARAC members were kept informed.
4.4 The Chair thanked Audit Wales for this update. He questioned what added value and benefits would be provided to justify a 15% increase in the fee.
4.5 Audit Wales were aware of the constraints on public sector budgets and confirmed that the new standard would lead to higher quality outputs and recommendations, with a greater insight into areas such as ICT.
4.6 In response to further challenge by Committee members on the timetable, Audit Wales provided assurance that they would aim for completion of the audit in June and the Senedd Commission audit would be a priority, but reiterated the issues they were facing with recruitment alongside applying new methodology.
4.7 Manon stressed the reasons for wanting the accounts finalised by June in terms of the Commission’s internal processes and meetings, the alignment of a suite of other annual reports, and the need to lay the Annual Report and Accounts ahead of the summer recess.
· Audit Wales to keep officials updated on progress with the detailed audit planning and timetable.
· Simon Hart to ensure the Chair is updated on future discussions with Audit Wales regarding their timetable and process, and provide an update to ARAC at its April meeting.
Briefing on ISA 315
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ARAC (23-01) Paper 5 - ISA 315 Audit Briefing
5.1 Clare presented a briefing paper on the audit approach, specifically on a revised auditing standard – ISA 315 (UK) Identifying and Assessing the Risks of Material Misstatement (Revised July 2020).
5.2 Clare explained that the revised standard would drive better quality and more effective risk assessments, as well as promoting greater exercise of professional scepticism. The advanced role of technology and complexity of financial reporting frameworks required more sophisticated risk identification and assessment processes. The revised standard would provide an enhanced review of the Commission’s control environment, including the use of technology.
5.3 The Committee thanked Audit Wales for the briefing.
Audit Wales update report (inc. AW reports/outputs)
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ARAC (22-06) Paper 5 - Audit Wales update
6.1 Gareth Lucey introduced the Audit Wales update. The
Commission’s Annual Report and Accounts had been certified by Ann-Marie Harkin and
laid with the Senedd on 30 June. Audit Wales would be in a position to issue
their invoice, which was currently below their initial estimate, before the end
6.2 Planning for the 2022-23 audit process had been
disrupted by the introduction of a revised International Auditing Standards 315
(ISA 315). As a result, Audit Wales would not be in a position to issue the
formal Audit Plan until the 28 April ARAC meeting, but would present an outline
plan at the 13 February meeting.
6.3 Gareth then described the consequences of the revised
ISA 315 to the accounts and audit process for 2022-23. It required a more
detailed risk assessment during the planning work, the results of which would
determine the level of further audit testing required.
6.4 These changes could potentially impact the timing of the
audit, as more planning time and upfront testing may be needed, although this
may reduce the level of final audit testing due the lower risk of material
mis-statements. There was also a potential impact on costs as more experienced
staff would need to be involved in the planning stage. The estimated fee
increase for local government bodies was between 12 and 18% but the impact on
the Commission’s audit fee would become clearer once planning work had been
6.5 Gareth also referenced wider Audit Wales outputs that
had recently been published, highlighting the reports on the National Fraud
Initiative and Learning from Cyber Attacks, both published in October 2022, and
Time To Change – Poverty in Wales, published in November 2022.
6.6 The Chair thanked Gareth for the update. He expressed concern around the potential increase in fees caused by the revised ISA 315, especially in the current financial climate. It was important that the Senedd Commission saw some benefits from the increased scrutiny involved under the new standard. He had asked Audit Wales to keep the Committee updated on progress and a regular series of update meetings had been agreed.
· Outline audit plan to be presented at the 13 February meeting with the detailed plan at the 28 April meeting.
Consider External Audit opinion (ISA 260 Report) for the financial year 2021-22
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ARAC (22-03) Paper 4 – ISA260 Report
4.1 Gareth Lucey introduced the ISA 260 report and noted the
intention for Audit Wales to issue an unqualified (clean) audit opinion on the
2021-22 accounts. He also highlighted that no misstatements had been
identified, with only a few minor amendments to the supporting narrative, and
no recommendations arising from the audit.
4.2 In relation to an issue that was raised during last
year’s audit, Gareth reported that the audit team had worked with the Finance
team to trawl for instances where capital expenditure could be recorded as
revenue and were satisfied that no material items were identified.
4.3 Gareth also highlighted one matter arising late in the
audit process around revaluation of land and building assets which had an
impact on the financial statements. He outlined that, whilst the Commission
revalued these assets every three years, in line with accounting standards, a
further revaluation was required due to material differences caused by rising
building replacement costs. This rise was due to the impact of increases in
inflation across the building sector in the final quarter. Gareth expressed his
thanks to Nia Morgan and her team for addressing this quickly. Audit Wales had
also discussed the revaluation directly with the valuers and were satisfied
with what they considered to be a reasonable estimate. The Committee agreed it
seemed logical to seek a revaluation of the Senedd estate.
4.4 Audit Wales had concluded that the financial statements
gave a true and fair record of the state of the Commission’s affairs. They
thanked Nia, Catharine Bray and the Finance team for their efforts and hard
work again this year which resulted in another very smooth audit.
4.5 The Chair thanked Audit Wales for their thorough report and praised Nia and the Finance team for their work, and for the way they had responded to the late request for revaluation. He had welcomed the opportunity to meet the audit team on 31 May, noting the importance of the Committee’s reliance on external audit as one of the primary providers of assurance on internal controls. He had been pleased to hear assurances from the audit team on the quality of the data and the systems in place, which aided the audit process.
4.6 The Committee members noted that the positive ISA 260 report was a reflection on the work done internally and thanked both parties.
Committee members acknowledged that the impact of increasing inflation was a global issue. Ann-Marie Harkin commented on the time spent by public sector bodies and auditors dealing with the impact of inflation increases, particularly on revaluations. She added that HM Treasury were undertaking a review of this impact and the pressure on resources of public sectors across the UK.
4.7 Ann-Marie Harkin confirmed that she would be signing the accounts again this year and that Adrian Crompton, Auditor General for Wales would be in a position to sign them next year.
Emerging findings and advice to Accounting Officer regarding submission of the draft Annual Report and Accounts to the Commission
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ARAC (22-02) Paper 8 - Audit Wales Update
9.1 Gareth Lucey introduced the Audit Wales update. Although
Committee members had been notified previously, he reminded them of the
proposed audit fee of £59,987 – a 3.5% increase on last year, in line with the
3.7% average increase in rates.
9.2 He confirmed that the interim audit ‘visit’ had taken
place over the weeks of 14 and 21 March and the team had completed early sample
testing on a number of account areas (including payroll, other expenditure and
direct charges to the Welsh Consolidated Fund). He was happy to report that
there were no audit issues arising to date and the plan was to deliver the ISA
260 report in time for 15 June meeting.
9.3 Gareth advised of one change to the audit team. The
Chair asked to meet informally with the team, which Gareth agreed to
9.4 In response to questions around the impact of increases
to National Insurance and the rate of inflation on public sector organisations,
Gareth explained the challenges they all faced around calculating costs,
particularly relating to asset valuation.
9.5 Nia confirmed that an asset valuation was due to be
undertaken by the Commission the following year and that the impact of an
increase in the rate of inflation had been highlighted to the Commission in a
paper relating to the 2023-24 budget.
· The Chair to meet (informally) with the Audit Wales auditing team.
Joint working protocol
Oral item - update in paper 8 refers
10.1 Gareth Lucey introduced this oral item. He confirmed
that a recent discussion with Gareth Watts had concluded there was no need for
an updated version as there were no changes to the protocol which was presented
in April 2021, a copy of which had been circulated with the committee papers.
He outlined compliance with the protocol and referred the Committee to the
table in the update paper which summarised how both parties had responded to a
set of agreed actions during the year.
10.2 The Committee thanked Gareth for the update and noted the Joint Working Protocol.
External Audit - update from Audit Wales including the audit of the Commission's 2021-22 financial statements
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ARAC (22-01) Paper 6 - Audit Wales Update
7.1 Gareth Lucey presented details of the Audit Wales plan
for the 2021-22 audit process. Due to
some outstanding legacy work from 2020-21 audits and various staff changes at
Audit Wales, they were unable to confirm the team for the Commission’s audit
but hoped to do so the following week.
The aim was to hold two separate week-long interim ‘visits’ in February
and March to conduct the planning and early testing work. The final audit would then take place as it
had in prior years, beginning at, or around 9 May, with the aim of presenting
their closing ISA 260 report in June.
7.2 One focus of their planning for this year’s audit would
be around the Commission’s application of IAS 16 to ensure capital expenditure
was accurately reflected in the 2021-22 accounts. He thanked the Commission’s Finance team for
their extensive work in this area and for providing information early in the
7.3 Gareth added that Audit Wales were unable to confirm the
audit fee until their Fee Scheme was approved by the Auditor General. However, he agreed to notify the Commission
and ARAC members of the fee as soon as it was confirmed. For information at
this stage, the consultation on fees had proposed an average fee scale increase
of 3.7% across all audited bodies for the coming year.
7.4 The Chair welcomed the update on the audit process and thanked Gareth for sight of the other reports they had produced across the wider public sector. He asked him and his audit team to be mindful that the 2021-22 data would be held on the old Finance system, to avoid any delays in the process.
2021 Audit Plan and Audit Wales update report (inc. AW reports/outputs)
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ARAC (05-21) Paper 5 – Audit Wales 2021 Audit Plan
ARAC (05-21) Paper 6 – Audit Wales ARAC Update Nov 2021
7.1 The Chair welcomed Ann-Marie Harkin and Gareth Lucey to the meeting.
7.2 Gareth referred to the plan for the 2021 audit of the Commission’s accounts which included details of the team, timings and risks to be built in. The aim was to carry out some early testing between January and March, with the substantive audit beginning in May and presentation of the ISA 260 report to the Committee in June 2022.
7.3 As most Audit Wales staff continued to work from home, the audit team would continue to work and engage with the Commission remotely. They would continue to monitor Welsh Government guidelines on working from home and liaise with officials to determine whether any of the audit work could be carried out on site.
7.4 They were unable to disclose the fee for this year’s audit as yet, although an increase on the previous year’s fee was likely. This information would be shared with Committee members when available.
7.5 Gareth then summarised the financial audit risks and the audit work planned in response. Whilst many of the risks were stable, there were additional risks specific to this year around the Senedd Elections and the Remuneration Board’s Determination which would need to be taken account of.
7.6 A further risk around the classification of capital expenditure had also been added due to the issue around last minute differences of opinion in the 2020-21 audit. Whilst it was recognised that this was a minor part of overall Commission spend, Audit Wales would work with the Finance team to agree the classification of project spend. Nia Morgan welcomed the early dialogue with Audit Wales and advised that her team were already working to identify project expenditure to inform discussions around classification. She assured the Committee that she would keep them informed of discussions with Audit Wales.
7.7 The Committee urged the Commission and Audit Wales to reach a common understanding of International Accounting Standard 16, well in advance of the planned audit, to ensure that both parties agreed on the classification of expenditure.
7.8 The Chair thanked Audit Wales for the clearly set out audit plan and welcomed sight of the other work undertaken by Audit Wales. He was keen to maintain constructive engagement with Audit Wales and the Auditor General.
Consider External Audit opinion (ISA 260 Report) for the financial year 2020-21
ARAC (03-21) Paper 3 - Paper to follow
ARAC (03-21) Paper 3 – ISA260 Report
4.1 The Chair welcomed Ann-Marie Harkin and Gareth Lucey to the meeting.
4.2 Audit Wales (AW) commented on the superb support received from Nia Morgan and the Finance team and thanked everyone involved for all their efforts in what was the second year of completing the audit remotely. Ann-Marie noted that the completion of the accounts so early was a great achievement with very few issues arising. Ann-Marie apologised for the confusion over who would sign the accounts and confirmed that she would be signing them on behalf of the Auditor General for Wales due to his previous employment at the Commission.
4.3 She highlighted one uncorrected misstatement of £273,000 for what Audit Wales considered to be misclassification of capital expenditure. Ann-Marie acknowledged that this was a grey area in accounting terms but Audit Wales technical team had advised that it be recorded as capital as opposed to revenue expenditure. She advised that this was well below the threshold of materiality and had no impact on the audit opinion.
4.4 Audit Wales intended to issue an unqualified audit opinion on the accounts.
4.5 Nia welcomed the opportunity to raise her concerns with the Committee about what she believed was the inconsistent approach taken by Audit Wales on this type of spend. She highlighted that, in previous years, more significant spend on building improvements had been correctly stated in the accounts as capital spend. She had discussed the issue at length with her team and Audit Wales and considered this to be a disagreement as opposed to an error as implied in the ISA260 report.
4.6 Nia also wanted to record her thanks for the phenomenal effort by members of her team to achieve such a successful and timely outcome.
4.7 The Chair thanked Nia and Audit Wales for the courteous and diplomatic way in which they had expressed their difference of opinion and acknowledged the frustration around the inconsistency and late identification of the issue, particularly given its low value. He encouraged both parties not to let this issue adversely affect their good relationship and to liaise closely on the treatment of future investment in the estate in the accounts. The Chair requested details of the advice provided by the Audit Wales technical team to inform the future treatment of this type of spend. Whilst noting this was not standard practice, Audit Wales agreed to share the technical advice with the Commission. The Chair welcomed the unqualified audit opinion and the early completion of the audit which was an excellent achievement. He would welcome feedback from the lesson learned sessions at the Committee’s autumn meeting including details of any future discussions..
4.8 The Chair was pleased to hear that the Auditor General for Wales would sign the accounts next year and would arrange to meet with him privately over the summer. Ann-Maire assured the Committee that he had been fully sighted on the accounts.
· Audit Wales to share advice from technical team ... view the full minutes text for item 4
Emerging findings and advice to Accounting Officer regarding submission of the draft Annual Report and Accounts to the Commission
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ARAC (02-21) Paper 9 - Audit Wales update
10.1 The Chair welcomed Audit Wales to the meeting and extended his congratulations to Ann-Marie on her recent promotion to Executive Director of Audit Services within Audit Wales.
10.2 Ann-Marie informed the Committee that, due to the significantly higher proportion of work in the health sector, Steve Wyndham would need to temporarily return to work on their accounts. To ensure a level of continuity, responsibility for auditing the Commission’s accounts would be handed back to his predecessor Gareth Lucey. Audit Wales apologised for this change in personnel, especially mid-way through an audit, but appreciated the Commission’s understanding in the matter.
10.3 Steve presented the paper which provided an update on current and planned financial audit work. He confirmed that the audit fee remained unchanged from the previous year but noted this was an estimate until the work was complete. There was nothing of note in the audit work undertaken so far and there had been good co-operation by Nia, the Finance team and Gareth Watts. He confirmed they were on track to commence the audit of the accounts on 10 May,
10.4 The Committee welcomed the inclusion in the paper of information about the Auditor General’s wider work programme, including the Good Practice Exchange (GPX).
Share wider public sector/national reports produced
6.1 Steve Wyndham thanked the Committee for their welcoming words and the Chair for taking the time to introduce himself ahead of the meeting. He had taken on board the Committee’s interest in Audit Wales (and National Audit Office) outputs and updates and agreed to share these when available.
6.2 Steve updated the Committee on the action regarding the outcome of any discussions with the Equalities and Human Rights Commission (EHRC) in relation to the Equalities Act. There was a commitment that Audit Wales would continue to liaise with EHRC when there was a significant equality angle to their work. Ann Beynon welcomed this commitment and encouraged the Senedd Commission to engage with the EHRC in a similar way. It was agreed that Dave would discuss this further with Ann outside of the meeting.
6.3 Steve confirmed that there were no outstanding issues for last year’s ISA 260 or Management Letter and the current interim audit was progressing well, with his team and the Finance team working flexibly and pragmatically in these challenging circumstances.
6.4 Audit Wales was not in a position to share its audit fee as it was being reviewing by their internal moderation process. As soon as it was available, it would be shared with the Committee.
Dave and Ann to discuss privately any value that could be added by involving
the Equality and Human Rights Commission in some aspects of equality work to be
taken forward by the Commission’s Executive Board.
Consider any residual actions arising from the previous year's work of both internal and external audit and comment on any associated risks
Consider emerging findings from the current interim/in-year work and advise the Accounting Officer of any issues that need to be addressed during the remainder of the year
Consider the proposed External Audit strategy for 2020-21 (including the audit fee)
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ARAC (05-20) Paper 5 – 2020 Audit Plan
7.1 Gareth Lucey introduced the 2020 Audit Plan which would follow a similar timetable to the previous year, noting this was subject to the impact of Covid-19 on Audit Wales. He would liaise with the Finance team in the coming weeks to agree on the detail of the timetable and share the audit fee, once finalised.
7.2 The audit team would see one change with Steve Wyndham replacing Gareth Lucey. The Chair thanked Gareth for his work over recent years and wished him well for the future.
7.3 Although the current Auditor General for Wales would not feature within the accounts this year (either within current year or comparative accounts disclosures), the Audit Wales Law & Ethics team had advised that, as he had been an employee of the Senedd Commission until July 2018, the Executive Director of Audit Services within Audit Wales should certify the 2020-21 Senedd Commission accounts.
7.4 In response to a question from Aled about valuations of the Senedd estate, Gareth explained that these were carried out every three years and that all organisations were be required to disclose increased material uncertainty due to Covid and other factors in their 2019-20 accounts. similar timetable to the previous year, noting this was subject to the impact of Covid-19 on Audit Wales. He would liaise with the Finance team in the coming weeks to agree on the detail of the timetable and share the audit fee, once finalised.
7.5 The audit team would see one change with Steve Wyndham replacing Gareth Lucey. The Chair thanked Gareth for his work over recent years and wished him well for the future.
7.6 Although the current Auditor General for Wales would not feature within the accounts this year (either within current year or comparative accounts disclosures), the Audit Wales Law & Ethics team had advised that, as he had been an employee of the Senedd Commission until July 2018, the Executive Director of Audit Services within Audit Wales should certify the 2020-21 Senedd Commission accounts.
7.7 In response to a question from Aled about valuations of the Senedd estate, Gareth explained that these were carried out every three years and that all organisations were be required to disclose increased material uncertainty due to Covid and other factors in their 2019-20 accounts.
Audit Wales update report
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ARAC (05-20) Paper 4 – Audit Wales Update
6.1 Gareth Lucey presented an update on current and planned Audit Wales work. This included reference to the 2020 Audit Plan, which summarised the plans, risks, and proposed timetable for their audit of the 2020-21 accounts, as covered under item 7.
6.2 Gareth referred to the updated Financial Reporting Manual (FReM), noting that most of the changes were to the structure and format. The biggest accounting change would be the delayed introduction of the new IFRS 16 - Leases on which they would liaise with the Finance Team.
6.3 Gareth also described how they continued to seek and share good practice from all-Wales audit work including areas such as cyber security and counter fraud, details of which were available on their website.
6.4 The Committee welcomed Gareth’s offer of sharing good practice reports as and when they were published via Gareth Watts. Ann-Marie Harkin also agreed to share the outcome of any discussions Audit Wales had with the Equalities and Human Rights Commission in relation to the Equalities Act.
6.5 The Chair thanked Audit Wales for this update and agreed that a similar twice-yearly update, capturing a summary of good practice, studies and reports relating to the wider public sector, should be added to the Committee’s forward work programme.
· (6.4) Share all national reports with ARAC via Nia Morgan/Gareth Watts as and when they are produced.
· (6.4) Share the outcome of any discussions Audit Wales have with the Equalities and Human Rights Commission in relation to the Equalities Act.
· (6.5) Clerking team to include a twice-yearly update report from Audit Wales in the Committee’s forward work programme, to share knowledge of wider public sector studies and reports.
External Audit opinion for the financial year 2019-20
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ARAC (03-20) Paper 4 ISA 260 Report
4.1 Gareth Lucey presented the ISA 260 report to the Committee, confirming their intention to issue an unqualified audit opinion on this year’s accounts. He added that this had been a very clean audit with no misstatements identified or significant corrections to bring to the attention of the Committee. They had only identified minor presentational amendments to disclosures within the Annual Report and Accounts in relation to the valuation of assets which had been taken on board.
4.2 Gareth explained that the table of Covid-19 impacts included in the Audit of Accounts (ISA 260) Report was a standard item for all audits. There was no significant impact on the accounts, although the report highlighted a comment by the property valuer indicating material uncertainty around the asset values of the Senedd buildings. To ensure transparency (and consistency with other public sector bodies facing similar issues) the Commission has included the valuer’s comments below Note 4 of the financial statements. Gareth explained that Audit Wales have also included an emphasis of matter paragraph within the Assistant Auditor General’s audit certificate to draw attention to this. However, the 2019-20 audit opinion is unaffected by this matter.
4.3 The audit certificate for 2019-20 also included a new disclaimer around assurance over ‘other information’ in the Annual Report. Gareth clarified that other information comprises the information included in the annual report other than the financial statements. The disclaimer states that the audit opinion on the financial statements does not cover the other information. However, Gareth did confirm that the Audit Wales team had reviewed the Remuneration Report as part of its work and was satisfied that the other information in the Annual Report was consistent with the financial statements.
4.4 The Audit Wales team thanked the Senedd Commission Finance team for their hard work in ensuring such a clean audit and smooth and straightforward audit process. They also noted that, because they were able to adapt some processes, there had been no significant negative impact as a result of the Covid-19 pandemic.
4.5 Nia Morgan also wished to record her thanks to her team for the incredible effort and additional hours they had worked to ensure the audit work was completed to the original timescales. She also thanked the Audit Wales team, acknowledging how hard both teams had worked to carry out such a thorough audit.
4.6 Committee members were impressed by how efficiently the audit work had been carried out, particularly given the Covid-19 situation. They asked how lesson learned from this experience, particularly in relation to the challenges and opportunities presented by working remotely would be captured and built into the approach for future audits.
4.7 Ann-Marie Harkin explained that Audit Wales would be liaising with other audit bodies as part of their internal learning mechanisms and this would include consideration of how best practice could be shared more widely across both public and private sector auditors. This would also include discussions with Nia and her ... view the full minutes text for item 4
Review of Joint Working Protocol
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ACARAC (02-20) Paper 8 – Joint Working Protocol
8.1 The Committee noted and were content with the Joint Working Protocol.
Emerging findings and advice to Accounting Officer regarding submission of the draft Annual Report and Accounts to the Commission
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ACARAC (02-20) Paper 7 – Audit Wales update
7.1 The Chair welcomed Gareth Lucey to the meeting. Gareth highlighted the following to the Committee:
· that the Wales Audit Office had recently undergone a re-branding and re-naming exercise and should now be referred to as Audit Wales;
· that work on the 2019-20 audit had been progressing well, and on that basis, the estimate fee was anticipated to be the same as in previous years, barring any unexpected changes;
· that whilst every effort would be made to honour agreed timeframes for the audit through built-in contingency elements, due to uncertainties around the COVID-19 pandemic this would be under constant review through discussions with Gareth Watts and Nia Morgan; and
· that the Auditor General would be writing to all audited bodies outlining the changes in the audit process due to the disruption caused by the COVID-19 pandemic.
7.2 In response to a query from the Chair, Gareth Lucey provided assurance to the Committee that effective audit trails would be maintained by Audit Wales when conducting live online sampling of the NAV system as part their audit.
7.3 The Chair thanked Gareth for the update.
External Audit Update
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ACARAC (01-20) Paper 5 - External Audit update
5.1 The Chair welcomed Gareth Lucey and Ann-Marie Harkin to the meeting. Gareth explained that the External Audit update had been circulated out of committee in December. This had included details of calculation of the audit fee on which the Chair asked for further clarification. Gareth agreed to provide further details out of committee.
5.2 Gareth drew the Committee’s attention to a national study of counter-fraud arrangements across the Welsh public sector. This was in response to a report presented to the Public Accounts Committee (PAC) in June 2019 where proposals by the Auditor General to carry out a more detailed review across 40 public sector bodies in Wales were endorsed. This included the Assembly Commission.
5.3 In response to questions around the confidentiality of any findings, Gareth assured Committee members that, whilst the report would be published and therefore subject to public scrutiny, it would not specifically highlight any issues with the Commission’s arrangements.
5.4 The Chair noted the planned work and that any learning from the study would be considered by the Commission after the report was published.
Action: (5.1) WAO to provide a note on the composition of daily rate costs in relation to audit fees, specifically a breakdown of overheads and costs directly funded.
Consider the proposed External Audit strategy
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ACARAC (01-20) Paper 6 – External Audit strategy 2019-20
6.1 The Committee received an overview of the 2020 Audit Plan from Ann-Marie, noting an estimated cost at the same reduced rate as last year. The audit would follow the usual risk-based approach and based on the assumptions outlined in the plan.
6.2 Ann-Marie also brought the Committee’s attention to personnel changes in the audit team with a new Senior Auditor in place. She also explained that the Assistant Auditor General for Wales would certify the accounts to maintain independence and objectivity as the Auditor General had previously been employed by the Commission.
6.3 It was anticipated that the bulk of the audit work could be completed by the end of May and the findings brought before ACARAC at its June meeting.
6.4 The Committee discussed the scope of the audit in relation to Assembly Members’ offices. Ann-Marie informed the Committee that the they were able to rely on information provided by internal audit and the Members’ Business Support (MBS) team, who regularly conduct site visits to offices. The Committee heard that added assurance would be provided from site visits as part of the review into the Commission’s assets.
6.5 The Chair asked the secretariat to arrange a briefing session for Committee members on the work of the Members’ Business Support (MBS) team and the monitoring of Assembly Members’ expenses.
Action: (6.5) Provide briefing to ACARAC members on the work of Members’ Business Support (MBS) and the monitoring of Assembly Members’ expenses.
WAO update report
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ACARAC (05-19) Paper 5 – WAO Update
7.1 The Chair introduced Jon Martin to the meeting, who was attending in place of Ann-Marie Harkin and Gareth Lucey, who had both sent apologies in advance.
7.2 Jon informed the Committee that a review meeting with Nia had identified some minor improvements for the process of auditing next year’s accounts.
7.3 As this meeting was earlier than usual, it was noted that the WAO Audit plan for the upcoming year would be circulated out of meeting when available.
7.4 In response to questions from Aled on the audit fee calculations, Jon indicated that the WAO would provide a note out of Committee on this.
Action: WAO Audit Plan to be circulated to Committee members out of meeting, along with a short note of how the annual audit fee is compiled
WAO update report
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ACARAC (04-19) Paper 4 – WAO update report
4.1 This report had been covered in item 3; the WAO had nothing further to add.
WAO Opinion 2018-19 (ISA260)
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ACARAC (03-19) Paper 9 - WAO opinion for 2018-19
8.1 Gareth Lucey confirmed that the WAO had not identified any material issues during their audit of the Commission’s accounts and that there were no uncorrected misstatements. The audit was substantially complete and the WAO were expecting to propose an unqualified, clean audit opinion. Gareth and Ann-Marie expressed their thanks to Nia and her team for their co-operation during the audit process which had once again run smoothly.
Review of Joint Working Protocol
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ACARAC (02-19) Paper 7 – Joint working Protocol
4.4 Both Gareth Lucey and Gareth Watts agreed that the current protocol remained relevant and up to date. They updated the Committee on how they had complied with the protocol over the past 12 months.
Update from WAO
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ACARAC (02-19) Paper 6 – WAO update
4.1 Gareth Lucey presented his update paper and advised that the proposed audit fee would remain the same as last year pending internal verification.
4.2 He confirmed the completion of the initial planning work in February and March. The final audit would commence on 13 May and any issues would be reported to the Committee in due course.
4.3 The Committee were encouraged with the progress of the audit work and welcomed the fixing of the fee at last year’s rate.
Update from WAO
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ACARAC (01-19) Paper 7 - WAO update
5.1 Ann-Marie thanked Nia and her team for accommodating the trainee accountant who was grateful for the opportunity.
5.2 The interim audit was due to be started that week and Ann-Marie assured the Committee that issues around internal communications between audit teams would be resolved.
- (5.2) Bob and Ann-Marie to discuss the approach to auditing the Commission’s accounts.
Updates from WAO
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ACARAC (05-18) Paper 7 - WAO update
ACARAC (05-18) Paper 8 - 2019 audit plan
8.1 Gareth Lucey confirmed that there was no outstanding work from the 2017-18 audit. He would shortly confirm the final out-turn, which was likely to be below the initial estimate (post-meeting: final cost is £57,255, £703 below Audit Plan estimate).
8.2 The 2019 Audit Plan had been shared and discussed with officials previously. Initial planning meetings had taken place and the audit approach and provisional timings remained fundamentally unchanged. The audit team would remain unchanged and Gareth anticipated being able to confirm the fee early in 2019.
8.3 As the new Auditor General for Wales was an employee of the Commission for part of 2018-19, the Assistant Auditor General would certify the Commission 2018-19 financial statements.
8.4 The WAO outlined some key changes to the International Financial Reporting Standards (IFRS) over the next two financial years, including the introduction of IFRS 9 (financial instruments) and IFRS 15 (revenue from customer contracts) in 2018-19. The introduction of IFRS 16 (leases) had already been reported to the Finance Committee (FC) and the Committee agreed that Nia Morgan should inform the FC of the delay, with the effective date moving from 2019-20 to 2020-21.
8.5 The Committee encouraged the WAO and the finance team to continue to exploit additional efficiency benefits of the NAV finance system for the external audit of the Assembly Commission’s financial statements.
- Nia Morgan to inform the Finance Committee of the delay in the implementation of IFRS 16 (leases).
WAO Update Report
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ACARAC (04-18) Paper 4 - WAO update
4.1 The WAO confirmed that no matters had arisen since the June meeting and that they continued to propose an unqualified audit opinion for the Commission.
4.2 The WAO would work with the Finance team to address a few minor points raised at the lessons learned meeting. Consideration would also be given to accelerating processes to allow presentation of the statement of accounts earlier next year, although it was recognised that the Pension timetable may not allow for this. This would be reported back to the Committee in order to inform its forward work programme.
4.3 The WAO would inform the Committee of any delays caused by further investigations into the drawing down of funds from the Welsh Consolidated Fund for payment of the Standards Commissioner, although Ann-Marie was confident that any delay would not impact on the signing of the accounts.
4.4 The Chair welcomed the positive working relationship between officials and the auditors which was reciprocated by officials.
4.5 The Committee agreed that the Accounting Officer should sign the 2017-18 financial statements.
WAO update report
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ACARAC (03-18) Paper 8 – WAO opinion for the FY 2017-18
3.1 This item was brought forward as Ann-Marie Harkin had requested to leave the meeting early.
3.2 Ann-Marie and Gareth Lucey reported the Auditor General’s intention to issue an unqualified audit report on the financial statements. One minor recommendation was identified from the 2017-18 audit work, relating to fully depreciated assets on the Commission’s fixed asset register. The recommendation, to carry out a review of these assets, had been accepted and was due to be implemented by September 2018.
3.3 The WAO confirmed that the audit had been very efficient and effective and agreed to consider how efficiencies resulting from the quality and immediacy of information produced by the new finance system might be reflected in future audit fees.
3.4 The audit was nearly complete from the WAO’s perspective apart from the final Assembly Members’ Pension Fund figures which could result in minor changes.
3.5 The WAO thanked Nia Morgan and her team for the professional and helpful way this audit had been managed, especially as they had also been dealing with a new system and a HMRC audit during the same period. They also referred to assurances they had been able to take from the internal audit work.
3.6 Nia welcomed the comments from the WAO and reiterated the importance of the strong working relationship that exists between them and the Commission. She was disappointed to receive one recommendation but assured the Committee that this would be implemented during the summer recess. The Committee noted that the ambitious self-imposed target of a 0.5% underspend had been narrowly missed by 0.1% due to an overestimation of certain accruals.
3.7 The Finance team had experienced some teething problems with the new system but Nia assured the Committee that these were mainly around matching purchase orders rather than fundamental issues.
Overall, the Committee were pleased with the smooth production of the accounts and were satisfied with the explanation received on the severance payments and the additional information received relating to the direct charge payments of the Auditor General Wales and the Public Service Ombudsman. The Committee encouraged officials to ensure that communication between the Commission and the Senior Salaries Review Body (SSRB) improved to avoid such discrepancies in the future.
Review of Joint Working Protocol between WAO and Internal Audit
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ACARAC (02-18) Paper 17
17.1 The Committee noted that no substantive changes had been made to the Joint Working Protocol and that the agreed actions were in hand.
17.2 Gareth Lucey confirmed that the WAO is itself required to meet international standards. The WAO has an internal quality assurance review regime as well as being subject to external reviews by the Quality Assurance Department of the Institute of Chartered Accountants in England and Wales (ICAEW).
WAO update report
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ACARAC (02-18) Paper 16
16.1 Gareth Lucey presented the WAO’s update report. Interim visits that had taken place in January ahead of the 2017-18 audit which was due to formally start on 21 May.
16.2 The Committee agreed it was helpful to receive a breakdown of the WAO fee.
16.3 Gareth Watts confirmed that agreement had been reached with the WAO and Welsh Government regarding the treatment of the Auditor General for Wales’ salary and that this had been documented.
Update from the WAO
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ACARAC (01-18) Paper 4 – WAO audit update
5.1 Gareth Lucey presented an update on behalf of the Wales Audit Office (WAO). The 2016-17 accounts were fully closed with a reduction of £5,221 in the estimated fee. An update on initial findings in the 2017-18 audit would be presented to the Committee in April. The fee for the 2017-18 audit was still under formal review by the Auditor General. The Chair requested a breakdown of the fee to demonstrate job roles of individuals involved in the audit process.
5.2 The team were also working on a briefing for the Finance Committee in relation to its inquiry into the budget profiling of the Remuneration Board’s Determination. Further discussions were necessary with the WAO technical team and the advice being drafted by Ann-Marie would outline the WAO’s view of the advantages and disadvantages of the Assembly’s current and proposed approaches.
5.3 The team had also met with Gareth Watts to discuss the content of the 2017-18 Internal Audit plan, and any other areas where Gareth’s work could provide reassurance to WAO’s financial audits.
- WAO to share a breakdown of the 2017-18 audit fee to demonstrate job roles of individuals involved in the audit process.
Updates from WAO
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ACARAC (05-17) Paper 16 – WAO audit update
ACARAC (05-17) Paper 17 – 2018 audit plan
13.1 Matthew Coe presented an update document on the WAO’s work to date and the detail of the 2018 audit plan. He assured the Committee that there was no outstanding work from the 2016-17 audit and that a detailed handover would take place with the new member of the audit team.
13.2 The Committee welcomed both documents. They queried why the audit fee was not yet ratified. Matthew confirmed that this was still going through the internal approval process and would be shared with the Committee as soon as it was available.
External Audit update
5.1 This item was covered under item 4.
External Audit update
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ACARAC (03-17) Paper 13 – WAO update on 2016-17
10.1 Ann-Marie Harkin expressed her thanks, on behalf of her team at the WAO for the support and co-operation they had received from the Finance team and other Commission staff. The Chair thanked the WAO for early presentation of the Financial Statements Report (ISA260) and Management Letter. Ann-Marie confirmed that this was a straightforward audit with a high quality set of accounts and confirmed that there were no matters arising from their audit work and no significant matters to discuss.
10.2 The Chair recognised the excellent quality of the accounts, reflected by the ISA260: there were no uncorrected misstatements, no material internal control weaknesses and no recommendations arising. Also, there were no outstanding actions from 2015-16. The Committee praised all involved in the audit process, especially Nia and her team.
10.3 Nia thanked everyone for their comments and advised that there would be additional focus on forecasting spend in future years.
Review of Joint Working Protocol - oral item
8.1 Both Matthew, Nia and Gareth agreed that their working relationship was effective and would continue to be open and transparent.
External Audit update report
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ACARAC (02-17) Paper 9 – Update report
7.1 Matthew Coe introduced the WAO update report. The proposed fee was slightly higher than the previous year but included some contingency which may not be required if the audit work continued smoothly. The interim work was proceeding without any major issues identified.
7.2 The Committee then discussed the results of the WAO benchmarking exercise of public sector annual reports and governance statements which had been incorrectly scored for the Commission. The WAO, Nia and the Committee agreed the revised scoring. The WAO would share best practice identified from the exercise and would also advise on plans to repeat such exercises in the future.
7.3 Nia was pleased with the continuity of the WAO audit team, particularly given the added pressures of implementing the new finance system. She informed the Committee that there were no concerns about the capacity of the team to maintain a smooth audit process.
- WAO to advise of plans to repeat the benchmarking exercise for annual reports and governance statements with other public bodies and share best practice ideas with the Assembly Commission.
Update from WAO
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5.0 Item 5 – Update from WAO
ACARAC (01-17) Paper 6 – update paper
5.1 Ann-Marie Harkin and Matthew Coe confirmed that the outstanding recommendation in the 2015-16 Management Letter had been resolved. The interim audit had not identified any issues as yet.
5.2 The 2016-17 audit fees were discussed and the WAO agreed to inform the Committee following their internal moderation process. The audit team have recommended a fee reduction due to the quality of the accounts and the assistance provided by the Commission.
5.3 The Chair queried the WAO’s scoring of the annual report in the comparison exercise they had carried out with other public sector organisations. In his view, several criteria were not applicable and the Commission’s overall rating should have been higher.
5.4 The WAO agreed that the scoring matrix should have been thoroughly checked for accuracy before being sent to Nia and that WAO communications on the purpose and methodology of the exercise could be improved. Nia and the WAO will discuss the scoring and share good practice outside of the meeting.
5.5 Whilst the Committee welcomed the principles behind the comparison exercise, they urged the WAO to ensure that future such exercises were carefully constructed and communicated.
- WAO to share approved annual fee with ACARAC.
- Nia Morgan and Ann-Marie Harkin to reassess scoring of Annual Report and highlight areas for improvement and best practice.
Update from WAO
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7.0 Item 7 – Updates from WAO
ACARAC (05-16) Paper 10 – External audit update
ACARAC (05-16) Paper 11 – 2017 Audit Plan
7.1 Ann-Marie Harkin and Matthew Coe presented their update paper and audit plan for 2017. They summarised the review of the 2015-16 accounts and identified some low level process changes, but nothing of significance. They also advised that there were no outstanding actions from the 2015-16 ISA260.
7.2 As the audit approach would remain unchanged, it was likely that the fee would remain static, although it was yet to be agreed. The Committee was encouraged to hear that the WAO were expecting a smooth audit process as the auditors were experienced and had a good working relationship with the Commission’s Finance team.
7.3 The Committee questioned the WAO on the omission from their papers of the impending replacement finance system. The WAO assured the Committee that discussions had taken place with Nia Morgan. They had identified some capacity issues if the Finance team’s efforts were diverted to work on implementing the system, for example during the transfer of the data. The Committee would be kept informed of any delays to the audit process.
- WAO to circulate confirmation of the fee early in the New Year.
External Audit update
ACARAC (04-16) Paper 5 – ISA 260
4.1 Nia Morgan presented the Committee with the final financial statements for 2015-16, which formed part of the Assembly Commission Annual Report. She was extremely pleased with the process and thanked her team, especially Donna Davies and Lisa Bowkett for their work. She also thanked the Wales Audit Office for the on-going dialogue during the audit period, especially when trying to resolve any outstanding issues.
4.2 Committee members praised the professional approach taken to this year’s report. The review undertaken last year had helped to improve communications and processes.
4.3 Ann-Marie Harkin and Matthew Coe presented the ISA 260 to the Committee. This document summarised the conclusion to the 2015-16 audit and was required in accordance with statutory auditing standards. Ann-Marie confirmed that her review of the accounts was complete and she would recommend that the Auditor General for Wales issues an unqualified report. She commented on the high quality documentation presented to her team, thanked the Finance team for their hard work and also expressed her thanks to Ian Summers.
4.4 Claire thanked the WAO for their open and honest communication, especially on the issues raised last year. The change in personnel, for both the Assembly Commission and the WAO could have proved detrimental to the audit process, but everyone worked extremely hard to ensure the process was smooth and successful.
4.5 She also wanted to formally thank Gareth Watts for his superb internal audit work and Chris Warner for drafting such a comprehensive Annual Report.
4.6 Finally, Claire wanted to thank and congratulate Nia and her team for achieving such an outstanding ISA 260 report. In all her years of being the Accounting Officer, she reflected that this was the best yet.
4.7 From an independent perspective, the Chair was extremely pleased and urged officials and the WAO to build on this progress by looking at ways to make further improvements for next year.
- The WAO and Assembly Finance team to review the 2015-16 audit process to look at ways to continuously improve on the audit process.
ACARAC (03-16) Paper 7 – WAO NAWC ACARAC update
7.1 Ann-Marie and Matthew informed the Committee that the 2015-16 audit, which had started on 23 May was, subject to final revisions, substantially complete with no significant issues identified so far. The ISA 260 report, which would be presented at the July meeting, would reflect this unless any significant issues were identified.
7.2 The WAO thanked Nia and her team for their helpful co-operation and noted further improvements in the process, timeliness and standard of documentation being presented this year.
Update on full position of all outstanding issues identified in last years accounts and any other emerging issues
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ACARAC (32) Paper 9 – WAO update
6.1 Matthew Coe introduced an update paper and highlighted some key items for the Committee to consider. Issues raised during the 2015-16 audit were now all resolved.
6.2 He confirmed that dates for the main audit of the accounts had been agreed with Nia, although concerns were raised regarding the resource impact of carrying out the pension audit in parallel and with the same audit lead. Nia and Matthew would discuss this further outside of the meeting to ensure that the timetable is met.
6.3 Matthew confirmed that papers, including the ISA260 would be submitted in time for the meetings in June and July.
6.4 In relation to the replacement finance system, Matthew suggested officials consider whether input from the WAO, such as observing at project board meetings would be useful to provide further assurance.
- Nia Morgan to liaise with WAO on resources for forthcoming audits of accounts and pensions.
- Nia Morgan to consider input from WAO on the replacement finance system project.
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ACARAC (31) Paper 9 - External audit update
7.1 Matthew Coe presented a paper outlining current progress of the 2015-16 audit, (including changes to the audit team and the proposed audit fee), follow up on the 2014-15 Management Letter and use of the Fraud Compliance Checklist.
7.2 Last year, the Fraud Compliance Checklist was completed by the Chief Executive and Management. Following a review of internal processes, the WAO confirmed that the checklist would be used as an audit tool to support their work and would not therefore be circulated to Management or the committee each year.
7.3 There remained a number of unresolved issues concerning the 2014-15 Management Letter and the WAO agreed to keep the committee informed on the progress of the resolutions.
- WAO to ensure the Committee are informed of the resolution of all outstanding issues identified in the 2014-15 Management Letter by end of February so that a full position can be presented in April.
External Audit - Management Letter 2014-15
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ACARAC (30) Paper 8 – Management Letter 2014-15
7.1 The WAO will liaise with the Commission to confirm the appropriate treatment for both dilapidations and heritage assets. Ann-Marie confirmed that she was confident that the Management Letter would be circulated with the ISA 260 next year.
- WAO to liaise with the Commission to confirm the appropriate treatment for both dilapidations and heritage assets.
ISA 260 Report 2014-15 (including Members' Expenses)
ACARAC (29) Paper 4 – ISA 260 Report 2014-15
6.1 Ann-Marie presented the International Standard on Auditing (ISA) 260 report. She confirmed that they had received all of the documents from the Assembly Commission on time and thanked Nicola’s team for their assistance. She informed the Committee that the accounts were unbiased, fair and clear. The main points she highlighted were:
· Change of accounting policy for ICT assets. WAO remain of the opinion that the change in treatment of ICT assets is an accounting policy change requiring a prior year adjustment. Management’s interpretation of IAS8 is that no prior period adjustment is required.
· Dilapidation provisions for leased properties.
· Pension contributions of Assembly Member Support Staff.
· Accounting for Assembly Member costs – holiday accrual for support staff.
6.2 The Chair thanked the WAO for highlighting these points. On the first point, the Committee agreed that change in ICT asset treatment did not constitute a change in accounting policy and were content that the accounts remained unchanged.
6.3 On the dilapidation point, Nicola added further information supporting management’s view confirming that the Estates and Facilities Management team had produced a 10 year rolling maintenance programme for Tŷ Hywel and that the allocation for improvements in current and future budgets remained manageable. To provide additional assurance, Nicola would take on board the WAO suggestion to consider gaining an independent view on the condition and maintenance requirements of Tŷ Hywel. The Committee supported management’s approach.
6.4 On the pension contribution point, Nicola informed the Committee that further discussions would be held with the Remuneration Board to ensure the impact of support staff salary sacrifice was clarified. The ISA 260 would also be amended to reflect the refund from HMRC was to Assembly Members and not the Assembly Commission. The Committee supported management’s approach.
6.5 On the final point regarding the accounting for Assembly Member costs, the WAO advised that their enquiries to date meant they were unable to form a clear view on whether an accrual for support staff’s untaken holiday leave was appropriate. As the potential values were not material, the WAO proposed to accept the current treatment and conclude the matter in 2015-16. Committee members supported this approach. In response to a Committee member query, the WAO stated that they could not confirm whether a retrospective adjustment would be necessary when they became clear on the accounting treatment, but they would keep the Committee informed.
6.6 The WAO confirmed that the Letter of Representation should be signed solely by the Accounting Officer and not also by ACARAC.
6.7 The Chair thanked the WAO for their presentation of the ISA 260, and urged Nicola, her team and the WAO to review the 2014-15 audit process to avoid a repeat of the delays experienced.
- Nicola to consider gaining an independent view on the potential dilapidations of leased property.
- Nicola to work with the WAO to agree the accounting treatment of Assembly Member costs.
Next meeting is scheduled for 16 November 2015. ... view the full minutes text for item 6
External Audit - update on work to date and progress and consider (emerging) External Audit findings for the financial year 2014-15
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ACARAC (28) Paper 8 – WAO update June 2015
Consider (emerging) External Audit findings for the financial year 2014-15 (oral update)
7.1 Ann-Marie and Matthew informed the Committee that the audit on the accounts had only just started and that, so far, there were no material weaknesses to report.
7.2 Ann-Marie commented on the complexity of the accounts and would work with Nicola to streamline their presentation.
- Review opportunities to streamline structure of accounts and share conclusions with ACARAC (WAO/Nicola Callow).
Joint Working Protocol
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ACARAC (27) Paper 10 – Joint Working Protocol
6.1 The IA/WAO Joint Working Protocol encouraged a collaborative working approach between the two organisations.
6.2 Ann-Marie Harkin confirmed that this document was a fair reflection of the current situation and that, as in previous years, they would be placing reliance on IA’s work on Payroll.
6.3 Gareth would examine the WAO Management Letter for areas of focus.
WAO View of Effectiveness of the Committee
7.1 As this was only Ann-Marie and Matthew Coe’s second meeting, they had discussed the Committee’s effectiveness with their colleagues (Richard Harries and Mark Jones) who had a positive opinion.
7.2 WAO felt that the Committee’s focus was pitched at the right level with plenty of constructive challenge and debate. Committee members were well prepared for the meetings; demonstrated a good understanding of the Assembly Commission and the way the organisation works; and meetings were run effectively.
7.3 Matthew confirmed that the WAO interim audit and work on the AM pension scheme audit were progressing well. He agreed to provide a brief update paper for the next meeting.
Update from WAO on any other matters
7.1 Matthew confirmed that the interim audit was largely complete and no significant concerns had been identified. As a result there were no plans to issue an interim Management Letter.
External audit opinion of committee effectiveness
16.1 The Committee agreed to defer this item until April.
External Audit updates
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5.1 Mark Jones introduced this item and confirmed that both the supplier fraud and HR Payroll project were fully covered off in the 2013-14 Management Letter.
5.2 The Committee questioned the progress on replacing the CODA finance system. Mark confirmed that there was general reassurance on the Assembly’s exposure and Nicola agreed to fully update the Committee at the February meeting.
5.3 Mark mentioned some future changes to the WAO audit team and agreed to keep Claire informed of these resource changes.
- Nicola Callow to inform Committee members of the Finance Committee’s response to the Auditor General for Wales regarding the 2015-16 audit fee (to be considered by Finance Committee at the end of November).
- Gareth Watts to discuss coverage of audit on financial controls with WAO.
- Nicola Callow to ensure sign-off of all outstanding recommendations in the Management Letter in plenty of time before the year end.
- Nicola Callow to present contingency plans for the CODA system.
ISA 260 Report 2013-14 (including Members' Expenses)
ACARAC (24) ISA 260 Report from WAO
5.1 Mark Jones presented the International Standard on Auditing (ISA) 260. He confirmed that they had received all of the documents from the Assembly Commission on time and thanked Nicola’s team for their assistance. He informed the Committee that the accounts were unbiased, fair and clear. The main point he highlighted was the HR Payroll project.
5.2 Further to the audit of the data migration for the HR Payroll project in June, the report recommended a full scope audit into the functionality of the system and the management of the project in general. This project would also be highlighted in the Management Letter.
5.3 Mark then went on to discuss their review of Assembly Members’ expenses. Of the sample of 13, all results were satisfactory, bar one. The documentation to process one claim was received by Members’ Business Support (MBS), but the declaration form to accompany the claim had not been signed by the Assembly Member.
5.4 Officials stressed that this was not inappropriate expenditure as the invoice was produced, and Nicola assured the Committee that the MBS team were aware of this anomaly and was assured that these checks would be completed in future.
5.5 Claire expressed her disappointment that the Management Letter would include these critical points, especially considering the excellent report the Assembly received last year. She would continue to urge officials to raise their standards, with the aim of receiving a clean Management Letter next year.
5.6 Claire reiterated that the HR Payroll project had not been managed to an acceptable standard, and informed the Committee that Gareth was responsible for leading a full scope audit and that he and Dave Tosh would identify an independent project/programme management expert to undertake this. The audit would take place over the summer recess with a report being presented to the Committee in November.
5.7 Committee members questioned a specific reference made in the report that ‘no further fees should be paid’ to the supplier. Mark urged officials to ensure that there was a full understanding of what was being paid for, before committing any further expenditure. It was acknowledged that further payments during the financial year could potentially be made but only if the Commission were satisfied with progress on functionality.
5.8 The Chair commented that, overall, the ISA 260 was reassuring and welcomed the planned audit of the HR Payroll project, especially when the Committee had been briefed on two contrasting projects over the past few months, namely the Future ICT Transition project and the HR Payroll project. On the audit of Assembly Members’ allowances, he accepted that the one claim which had not been signed was due to a process error rather than it being an inappropriate claim.
5.9 He thanked the Assembly officials and the WAO staff for their work and contribution to the meeting. The Committee concluded by recommending to the Accounting Officer that the accounts could be signed.
- Gareth and Dave to engage an ... view the full minutes text for item 5
External Audit updates
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5.1 The Wales Audit Office (WAO) apologised for the delay in sending the audit fee letter which was due to the implementation of the Public Audit Wales Act 2013. The 2013-14 increase of 3.8% was subject to a consolidated fund subsidy, which will not apply to the 2014-15 fee. The WAO agreed to provide the Committee with more information in terms of the make-up of the fee and the internal changes to the WAO following the legislation.
5.2 Officials confirmed that they would work closely with TIAA and the WAO to ensure that the best approach was taken to the programme of audit work in order to contain costs in the future.
5.3 The WAO also confirmed that they were liaising with colleagues in the NAO, Scotland and Northern Ireland to discuss appropriate levels of audit for parliamentary bodies in the future.
5.4 The Chair agreed that with the working protocols already in place, there was evidence of a strong working relationship and this should help ensure that costs would be contained.
5.5 The Effectiveness Survey results were also discussed. Mark Jones, WAO took the Committee through the results, which overall were positive.
5.6 The Chair agreed that this was a very encouraging survey but that there were opportunities for improvement.
5.7 The Committee agreed that they would review the accounting policies. They also asked for a summary of the whistleblowing policy to be brought to the next meeting.
5.8 To increase their awareness of performance and issues discussed within the organisation, Committee members requested that the Key Performance Indicator (KPI) reports and Assembly Commission (AC) minutes be sent to members on a regular basis.
5.9 They also agreed that if there were no corporate risks of a severity that merited close scrutiny, then they should consider a key performance indicator instead. However, the Committee should always be sighted on the overall risk landscape.
5.10 The Chair asked Committee members to think about what further actions were needed to respond to the survey results and which of these should be reflected in the Committee’s Forward Work Programme.
- Nicola Callow to confirm with the clerking team when and what accounting policies should be added to the FWP.
- Gareth Watts agreed to present the whistleblowing mechanism at the meeting in November.
- Kathryn Hughes to ensure that KPI reports and AC minutes are circulated to members on a regular basis.
- If no corporate risks are scheduled to be discussed, the clerking team will agree with the Chair on a corporate performance measure to discuss instead.
- Committee members to propose actions to respond to the Effectiveness Survey.
- The Chair and Chief Executive to discuss privately the management of communication with the Assembly Commission.