Royal Borough of Windsor and Maidenhead - Annual Audit Letter 2009/10 November 2010 AUDIT
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PUBLIC SECTOR Royal Borough of Windsor and Maidenhead Annual Audit Letter 2009/10 November 2010 AUDIT
Introduction
The contacts at Background
KPMG in
This Annual Audit Letter summarises the key issues arising from our 2009/10 audit of the Royal Borough of Windsor and
connection with
this report are: Maidenhead (the Council). Although this letter is addressed to the Members of the Council, it is also intended to communicate
these issues to key external stakeholders, including members of the public. The letter will also be published on the Audit
Neil Thomas Commission website at oneplace.audit-commission.gov.uk. It is the responsibility of the Council to publish the letter on the Council’s
Partner website at www.rbwm.gov.uk. In the letter we highlight areas of good performance and also provide recommendations to help you
KPMG LLP (UK) improve performance. A summary of our key recommendations is summarised in Appendix A. We have reported all the issues in
this letter to you throughout the year and a list of all reports we have issued is provided in Appendix B.
Tel: 020 7311 1379
Neil.thomas@kpmg. Scope of our audit
co.uk
The statutory responsibilities and powers of appointed auditors are set out in the Audit Commission Act 1998. Our main
Nick Rolfe responsibility is to carry out an audit that meets the requirements of the Audit Commission's Code of Audit Practice (the code)
Manager which requires us to report on:
KPMG LLP (UK)
Tel: 020 7311 4064 We conclude on the arrangements in place for securing economy, efficiency and effectiveness (‘value
Use of Resources (UoR)
Nick.rolfe@kpmg.co for money’) in your use of resources.
.uk
Financial Statements We provide an opinion on your accounts.
John Lester
Assistant Manager
KPMG LLP (UK) Fees
Tel: 020 7311 6662 Our fee for 2009/10 was £183,000 excluding VAT (2008/09: £205,000). This includes £125,000 for the financial statements audit,
John.lester@kpmg. £55,000 for Use of Resources and £3,000 for Whole of Government Accounts work. Our work on the certification of grants and
co.uk returns has not yet been completed, and we are therefore unable to state the overall cost of this work. We estimate this cost to be
£40,000.
This report is addressed to the Royal Borough of Windsor and Maidenhead (the Council) and has been prepared for the sole use of the Council. We take no responsibility to any
member of staff acting in their individual capacities, or to third parties. The Audit Commission has issued a document entitled Statement of Responsibilities of Auditors and Audited
Bodies. This summarises where the responsibilities of auditors begin and end and what is expected from the audited body. We draw your attention to this document.
External auditors do not act as a substitute for the audited body’s own responsibility for putting in place proper arrangements to ensure that public business is conducted in
accordance with the law and proper standards, and that public money is safeguarded and properly accounted for, and used economically, efficiently and effectively.
If you have any concerns or are dissatisfied with any part of KPMG’s work, in the first instance you should contact Neil Thomas who is the engagement lead to the Council or Trevor
Rees, the national contact partner for all of KPMG’s work with the Audit Commission. After this, if you still dissatisfied with how your complaint has been handled you can access
the Audit Commission’s complaints procedure. You can contact the Complaints Unit by phone (0844 798 3131), by email (complaints@audit-commission.gov.uk), through the audit
commission website (www.audit-commission.gov.uk/aboutus/contactus), by textphone/minicom (020 7630 0421), or via post to Complaints Unit, Audit Commission , Westward
House, Lime Kiln Close, Stoke Gifford, Bristol, BS34 8SR.
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Swiss entity. All rights reserved. This document is confidential and its circulation and use are restricted. KPMG and the KPMG logo are registered trademarks of KPMG International Cooperative, a Swiss entity. 1Headlines
Use of Resources Use of Resources In May 2010 the government announced that the Comprehensive Area Assessment (CAA) would be
assessment abolished. The Audit Commission subsequently confirmed that work related to CAA should cease
with immediate effect. This included work for UoR scored assessments at local authorities. However,
there is no change to the requirement in the statutory Code of Audit Practice for auditors to issue a
VFM conclusion.
At the time of the announcement, the vast majority of UoR work for 2010 had already been completed
and this therefore informed our 2009/10 VFM conclusion.
We identified that improvements could be made in workforce planning and strategies. Plans have
been considered at a local level but focus on the Authority as a whole could be made to identify the
future shape of the workforce. This will help to formally identify where there might be gaps in the
workforce and link to the future service provision of the Authority. From assessment of managing the
finances, the cost of staff have been built into financial plans.
Specific risk based We originally intended to undertake a review centring on social services as part of our use of
reviews resources work. Following scoping of that work we identified that it would not be necessary for us to
reach our use of resource conclusion however as the Authority believed there to be benefit from the
assignment we reduced our audit fee for the work but proposed an additional assignment outside of
the audit plan which is currently underway.
Our conclusion We issued an unqualified value for money conclusion for 2009/10. This means that we are satisfied
that you have put into place proper arrangements for securing economy, efficiency and effectiveness
in your use of resources.
© 2010 KPMG LLP, a UK limited liability partnership, is a subsidiary of KPMG Europe LLP and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative, a
Swiss entity. All rights reserved. This document is confidential and its circulation and use are restricted. KPMG and the KPMG logo are registered trademarks of KPMG International Cooperative, a Swiss entity. 2Headlines
Financial Annual accounts Our audit identified a total of 5 numerical audit adjustments. Only two of these impacted on the
Statements financial outturn of the Authority. The others were movements between reserves and the balance
sheet. The impact of these adjustments was to:
Have no impact on the general fund account as at 31 March 2010;
Increase the deficit on the income and expenditure account for the year by £1,972K; and
Decrease the net worth of the Authority as at 31 March 2010 by £1,085K.
There were no significant matters which we were required to report to ‘those charged with
governance’.
The quality of the draft set of accounts and the supporting working papers was good. Officers on the
most part dealt efficiently with audit queries and the audit process was been completed within the
planned timescales.
Annual No significant adjustments were required to the Annual Governance Statement.
Governance
Statement
Our conclusion We issued an unqualified opinion on your accounts on 28 September 2010. This means that we
believe the accounts give a true and fair view of the financial affairs of the Council and of the income
and expenditure recorded during the year.
Recommendations High risk We have raised 4 recommendations as a result of our 2009/10 audit work, but none of these were
recommendations deemed to be high risk. Recommendations are summarised in Appendix A.
The Authority has implemented the three out of eight of the recommendations in our ISA 260 Report
2008/09 relating to the financial statements. None of these were considered high risk areas, but we
encourage prioritisation of these.
Public Interest We did not issue a report in the public interest or exercise other audit powers in 2009/10.
Reporting
Fraud This work is complete and has not identified any matters which we wish to draw to your attention.
© 2010 KPMG LLP, a UK limited liability partnership, is a subsidiary of KPMG Europe LLP and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative, a
Swiss entity. All rights reserved. This document is confidential and its circulation and use are restricted. KPMG and the KPMG logo are registered trademarks of KPMG International Cooperative, a Swiss entity. 3Headlines
High profile issues Economic Following the Comprehensive Spending Review announcement in October 2010, there is now greater
Downturn and clarity on the spending cuts that will affect local government. Local authorities will face 7.1% annual
pressure on the cuts representing 26% reductions over the next four years. Although this is less than many
public sector commentators had predicted, this still represents one of the biggest cuts for any part of the public
sector. Detailed analysis will be required as further details of these funding cuts are clarified - the real
impact will not be known until the government departments produce their business plans in
November and organisations have a chance to digest the Chancellor’s messages.
The Authority has been preparing for cuts of this magnitude for some time. Facing up to these
challenges will require revolutionary transformation of public sector services, rather than tinkering.
Strong leadership from Members and senior management will be essential.
International The Authority has made good progress towards implementing IFRS, including restatement of the
Financial opening balance sheet position. A review of leases has been undertaken and an external contractor
Reporting has been engaged to assist in the IFRS restatement. They are undertaking the detailed work in
Standards (IFRS) restatement.
The closing balance sheet has already been restated for 2008-09 as a practice exercise and for the
three years of comparatives required for the first year of full restatement. We have considered the
work performed and approach but have not audited the figures. The approach taken seemed
consistent with other authorities and progress made is in line with the timeline for full restatement in
2010-11.
© 2010 KPMG LLP, a UK limited liability partnership, is a subsidiary of KPMG Europe LLP and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative, a
Swiss entity. All rights reserved. This document is confidential and its circulation and use are restricted. KPMG and the KPMG logo are registered trademarks of KPMG International Cooperative, a Swiss entity. 4Future audit work
Changes to next year’s value for work programme
Given the scale of the pressures facing public bodies in the current economic climate, the Audit Commission has reviewed its work programme for
2010/11 onwards. As part of this exercise, the Commission has been discussing possible options for a new approach to local value for money (VFM)
audit work with key national stakeholders. From 2010/11 we will therefore apply a new, more targeted and better value approach to our local VFM
audit work. This will be based on a reduced number of reporting criteria specified by the Commission, concentrating on:
securing financial resilience; and
prioritising resources within tighter budgets.
We will determine a local programme of VFM audit work based on our audit risk assessment, informed by these criteria and our statutory
responsibilities. We will no longer make annual scored judgements relating to our local VFM audit work. Instead we will report the results of all the
local VFM audit work and the key messages for the audited body in our annual report to those charged with governance and in a clear and accessible
annual audit letter.
Future audit arrangements
In August 2010 the Secretary of State for Communities and Local Government announced proposals to abolish the Audit Commission. The proposed
abolition will be from 2012 and the government will seek legislation in this session of Parliament.
One consequence of the abolition is that the Audit Commission has now changed the proposed appointed auditor to the Council; it was originally
intended for KPMG to rotate from this audit and the Audit Commission take the appointment from 1 April 2010. The Audit Commission are now
proposing that KPMG are appointed for the two year period to 31 March 2012 to avoid having to change auditors twice in two years.
There is no immediate change to the current audit arrangements. We will keep you informed about the future audit programme and any changes to
audit arrangements.
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Swiss entity. All rights reserved. This document is confidential and its circulation and use are restricted. KPMG and the KPMG logo are registered trademarks of KPMG International Cooperative, a Swiss entity. 5Appendices
Appendix A: Key Recommendations
This appendix Management Response / Responsible Date to follow up and
summarises all # Risk Summary of recommendation
recommendations
Officer / Due Date report to Audit Panel
raised in 2009/10.
These were raised Revaluation of properties Agreed. The 6 properties have been February 2011
within our ISA 260
We recommend a plan is put in place at the reviewed to confirm their value has not
report to those changed significantly since the last formal
beginning of the year for all properties that
charged with
governance
1 are due to be revalued and this is checked valuation. The 5 year plan will be checked
presented to the back to the properties that are due for periodically to prevent reoccurrence.
Audit Panel in
September 2010.
valuation in the cycle. Ralph Brown - Immediately
Journal authorisation review The control has not been removed; a review February 2011
We recommend reviews of journals over will continue to be carried out and signed
£50K should continue to be reported to off by the Finance Partners and Corporate
2 group accountants and reviewed on a Group Accountant.
monthly basis and positive confirmation
required. Our testing identified non-
compliance with the control in place.
Capital budget reporting Greater efforts will be made to profile February 2011
To improve reporting over the capital budgets when loaded and improved
programme, variances and slippage should reporting of slippage and variances will be
3 be routinely reported. Action plans should included in service monitoring reports..
be identified as to how the programme will Richard Bunn - Immediately
get back on track, and how the process will
be managed and improved going forwards.
Positive confirmation of staff listings Staff listings are sent to Managers on a February 2011
We recommend a mechanism for ensuring monthly basis. A mechanism to allow
4 budget holders provide positive budget holders to confirm the accuracy of
Key:
confirmation to the accuracy of staff listings the listings will be investigated
Low Risk
Medium Risk monthly or quarterly is put in place. Richard Bunn - December 2010
High Risk
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Swiss entity. All rights reserved. This document is confidential and its circulation and use are restricted. KPMG and the KPMG logo are registered trademarks of KPMG International Cooperative, a Swiss entity. 6Appendices
Appendix B: Summary of Reports issued
This appendix 2010
summarises the
reports we issued January
since our last Audit Plan The Audit Plan set out our
Annual Audit
(February 2010) approach to the audit of the
Letter.
Council’s Use of Resources and February
Financial Statements . Certification of This report summarised the
Grants & outcome from our certification
March Returns work on the Council’s 2008/09
(February 2010) grants and returns.
April
May
June
July
August
Report to those The Report to Those Charged with Audit Report The Audit Report included our audit
charged with Governance summarised the opinion for the year, the Value for
September (September
governance results of our audit for 2009/10 Money conclusion and our Audit
2010)
(September including key issues and Certificate.
2010) recommendations raised as a
October
result of our observations.
We also provided the mandatory
declarations required under November Annual Audit This Annual Audit Letter
auditing standards as part of this Letter provides a summary of the
report. (November 2010) results of our audit for 2009/10.
December
© 2010 KPMG LLP, a UK limited liability partnership, is a subsidiary of KPMG Europe LLP and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative, a
Swiss entity. All rights reserved. This document is confidential and its circulation and use are restricted. KPMG and the KPMG logo are registered trademarks of KPMG International Cooperative, a Swiss entity. 7You can also read
