Auditor's Annual Report 2021

Annual Audit Completion Report 2020 - 2021

Rushcliffe Borough Council - Year ended 31 March 2021

Report by: Mazars

Publish date: November 2021

 

Contents

1 Executive Summary

2 Status of the audit

3 Audit approach

4 Significant findings

5 Internal control recommendations

6 Summary of misstatements

7 Value for money

Appendix A

Appendix B

Appendix C

Appendix D

 

1 Executive summary

Principal conclusions and significant findings

The detailed scope of our work as your appointed auditor for 2020/21 is set out in the National Audit Office’s (NAO) Code of Audit Practice. Our responsibilities and powers are derived from the Local Audit and Accountability Act 2014 and as outlined in our Audit Strategy Memorandum, our audit has been conducted in accordance  with International Standards on Auditing (UK) and means we focus on audit risks that we have assessed as resulting in a higher risk of material misstatement.

In section 4 of this report, we have set out our conclusions and significant findings from our audit. This section includes our conclusions on the audit risks and areas of management judgement in our Audit Strategy Memorandum, which include:

• Management override of controls;
• Defined benefit liability valuation;
• Valuation of property, plant and equipment, and investment properties; and
• COVID-19 grants recognition.

Section 5 sets out internal control recommendations and section 6 sets out audit misstatements.

Section 7 outlines our work on the Council’s arrangements to achieve economy, efficiency and effectiveness in its use of resources.

Status and audit opinion

We have substantially completed our audit in respect of the financial statements for the year ended 31 March 2021. At the time of preparing this report, significant matters remaining outstanding as outlined in section 2. We will provide an update to you in relation to the significant matters outstanding through issuance of a follow up letter.

Subject to the satisfactory conclusion of the remaining audit work, we have the following conclusions:

Audit opinion

We anticipate issuing an unqualified opinion, without modification, on the financial statements. Our proposed audit opinion is included in the draft auditor’s report in Appendix B.

Value for Money

We anticipate having no significant weaknesses in arrangements to report in relation to the arrangements that the Council has in place to secure economy, efficiency and effectiveness in its use of resources. Further detail on our Value for Money work is provided in section 7 of this report.

Whole of Government Accounts (WGA)

We have not yet received group instructions from the National Audit Office in respect of our work on the Council’s WGA submission. We are unable to commence our work in this area until such instructions have been received.

Wider powers

The 2014 Act requires us to give an elector, or any representative of the elector, the opportunity to question us about the accounting records of the Council and to consider any objection made to the accounts.

2 Status of the audit

Our work is substantially complete and there are currently no matters of which we are aware that would require modification of our audit opinion, subject to the outstanding matters detailed below.

Guide to status description:

• Red: Likely to result in material adjustment or significant change to disclosures within the financial statements.
• Amber: Potential to result in material adjustment or significant change to disclosures within the financial statements.
• Green: Not considered likely to result in material adjustment or change to disclosures within the financial statements.

Audit areas

1. Opening Balances
   • Status = green
   • Description of the outstanding matters: A number of queries remain outstanding that are being processed by the audit team and discussed with management where further evidence is required.
     
2. COVID-19 grants
   • Status = green
   • Description of the outstanding matters: A number of queries remain outstanding that are being processed by the audit team and discussed with management where further evidence is required.
     
3. Investment income
   • Status = green
   • Description of the outstanding matters: A number of queries remain outstanding that are being processed by the audit team and discussed with management where further evidence is required.
     
4. Creditors
   • Status = green
   • Description of the outstanding matters: A number of queries remain outstanding that are being processed by the audit team and discussed with management where further evidence is required.
     
5. Whole of Government Accounts
   • Status = green
   • Description of the outstanding matters: We are awaiting further guidance from central government in relation to the 2020/21 process, therefore, this work is yet to start.
     
6. Completion procedures
   • Status = green
   • Description of the outstanding matters: This remains outstanding due to queries identified above.
     

3 Audit approach

Changes to our audit approach

We provided details of our intended audit approach in our Audit Strategy Memorandum dated 7 June 2021.

We have not made any changes to our audit approach since we presented our Audit Strategy Memorandum.

Materiality

Our provisional materiality at the planning stage of the audit was set at £818k using a benchmark of 2% of gross operating expenditure.

Our final assessment of materiality, based on the final financial statements and qualitative factors is £799k using the same benchmark.

Specific materiality thresholds also used are:

1. Officer remuneration - £5,000 (Bandings within the note are £5k, so therefore a one band move is considered material)
2. Termination payments - £37,000
3. Members' allowances - £69,000
4. Audit fees - £7,000

Reliance on internal audit

No reliance has been placed on internal audit for the 2020/21 financial audit. Enquiries have been undertaken to held aid the overarching control environment at the Council.

Use of experts

Information below was disclosed within our Audit Strategy Memorandum, dated 7 June 2021. No changes to our audit approach have been identified.

1. Item of account: Payroll costs
   • Management's expert: Nick Berry / Leanne Ashmore - Internal Valuer.
   • Our expert: None. Third party evidence provided via the NAO to support our challenge of valuation assumptions.

2. Item of account: Pensions

   • Management's expert: Barnett Waddingham - Actuary for Nottinghamshire Pension Fund.
   • Our expert: PWC (Consulting actuary appointed by the NAO).

3. Item of account: Financial Instrument disclosures

   • Management's expert: Link Asset Management (LAM) - Treasury management advisors.
   • Our expert: None.

Service organisations

Item of account:

Payroll costs

Service organisation:

Gedling Borough Council

The payroll entries that form part of the Council’s financial statements are material and are derived from the processing of monthly payrolls. The payroll processing is
undertaken and administered by Gedling Borough Council (GBC) on behalf of the Council.

Audit approach: We have reviewed the controls operating at the Council over these transactions to gain an understanding of the services provided by the service organisation.

We are able to conclude that the Council has sufficient controls in place over the services provided by GBC and that we will be able to audit payroll based on the records held at the entity.

4 Significant findings

In this section we outline the significant findings from our audit. These findings include:

• our audit conclusions regarding other significant risks and key areas of management judgement outlined in the Audit Strategy Memorandum;
• our comments in respect of the accounting policies and disclosures that you have adopted in the financial statements. We have concluded in section 4 whether the financial statements have been prepared in accordance with the financial reporting framework and commented on any significant accounting policy changes that have been made during the year;
• any further significant matters discussed with management; and
• any significant difficulties we experienced during the audit.

Significant risks

Management override of controls

• Description of the risk
  • This is a mandatory significant risk on all audits due to the unpredictable way in which such override could occur.
  • Management at various levels within an organisation are in a unique position to perpetrate fraud because of their ability to manipulate accounting records and prepare fraudulent financial statements by overriding controls that otherwise appear to be operating effectively. Due to the unpredictable way in which such override could occur there is a risk of material misstatement due to fraud on all audits.
• How we addressed this risk
  • We addressed this risk through performing audit work over:
    • Accounting estimates impacting amounts included in the financial statements;
    • Consideration of identified significant transactions outside the normal course of business; and
    • Journals recorded in the general ledger and other adjustments made in preparation of the financial statements.
• Audit conclusion
  • No issues have been identified that need to be brought to the attention of members.

Defined benefit liability valuation

• Description of the risk
  • The defined benefit liability relating to the Local Government pension scheme represents a significant balance on the Council’s balance sheet.
  • The Council uses an actuary to provide an annual valuation of these liabilities in line with the requirements of IAS 19 Employee Benefits.
  • Due to the high degree of estimation uncertainty associated with this valuation, we have determined there is a significant risk in this area.
• How we addressed this risk
  • We addressed this risk by:
    • critically assessed the competency, objectivity and independence of the Nottinghamshire Pension Fund’s Actuary;
    • liaised with the auditors of the Nottinghamshire Pension Fund to gain assurance that the controls in place at the Pension Fund are operating effectively. This will included the processes and controls in place to ensure data provided to the Actuary by the Pension Fund for the purposes of the IAS 19 valuation is complete and accurate;
    • reviewed the appropriateness of the Pension Asset and Liability valuation methodologies applied by the Pension Fund Actuary, and the key assumptions included within the valuation. This will include comparing them to expected ranges, utilising information by PWC and consulting actuary engaged by the National Audit Office; and
    • agreed the data in the IAS 19 valuation report provided by the Fund Actuary for accounting purposes to the pension accounting entries and disclosures in the Council’s financial statements.
• Audit conclusion
  • No issues noted throughout our testing that need to be brought to the attention of Members.
  • An unadjusted misstatement has been identified. Further details including quantification of the amount in question is discussed in part 6 of this report.

Valuation of property, plant and equipment, and investment properties

• Description of the risk
  • The Council’s accounts contain material balances and disclosures relating to its holding of property, plant and equipment and investment properties, with the majority required to be carried at valuation.
  • The valuation of these assets is complex and is subject to a number of management assumptions and judgements. Due to the high degree of estimation uncertainty associated, we have determined there is a significant risk in this area.
• How we addressed this risk
  • We addressed this risk by:
    • critically assessed the Council's valuers scope of work, qualifications, objectivity and independence to carry out the required programme of revaluations;
    • considered whether the overall revaluation methodologies used by the Council’s valuers are in line with industry practice, the CIPFA Code of Practice and the Council’s accounting policies;
    • assessed whether valuation movements are in line with market expectations by using third party information provided by Gerald Eve to provide information on regional valuation trends;
    • critically assessed the approach that the Council adopts to ensure that assets are not subject to revaluation in 2020/21 are materially correct, including considering the robustness of that approach in light of the valuation information reported by the Council’s valuers.
• Audit conclusion
  • No issues noted throughout our testing that need to be brought to the attention of Members.

COVID-19 grants recognition

• Description of the risk
  • Throughout 2020/21, the Government has provided substantial sums of financial support to local authorities. A lack of clarity exists in respect of the expected accounting treatment over this income source.
  • We therefore identified the completeness and accuracy of the this income as a risk.
• How we addressed this risk
  • We addressed this risk by:
    • reviewed the Council’s approach to determine whether grants are or are not ringfenced for specified areas of expenditure; and
    • tested a sample of grant income recorded in the ledger to grant allocations/ notifications; and
    • reviewed a sample of grants to ensure conditions to recognise the income in 2020/21 have been met or not.
• Audit conclusion
  • In line with section 2 of this report, a number of queries remain outstanding. At this point in time, no significant concerns have been identified that need to be brought to the attention of members.

Qualitative aspects of the Council's accounting practices

We have reviewed the Council’s accounting policies and disclosures and concluded they comply with the 2020/21 Code of Practice on Local Authority Accounting, appropriately tailored to the Council’s circumstances.

Draft accounts were received from the Council on 5 July 2021 and were of a good quality. These were supported by working papers of a good standard and represents a significant achievement by the finance team.

Significant matters discussed with management

Significant matters discussed with management during the year include the on-going impact of COVID-19 on the Council’s business, including any potential impact on risks of material misstatement.

This included the disclosures required regarding the key sources of estimation uncertainty that management has made in preparing the Statement of Accounts.

Significant difficulties during the audit

During the course of the audit, we did not encounter any significant difficulties and we have had the full co-operation of management. The audit was again carried out remotely but there were no significant difficulties in carrying out our normal audit procedures and obtaining the audit evidence required to complete the audit. We continue to work with management to complete any remaining audit work and resolve audit queries and are grateful for the cooperation and support provided.

Wider responsibilities

Our powers and responsibilities under the 2014 Act are broad and include the ability to:

• issue a report in the public interest;
• make statutory recommendations that must be considered and responded to publicly;
• apply to the court for a declaration that an item of account is contrary to law; and
• issue an advisory notice under schedule 8 of the 2014 Act.

We have not exercised any of these powers as part of our 2020/21 audit.

The 2014 Act also gives rights to local electors and other parties, such as the right to ask questions of the auditor and the right to make an objection to an item of account. No such objections have been raised.

5 Internal control recommendations

The purpose of our audit was to express an opinion on the financial statements. As part of our audit, we have considered the internal controls in place relevant to the preparation of the financial statements in order to design audit procedures to allow us to express an opinion on the financial statements but not for the purpose of expressing an opinion on the effectiveness of internal control or to identify any significant deficiencies in their design or operation.

The matters reported are limited to those deficiencies and other control recommendations that we have identified during our normal audit procedures and that we consider to be of sufficient importance to merit being reported. If we had performed more extensive procedures on internal control, we might have identified more
deficiencies to be reported or concluded that some of the reported deficiencies need not in fact have been reported. Our comments should not be regarded as a comprehensive record of all deficiencies that may exist or improvements that could be made.

Our findings and recommendations are set out below. We have assigned priority rankings to each of them to reflect the importance that we consider each poses to your organisation and, hence, our recommendation in terms of the urgency of required action. In summary, the matters arising fall into the following categories:

There have been no internal control recommendations identified as part of the 2019/20 or 20202/21 financial audit.

1. Priority ranking : 1 (high)
   • Description: In our view, there is potential for financial loss, damage to reputation or loss of information. This may have implications for the achievement of business strategic objectives. The recommendation should be taken into consideration by management immediately.
   • Number of issues = 0
2. Priority ranking : 2 (medium)
   
   • Description: In our view, there is a need to strengthen internal control or enhance business efficiency. The recommendations should be actioned in the near future. 
   • Number of issues = 0
3. Priority ranking : 3 (low)
   
   • Description: In our view, internal control should be strengthened in these additional areas when practicable.
   • Number of issues = 0

6 Summary of misstatements

This section outlines the misstatements identified during the course of the audit, above the trivial threshold for adjustment of £24k.

Unadjusted misstatements

Mazars advised management of a matter brought to their attention by the Nottinghamshire Pension Fund auditors. The Pension Fund auditors had identified a 0.23% difference (increased) between the estimated 2020/21 Fund investment asset value used by the Actuary to prepare the employers’ IAS19 valuation reports and the 2020/21 Fund financial statements being audited.

As disclosed at Note to the Council’s financial statements the value of the Council’s share of the Fund’s estimated pension scheme assets at 31/3/2021 was £69,736k. The extrapolated 0.23% difference is £160k.

Management chose not, on the grounds of materiality, to obtain an updated IAS19 valuation report or amend the accounts for the specific extrapolated differences below, which represent a £160k increase in both Total Net Assets and Total Reserves.

Adjusted misstatements

No adjusted misstatements have been identified for 2020/21.

Disclosure amendments

A few disclosure amendments have been made to the 2020/21 financial statements; these are;

• Collection fund narrative has changed.
• Group accounts have been update.
• Date change to the Intangibles note.
• Disclosure of capital commitments has been changed from £19.7m to £19.3m.
• Date change to Contingent liabilities.
• Disclosure change in relation to discount and CPI rate used within Note 3.
• The £7m included within Note 35 has been changed to 2022/23 based on updated information.
• Reference to Material Valuation Uncertainty in Note 9 and 40 has been removed.

7 Value for money

Approach to value for money

We are required to consider whether the Council has made proper arrangements for securing economy, efficiency and effectiveness in its use of resources. The NAO issues guidance to auditors that underpins the work we are required to carry out and sets out the reporting criteria that we are required to consider. The reporting criteria are:

• Financial sustainability - How the Council plans and manages its resources to ensure it can continue to deliver its services
• Governance - How the Council ensures that it makes informed decisions and properly manages its risks
• Improving economy, efficiency and effectiveness - How the Council uses information about its costs and performance to improve the way it manages and delivers its services.

At the planning stage of the audit, we undertake work to understand the arrangements that the Council has in place under each of the reporting criteria and we identify risks of significant weaknesses in those arrangements. Although we describe this work as planning work, we keep our understanding of arrangements under review and update our risk assessment throughout the audit to reflect emerging issues that may suggest significant weaknesses in arrangements exist.

Where our risk-based procedures identify actual significant weaknesses in arrangements we are required to report these and make recommendations for improvement. Where such significant weaknesses are identified, we report these in the audit report.

The primary output of our work on the Council's arrangements is the commentary on those arrangements that forms part of the Auditor’s Annual Report.

Status of our work

We are yet to complete our work in respect of the Council's arrangements for the year ended 31 March 2021. At the time of preparing this report, we have not identified any significant weaknesses in arrangements that require us to make a recommendation, however we continue to undertake work on the Council's arrangements.

Our draft audit report at Appendix B outlines that we have not yet completed our work in relation to the Council's arrangements. As noted above, our commentary on the Council's arrangements will be provided in the Auditor’s Annual Report.

 

Appendix A: Draft management and representation letter

Mazars LLP

Park View House

58 The Ropewalk

Nottingham

NG1 5DW

Dear Sirs Rushcliffe Borough Council - audit for year ended 31 March 2021

This representation letter is provided in connection with your audit of the financial statements of Rushcliffe Borough Council (the Council) for the year ended 31 March 2021 for the purpose of expressing an opinion as to whether the financial statements give a true and fair view in accordance with the CIPFA/LASAAC Code of Practice on Local Authority Accounting in the United Kingdom 2020/21 (the Code) and applicable law.

I confirm that the following representations are made on the basis of enquiries of management and staff with relevant knowledge and experience (and, where appropriate, inspection of supporting documentation) sufficient to satisfy ourselves that I can properly make each of the following representations to you.

My responsibility for the financial statements and accounting information

I believe that I have fulfilled my responsibilities for the true and fair presentation and preparation of the financial statements in accordance with the Code and applicable law.

My responsibility to provide and disclose relevant information

I have provided you with:

• Access to all information of which we are aware that is relevant to the preparation of the financial statements such as records, documentation and other material; 
• Additional information that you have requested from us for the purpose of the audit; and
• Unrestricted access to individuals within the Council you determined it was necessary to contact in order to obtain audit evidence.

I confirm as Deputy Chief Executive and Director of Finance and Corporate Services that I have taken all the necessary steps to make me aware of any relevant audit information and to establish that you, as auditors, are aware of this information.

As far as I am aware there is no relevant audit information of which you, as auditors, are unaware.

Accounting records

I confirm that all transactions that have a material effect on the financial statements have been recorded in the accounting records and are reflected in the financial statements. All other records and related information, including minutes of all Council and committee meetings, have been made available to you.

Accounting policies

I confirm that I have reviewed the accounting policies applied during the year in accordance with the Code and International Accounting Standard 8 and consider these policies to faithfully represent the effects of transactions, other events or conditions on the Council’s financial position, financial performance and cash flows. Accounting estimates, including those measured at fair value I confirm that any significant assumptions used by the Council in making accounting estimates, including those measured at current or fair value, are reasonable.

I confirm that I am satisfied that the actuarial assumptions underlying the valuation of pension scheme liabilities for IAS19 disclosures are consistent with my knowledge. I confirm that all settlements and curtailments have been identified and properly accounted for. I confirm that all significant retirement benefits have been identified and properly accounted for (including any arrangements that are statutory, contractual or implicit in the employer’s actions, that arise in the UK or overseas, that are funded or unfunded).

Contingencies

There are no material contingent losses including pending or potential litigation that should be accrued where:

• information presently available indicates that it is probable that an asset has been impaired or a liability had been incurred at the balance sheet date; and
• the amount of the loss can be reasonably estimated.

There are no material contingent losses that should be disclosed where, although either or both the conditions specified above are not met, there is a reasonable possibility that a loss, or a loss greater than that accrued, may have been incurred at the balance sheet date.

There are no contingent gains which should be disclosed.

All material matters, including unasserted claims, that may result in litigation against the Council have been brought to your attention. All known actual or possible litigation and claims whose effects should be considered when preparing the financial statements have been disclosed to you and accounted for and disclosed in accordance with the Code and applicable law.

Laws and regulations

I confirm that I have disclosed to you all those events of which I am aware which involve known or suspected non-compliance with laws and regulations, together with the actual or contingent consequences which may arise therefrom.

The Council has complied with all aspects of contractual agreements that would have a material effect on the accounts in the event of non-compliance.

Fraud and error

I acknowledge my responsibility as Deputy Chief Executive and Director of Finance and Corporate Services for the design, implementation and maintenance of internal control to prevent and detect fraud and error.

I have disclosed to you:

• All the results of my assessment of the risk that the financial statements may be materially misstated as a result of fraud;
• All knowledge of fraud or suspected fraud affecting the Council involving:
  • management and those charged with governance;
  • employees who have significant roles in internal control; and others where fraud could have a material effect on the financial statements.

I have disclosed to you all information in relation to any allegations of fraud, or suspected fraud, affecting the Council’s financial statements communicated by employees, former employees, analysts, regulators or others.

Related party transactions

I confirm that all related party relationships, transactions and balances, have been appropriately accounted for and disclosed to you in accordance with the requirements of the Code and applicable law. I have disclosed the identity of the Council’s related parties and all related party relationships and transactions of which I am aware.

Impairment review

To the best of my knowledge, there is nothing to indicate that there is a permanent reduction in the recoverable amount of the property, plant and equipment and intangible assets below their carrying value at the balance sheet date. I have considered the impact of Covid-19 on the Council’s Investment Properties. An impairment review is therefore not considered necessary.

Charges on assets

All the Council’s assets are free from any charges exercisable by third parties except as disclosed within the financial statements.

Future commitments

I am not aware of any plans, intentions or commitments that may materially affect the carrying value or classification of assets and liabilities or give rise to additional liabilities.

Subsequent events

I confirm all events subsequent to the date of the financial statements, and for which the Code and applicable law require adjustment or disclosure, have been adjusted or disclosed. Should further material events occur after the date of this letter which may necessitate revision of the figures included in the financial statements or inclusion of a note thereto, I will advise you accordingly.

Covid-19

We confirm that we have carried out an assessment of the on-going impact of the Covid-19 Virus pandemic on the Council, including the impact of mitigation measures and uncertainties, and that the disclosure in the Statement of Accounts fairly reflects that assessment.

Brexit

We confirm that we have carried out an assessment of the potential impact of the United Kingdom leaving the European Union, including the potential outcomes at the end of the Implementation Period, and that the disclosure in the Statement of Accounts fairly reflects that assessment.

Going concern

To the best of my knowledge there is nothing to indicate that the Council will not continue as a going concern in the foreseeable future. The period to which I have paid particular attention in assessing the appropriateness of the going concern basis is not less than twelve months from the date of approval of the accounts. I have updated our going concern assessment in light of the on-going Covid-19 pandemic. I continue to believe that the Council’s financial statements should be prepared on a going concern basis and have not identified any material uncertainties related to going concern on the grounds that current and future sources of funding or support will be more than adequate for the Council’s needs. We believe that no further disclosures relating to the Council's ability to continue as a going concern need to be made in the financial statements.

Annual Governance Statement

I am satisfied that the Annual Governance Statement (AGS) fairly reflects the Council's risk assurance and governance framework and I confirm that I am not aware of any significant risks that are not disclosed within the AGS.

Narrative report

The disclosures within the Narrative Report fairly reflect my understanding of the Council's financial and operating performance over the period covered by the financial statements.

Unadjusted misstatements

I confirm that the effects of the uncorrected misstatements set out at Appendix A are immaterial, both individually and in aggregate, to the financial statements as a whole.

 

Yours faithfully

Deputy Chief Executive and Director of Finance and Corporate Services

 

Appendix B: Draft audit report

Independent auditor’s report to the members of Rushcliffe Borough Council Report on the audit of the financial statements

Opinion on the financial statements

We have audited the financial statements of Rushcliffe Borough Council (‘the Council’) and its subsidiaries (‘the Group’) for the year ended 31 March 2021, which comprise the Comprehensive Income and Expenditure Statement, the Movement in Reserves Statement, the Balance Sheet, the Cash Flow Statement, the Collection
Fund, Group consolidated accounts and notes to the financial statements, including a summary of significant accounting policies. The financial reporting framework that has been applied in their preparation is applicable law and the CIPFA/LASAAC Code of Practice on Local Authority Accounting in the United Kingdom 2020/21.

• In our opinion, the financial statements:
  give a true and fair view of the financial position of the Council and the Group as at 31st March 2021 and of the
  Council’s and the Group’s expenditure and income for the year then ended; and
• have been properly prepared in accordance with the CIPFA/LASAAC Code of Practice on Local Authority
  Accounting in the United Kingdom 2020/21.

Basis for opinion

We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs (UK)) and applicable law. Our responsibilities under those standards are further described in the Auditor’s responsibilities section of our report. We are independent of the Council and Group in accordance with the ethical requirements that are relevant to our audit of the financial statements in the UK, including the FRC’s Ethical Standard, and we have fulfilled our other ethical responsibilities in accordance with these requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

Conclusions relating to going concern

In auditing the financial statements, we have concluded that the Deputy Chief Executive and Director of Finance and Corporate Services use of the going concern basis of accounting in the preparation of the financial statements is appropriate.

Based on the work we have performed, we have not identified any material uncertainties relating to events or conditions that, individually or collectively, may cast significant doubt on the Council's ability to continue as a going concern for a period of at least twelve months from when the financial statements are authorised for issue.

Our responsibilities and the responsibilities of the Deputy Chief Executive and Director of Finance and Corporate Services with respect to going concern are described in the relevant sections of this report.

Other information

The Deputy Chief Executive and Director of Finance and Corporate Services is responsible for the other information. The other information comprises the information included in the Statement of Accounts, other than the financial statements and our auditor’s report thereon. Our opinion on the financial statements does not cover the
other information and, except to the extent otherwise explicitly stated in our report, we do not express any form of assurance conclusion thereon.

In connection with our audit of the financial statements, our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained in the audit or otherwise appears to be materially misstated. If we identify such material
inconsistencies or apparent material misstatements, we are required to determine whether there is a material misstatement in the financial statements or a material misstatement of the other information. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact.

We have nothing to report in this regard.

Responsibilities of the Deputy Chief Executive and Director of Finance and Corporate Services for the
financial statements

As explained more fully in the Statement of the Deputy Chief Executive and Director of Finance and Corporate Services Responsibilities, the Deputy Chief Executive and Director of Finance and Corporate Services is responsible for the preparation of the Statement of Accounts, which includes the financial statements, in accordance with proper practices as set out in the CIPFA/LASAAC Code of Practice on Local Authority Accounting in the United Kingdom 2020/21, and for being satisfied that they give a true and fair view. The Deputy Chief Executive and Director of Finance and Corporate Services is also responsible for such internal control as the Deputy Chief Executive and Director of Finance and Corporate Services determines is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error.

The Deputy Chief Executive and Director of Finance and Corporate Services is required to comply with the CIPFA/LASAAC Code of Practice on Local Authority Accounting in the United Kingdom 2020/21 and prepare the financial statements on a going concern basis, on the assumption that the functions of the Council will continue in
operational existence for the foreseeable future. The Deputy Chief Executive and Director of Finance and Corporate Services is responsible for assessing each year whether or not it is appropriate for the Council and Group to prepare its accounts on the going concern basis and disclosing, as applicable, matters related to going
concern.

Auditor’s responsibilities for the audit of the financial statements

Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance is a high level of assurance but is not a guarantee that an audit conducted in
accordance with ISAs (UK) will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements.

Irregularities, including fraud, are instances of non-compliance with laws and regulations. We design procedures in line with our responsibilities, outlined above, to detect material misstatements in respect of irregularities, including fraud. Based on our understanding of the Council, we identified that the principal risks of non-compliance with laws and regulations related to the Local Government Act 2003 (and associated regulations made under section 21), the Local Government Finance Acts of 1988, 1992 and 2012, and the Accounts and Audit Regulations 2015, and we considered the extent to which non-compliance might have a material effect on the financial statements.

We evaluated the Deputy Chief Executive and Director of Finance and Corporate Services incentives and opportunities for fraudulent manipulation of the financial statements (including the risk of override of controls) and determined that the principal risks were related to posting manual journal entries to manipulate financial
performance, management bias through judgements and assumptions in significant accounting estimates and significant one-off or unusual transactions.

Our audit procedures were designed to respond to those identified risks, including non-compliance with laws and regulations (irregularities) and fraud that are material to the financial statements. Our audit procedures included but were not limited to:

• discussing with management and the Governance Scrutiny Group the policies and procedures regarding
  compliance with laws and regulations;
• communicating identified laws and regulations throughout our engagement team and remaining alert to any
  indications of non-compliance throughout our audit; and
• considering the risk of acts by the Council and the Group which were contrary to applicable laws and
  regulations, including fraud.

Our audit procedures in relation to fraud included but were not limited to:

• making enquiries of management and the Governance Scrutiny Group on whether they had knowledge of any actual, suspected or alleged fraud;
• gaining an understanding of the internal controls established to mitigate risks related to fraud;
• discussing amongst the engagement team the risks of fraud; and
• addressing the risks of fraud through management override of controls by performing journal entry testing.

There are inherent limitations in the audit procedures described above and the primary responsibility for the prevention and detection of irregularities including fraud rests with management and the Governance Scrutiny Group. As with any audit, there remained a risk of non-detection of irregularities, as these may involve collusion,
forgery, intentional omissions, misrepresentations or the override of internal controls.

We are also required to conclude on whether the Deputy Chief Executive and Director of Finance and Corporate Services use of the going concern basis of accounting in the preparation of the financial statements is appropriate. We performed our work in accordance with Practice Note 10: Audit of financial statement and regularity of public sector bodies in the United Kingdom, and Supplementary Guidance Note 01, issued by the National Audit Office in April 2021.

A further description of our responsibilities for the audit of the financial statements is located on the Financial Reporting Council’s website at www.frc.org.uk/auditorsresponsibilities. This description forms part of our auditor’s report.

Report on the Council’s arrangements for securing economy, efficiency and effectiveness in its use of
resources

Matter on which we are required to report by exception

We are required to report to you if, in our opinion, we are not satisfied that the Council has made proper arrangements for securing economy, efficiency and effectiveness in its use of resources for the year ended 31 March 2021.

We have not completed our work on the Council’s arrangements. On the basis of our work to date, having regard to the guidance issued by the Comptroller and Auditor General in April 2021, we have not identified any significant weaknesses in arrangements for the year ended 31 March 2021.

We will report the outcome of our work on the Council’s arrangements in our commentary on those arrangements within the Auditor’s Annual Report. Our audit completion certificate will set out any matters which we are required to report by exception.

Responsibilities of the Council

The Council is responsible for putting in place proper arrangements to secure economy, efficiency and effectiveness in its use of resources, to ensure proper stewardship and governance, and to review regularly the adequacy and effectiveness of these arrangements.

Auditor’s responsibilities for the review of arrangements for securing economy, efficiency and effectiveness in the use of resources

We are required under section 20(1)(c) of the Local Audit and Accountability Act 2014 to satisfy ourselves that the Council has made proper arrangements for securing economy, efficiency and effectiveness in its use of resources.

We are not required to consider, nor have we considered, whether all aspects of the Council’s arrangements for securing economy, efficiency and effectiveness in its use of resources are operating effectively.

We have undertaken our work in accordance with the Code of Audit Practice, having regard to the guidance issued by the Comptroller and Auditor General in April 2021.

Matters on which we are required to report by exception under the Code of Audit Practice

We are required by the Code of Audit Practice to report to you if:

• we issue a report in the public interest under section 24 of the Local Audit and Accountability Act 2014;
• we make a recommendation under section 24 of the Local Audit and Accountability Act 2014; or
• we exercise any other special powers of the auditor under sections 28, 29 or 31 of the Local Audit and
  Accountability Act 2014.

We have nothing to report in these respects.

Use of the audit report

This report is made solely to the members of Rushcliffe Borough Council, as a body, in accordance with part 5 of the Local Audit and Accountability Act 2014 and as set out in paragraph 44 of the Statement of Responsibilities of Auditors and Audited Bodies published by Public Sector Audit Appointments Limited. Our audit work has been
undertaken so that we might state to the members of the Council those matters we are required to state to them in an auditor’s report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the members of the Council, as a body, for our audit work, for this report, or for the opinions we have formed.

Delay in certification of completion of the audit

We cannot formally conclude the audit and issue an audit certificate until we have completed:

• the work necessary to issue our assurance statement in respect of the Council’s Whole of Government
  Accounts consolidation pack; and
• the work necessary to satisfy ourselves that the Council has made proper arrangements for securing economy,
  efficiency and effectiveness in its use of resources.

 

David Hoose, Key Audit Partner

For and on behalf of Mazars LLP
Park View House
58 The Ropewalk
Nottingham
NG1 5DW

 

Appendix C: Independence

As part of our ongoing risk assessment, we monitor our relationships with you to identify any new actual or perceived threats to our independence within the regulatory or professional requirements governing us as your auditors.

We can confirm that no new threats to independence have been identified since issuing the Audit Strategy Memorandum and therefore we remain independent.

 

Appendix D: Other communications

Compliance with Laws and Regulations

We have not identified any significant matters involving actual or suspected non-compliance with laws and regulations. We will obtain written representations from management that all known instances of non-compliance or suspected non-compliance with laws and regulations whose effects should be considered when preparing financial statements have been disclosed.

External confirmation

We did not experience any issues with respect to obtaining external confirmations.

Related parties

We did not identify any significant matters relating to the audit of related parties. We will obtain written representations from management confirming that:

• a. they have disclosed to us the identity of related parties and all the related party relationships and transactions of which they are aware; and
• b. they have appropriately accounted for and disclosed such relationships and transactions in accordance with the requirements of the applicable financial reporting framework.

Going Concern

We have not identified any evidence to cause us to disagree with the Deputy Chief Executive and Director of Finance and Corporate Services that Rushcliffe Borough Council will be a going concern, and therefore we consider that the use of the going concern assumption is appropriate in the preparation of the financial statements.

Subsequent events

We are required to obtain evidence about whether events occurring between the date of the financial statements and the date of the auditor’s report that require adjustment of, or disclosure in, the financial statements are appropriately reflected in those financial statements in accordance with the applicable financial reporting framework. We will obtain written representations from management that all events occurring subsequent to the date of the financial statements and for which the applicable financial reporting framework requires adjustment or disclosure have been adjusted or disclosed.

Matters related to fraud

We have designed our audit approach to obtain reasonable assurance whether the financial statements as a whole are free from material misstatement due to fraud. In addition to the work performed by us, we will obtain written representations from management, and governance scrutiny group, confirming that:

• a. they acknowledge their responsibility for the design, implementation and maintenance of internal control to prevent and detect fraud;
• b. they have disclosed to the auditor the results of management’s assessment of the risk that the financial statements may be materially misstated as a result of fraud;
• c. they have disclosed to the auditor their knowledge of fraud or suspected fraud affecting the entity involving:
  • i. Management;
  • ii. Employees who have significant roles in internal control; or
  • iii. Others where the fraud could have a material effect on the financial statements; and
• d. they have disclosed to the auditor their knowledge of any allegations of fraud, or suspected fraud, affecting the entity’s financial statements communicated by employees, former employees, analysts, regulators or others.