External Audit Completion Report 2023

Rushcliffe borough Council External Audit Completion Report 2023

Reported to Governance Scrutiny Group - 23 November 2023

Contents

Executive summary
Status of audit
Audit approach
Significant findings
Internal control recommendations
Summary of misstatements
Value for money

Appendix A: Draft management representation letter

Appendix B: Draft audit report

Appendix C: Independence

Appendix D: Other communications

Dear Governance Scrutiny Group Members,

Audit Completion Report – Year ended 31 March 2023

We are pleased to present our Audit Completion Report for the year ended 31 March 2023. The purpose of this document is to summarise our audit conclusions.

The scope of our work, including identified significant audit risks, and other key judgement areas, was outlined in our Audit Strategy Memorandum, which we presented on 29 June 2023.

We have reviewed our Audit Strategy Memorandum and concluded that the original significant audit risks and other areas of management judgement remain appropriate.

We would like to express our thanks for the assistance of your team during our audit.

If you would like to discuss any matters in more detail then please do not hesitate to contact me at Mark.Surridge@mazars.co.uk

Yours faithfully
Mark Surridge
Mazars LLP

1. Executive summary

Principal conclusions and significant findings

The detailed scope of our work as your appointed auditor for 2022/23 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;
net defined benefit liability valuation;
Valuation of property, plant and equipment, and investment properties; and
insourcing of Streetwise.

Misstatements and internal control recommendations

Section 5 sets out internal control recommendations and section 6 sets out audit misstatements; unadjusted misstatements total £807,000 (gross) with a net impact on the CIES and balance sheet of £299,000. 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 2023. At the time of preparing this report, significant matters remaining outstanding are 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.

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

Our value for money work is ongoing, but at this stage 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 received partial group instructions from the National Audit Office. We anticipate reporting that the WGA submission is consistent with the audited financial statements. However, we are unable to issue our certificate until full group audit instructions are received which confirm if the Council have been sampled to undergo additional audit procedures.

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. No such correspondence from electors has been received.

2. Status of audit

Our audit 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 satisfactory resolution of the outstanding matters set out below.

Related Parties - Status Green

Our testing is complete, with the exception of our review of property valuations for assets not revalued in the year, as we are awaiting
third party information from the NAO.

Cash and cash equivalents - Status Green

We need to finalise our documentation in relation to:

Business Rates income
Creditors
Reserves

Pensions - Status Amber

Awaiting a response to our request for assurance from the pension fund auditors.

Completion procedures - Status Amber

Procedures such as our quality control, review for post balance sheet events, and management representations are ongoing, and will remain as such, through to the date of issuing the auditor’s report.

Status notes

Green - Not considered likely to result in a material adjustment or a change to disclosures in the financial statements.
Amber - Potential to result in a material adjustment or a significant change to disclosures in the financial statements.
Red - Likely to result in a material adjustment or a significant change to disclosures in the financial statements.
Blue - Work on value for money arrangements.

3. Audit approach

Changes to our audit approach

We provided details of our intended audit approach in our Audit Strategy Memorandum in June 2023. 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 £880,000 using a benchmark of 2% of gross operating expenditure. No changes to the materiality level set at the planning stage have been made.

Reliance on internal audit

No reliance has been placed on internal audit for the 2022/23 financial audit. Enquiries have been undertaken to aid our understanding of the overarching control environment at the Council.

Use of experts

Management makes use of experts in specific areas when preparing the Council’s financial statements. We also use experts to assist us to obtain sufficient appropriate audit evidence on specific items of account. No changes to those outlined in our ASM.

Item of account: Property, Plant & Equipment and Investment Property

Management expert: Internal Valuers - N Berry and L Ashmore
Our expert (Mazars'): None. Third party evidence is provided via the National Audit Office (NAO) to support our challenge of valuation assumptions.

Item of account: Pensions

Management expert: Barnett Waddingham (Actuary for Nottinghamshire Pension Fund)
Our expert (Mazars'): PwC (Consulting actuary appointed by the NAO)

Item of account: Financial Instruments disclosures

Management expert: Link Asset Management (LAM) Treasury management advisors
Our expert (Mazars'): None

Service organisations

International Auditing Standards (UK) (ISAs) define service organisations as third party organisations that provide services to the Council that are part of its information systems relevant to financial reporting. We are required to obtain an understanding of the services provided by service organisations as well as evaluating the design and implementation of controls over those services. The table below summarises the service organisations used by the Council and our planned audit approach. There have been no changes to our approach since we issued our ASM

Item of account: Payroll Costs

Service Organisation: 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 on behalf of the Council.
Audit approach: We will review the controls operating at the Council over these transactions to gain an understanding of the services provided by the service organisation. In addition, we will undertake substantive based procedures for payroll costs included within the financial statements.

4. Significant findings

Significant findings, including key areas of management judgement

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

our audit conclusions regarding 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. On page 15 we have concluded 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;
any significant difficulties we experienced during the audit; and

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
journal entries 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.

Net 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 IAS19 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 assessing the competency, objectivity and independence of the Nottinghamshire Pension Fund’s Actuary;
Liaising 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 include the processes and controls in place to ensure data provided to the Actuary by the Pension Fund for the purposes of the IAS19 valuation is complete and accurate;
Reviewing 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;
Agreeing the data in the IAS19 valuation report provided by the Fund Actuary for accounting purposes to the pension accounting entries disclosures in the Council’s financial statements; and
Considering the impact of IFRIC14 regarding pension fund surpluses.

Audit conclusion

Through the work completed to date, no issues have been identified that need to be brought to the attention of members. However, our work is ongoing in this area as we have not yet received the assurance required from the Pension Fund auditor.

Valuation of land, buildings, and investment properties

Description of the risk

Property related assets are a significant balance on the Council’s balance sheet. The valuation of land and buildings 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 assessing the Council's valuers scope of work, qualifications, objectivity and independence to carry out the required programme of revaluations;
Considering 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;
Assessing whether valuation movements are in line with market expectations by using third party information provided by Montagu Evans to provide information on regional valuation trends;
Critically assessing the approach that the Council adopts to ensure that assets not subject to revaluation in 2022/23 are materially correct, including considering the robustness of that approach in light of the valuation information reported by the Council’s valuers.

Audit conclusion

Our work in this area is complete. We have identified two misstatements, which are included in section 6. As these are immaterial, they remain unadjusted in the 2022/23 accounts, but the Council are correcting these for 2023/24.

No other issues have been identified, that need to be brought to the attention of members.

Insourcing of Streetwise

Description of the risk

In February 2022, Cabinet took the decision to insource its wholly-owned grounds maintenance and street cleansing companies Streetwise Environmental Limited and Streetwise Environmental trading Limited with effect from 1 September 2022. The Council will therefore need to consider the accounting treatment for the change in group structure and incorporate relevant assets, liabilities, income and expenditure into the financial statements for 2022/23.

How we addressed this risk

We addressed this risk by:

Reviewing the proposed accounting treatment to bring services back in house
Evaluating the impact on our testing approach of income, expenditure, assets and liabilities for 2022/23

Audit conclusion

No issues 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 CIPFA/LASAAC Code of Practice on Local Authority Accounting in the United Kingdom 2022/23, as amended by the Update to the Code and Specifications for Future Codes for Infrastructure Assets, published in November 2022, appropriately tailored to the Council’s circumstances, with the exception of the following item:

Two large construction projects were completed in year - Bingham Hub, and Rushcliffe Oaks Crematorium. These assets were correctly transferred from Assets Under Construction to Operational Land and Buildings, however the transfer value was the capital expenditure up to the end of 2021/22, with any subsequent 2022/23 expenditure capitalised as Operational Land and Buildings despite the projects not being complete until 28 February 2023, and 31 March 2023 respectively. Therefore, in the PPE disclosure, the transfer value was understated and in year additions were misclassified. We confirm though, that this has no impact on the closing balance or classification of the assets and therefore no impact on the Balance Sheet.

Draft accounts were received from the Council’s on 31 May, some minor adjustments were identified by management, and we received revised draft accounts on 4 August.

Significant matters discussed with management

In addition to the ongoing impact of the statutory override in accounting for infrastructure assets, during our audit we discussed the following significant matters with management:

The accounts include £40.137m for S106 contributions not yet recognised as income due to conditions not yet being met. £1.025m of contributions are currently unallocated with a repayment clause within the next 12 months. We discussed the Council’s process which is to write to the organisations who requested the contribution, as well as contacting beneficiaries where a contribution is nearing an expiry date, to encourage project submission. They also have frequent updates with the County Council (as one of the major beneficiaries) to establish any priorities for project submission/funding release. They have made no repayments to developers due to expiry periods on contributions.
The Council holds £13.766m of pooled investments. In 2018, a Statutory Override on IFRS9 was introduced to allow local authorities to move the impact of gains and losses on pooled investment funds into an unusable reserve rather than impact the general fund. The Override was initially due to end in March 2023, but this was extended to March 2025.The table below sets out the Council’s balance sheet position over the past three years. Whilst the council has made a commitment to hold these funds over the long-term, as seen by the below, they have fallen in value by £1.234m. Had the override ended when originally intended (31 March 2023), the Council would have had to build in the recovery of this unusable reserve in 2023/24, via the General Fund or by re-purposing Earmarked Reserves. The extent of financial risk associated with current and future investments needs to be
monitored, and alongside updates to the capital financing regime and Minimum Revenue Provision, we would encourage the Governance Scrutiny Group to seek assurance and ensure it understands the relevance and potential impact to the Council. We are aware that the Council are monitoring the risks closely, and have provided regular updates to the group, through their treasury management updates.

TABLE

Funds summary
Item	2020/21 (£)	2021/22 (£)	2022/23 (£)
Fair value of investments	13.050 m	15.222 m	13.766 m
Pooled Funds Adjustment Account balance (Unusable Reserve)	0.50 m	0.223 m	minus 1.234 m
General Fund balance	2.604 m	2.604 m	2.604 m
Earmarked Revenue Reserves	22.365 m	23.575 m	19.673 m

Through our discussions with the council, we also understand the accounts include a Treasury Capital Depreciation Reserve, to provide funding to reduce the impact on the general fund from reductions in the capital value of treasury investments, in line with the above bullet point. The additions to this reserve in year are £973,000. The current net loss on value of the pooled investments is £1.4m and this will be crystalised if the Council redeem their investment whilst they are holding a fair value loss. They have therefore appropriated funds into a reserve to mitigate the risk of the capital loss against the general fund.

Pooled and reserve funds
Item	2018/19	2019/20	2020/21	2021/22	2022/23	Total
Net gain/ loss on pooled investments	0.024 m	minus 1.238 m	1.143 m	0.173 m	minus 1.457 m	minus 1.355 m
Treasury Capital Depreciation Reserve balance	-	-	-	-	0.973 m	-

The Council’s financial position, including development of the medium-term financial plan: During the year, we have met with officers to discuss the Council’s financial position and budget setting process and pressures to enable us to reflect on the Council’s financial resilience and sustainability, and to conclude whether the going concern basis of accounting in the preparation of the financial statements is appropriate.
IAS19 Pension Surpluses: Each year employers within the Local Government Pension Scheme receive an actuarial accounting report prepared in accordance with IAS19 Employee Benefits. The report sets out the movement in the employers’ interest in the LGPS assets and liabilities during the year, and their share of assets and liabilities at the year end. At 31 March 2023 some employers have, for the first time in many years, a net IAS19 pension asset (surplus). When an employer has a net pension liability, the liability is included in the financial statements in full. Where there is a surplus, there are circumstances under which the surplus is not recognised in full in the financial statements. Where bodies can access the economic benefit arising from the asset in terms of reduced contributions or a refund, they should recognise the net defined benefit as an asset. The net defined benefit asset recognised should be the surplus, adjusted for the effect of any asset ceiling. At 31 March 2023, the Council recorded a liability, and no evidence has come to light to suggest the asset had been capped. This issue therefore didn’t impact Rushcliffe Borough Council.
ISA (UK) 315 (Revised 2019) introduces major changes to the auditor’s risk identification and assessment approach, which are intended to drive a more focused response from auditors undertaking work to obtain sufficient appropriate audit evidence to address the risks of material misstatement. This has involved enhanced risk identification and assessment; greater emphasis on understanding IT; and Increased focus on controls. We have needed to make additional enquires in these areas to enable us to meet these audit requirements.

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.

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 2022/23 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

As part of our audit of the financial statements, we obtained an understanding of internal controls sufficient to plan our audit and determine the nature, timing and extent of testing performed. Although our audit was not designed to express an opinion on the effectiveness of internal control, we are required to communicate to Those Charged With Governance any significant deficiencies identified during the course of our work.

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:

High: 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 - zero.

Medium: 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 - one.

Low: In our view, internal control should be strengthened in these additional areas when practicable. Number of issues - zero.

Other Deficiencies in internal control - level two

Description of deficiency

There were two councillors for which no declaration of interests' form was available. The councillors are no longer serving councillors, however they were during 2022/23 so a declaration for the 2022/23 year should have been made.

Potential effects

Missing declarations of interest could result in the Council omitting a required related party disclosure from
their financial statements.

Recommendation

We recommend that management implement robust processes for ensuring that all councillors and senior officers complete declaration of interests’ forms.

Management response

To be considered.

Follow up on previous internal control points

Description of deficiency

A journal posting in relation to the Council’s bank process was made incorrectly.

Potential effects

Year-end balances could be misstated due to incorrect postings.

Recommendation

Users need to be aware of the account/s they are posting to and timely reviews need to be undertaken to ensure any inconsistencies are picked up and amended.

2022/23 update

We did not encounter any significant issues with the bank process, however we identified a trivial variance outstanding on the bank reconciliation, as a result of a brought forward error that has not yet been corrected. This is being corrected in 2023/24.

Description of deficiency

The Council have incorrectly accounted for a material balance in the prior period, resulting in an understatement of debtors and income.

Potential effects

Income could be recognised in the incorrect period leading to the financial statements being materially misstated.

Recommendation

The Council need consider all future cashflows on large non-recurring transactions such as this in order to ensure they are applying the accruals basis of accounting within their financial statements.

2022/23 update

We have not encountered any similar issues in 2022/23.

6. Summary of misstatements

This section outlines the misstatements identified during the course of the audit, above the trivial threshold for adjustment of £26,000. The first table outlines the misstatements that were identified during the course of our audit which management has assessed as not being material either individually or in aggregate to the financial statements and does not currently plan to adjust.

The second table outlines the misstatements that have been adjusted by management during the course of the audit.

Unadjusted misstatements

Management has assessed the misstatements in the table below as not being material, individually or in aggregate, to the financial statements and does not plan to adjust. We only report to you unadjusted misstatements that are either material by nature or which exceed our reporting threshold.

Unadjusted misstatements
Details of adjustment	Comprehensive Income and Expenditure Statement Debtor £'000	Comprehensive Income and Expenditure Statement Creditor £'000	Balance Sheet Debtor £'000	Balance Sheet Creditor £'000
Debtor VAT Creditor PPE (Vehicles, Plant, Equipment) Being a capital invoice incorrectly capitalised gross of VAT	110	-	-	110
Debtor VAT Creditor PPE Being the extrapolated error for 2022/23 expenditure that had not been accrued for	268	-	-	268
Debtor Investment Properties Creditor Gain on Revaluation	-	254	254	-
Debtor Loss on Revaluation Creditor PPE (Land and Buildings)	175	-	-	175
Total unadjusted misstatements	553	254	254	553

Adjusted misstatements

Adjusted misstatements
title	Comprehensive Income and Expenditure Statement Debtor £'000	Comprehensive Income and Expenditure Statement Creditor £'000	Balance Sheet Debtor £'000	Balance Sheet Creditor £'000
Debtor – NNDR Creditor – Business Rates income Management adjustment to correct initial draft accounts figures which were based on estimate	-	101	101	-
Aggregate effect of adjusted misstatements	-	101	101	-

Disclosure misstatements

We identified the following disclosure misstatements during our audit that have been corrected by management:

Amendment of the debtors and creditors values in the financial instruments disclosure
Correction of a misclassification between debtors and investments in the cash flow statement
Amendment to pensions disclosure to ensure consistent with actuary report
Amendment of a casting error on EFA
Amendment to senior officer pay bandings to ensure bandings are more transparent for the reader
Correction of estimated sales proceeds of investment properties held for sale in note 11
Removal of audit fees payable to auditors other than the Council’s appointed auditor, to ensure compliance with the Code requirements
Reclassification of investment property rental income from fees and charges to investment income in note 2
Reclassification of agency staff costs from other service expenses to employee benefits expense in note 2
Update narrative in relation to bad debt provision, which is now allowance for expected credit loss in accordance with IFRS 9

In addition, there were some disclosures where we asked the Council to revise the narrative, in order to improve clarity and quality of the disclosures for the reader. This included the narrative in Note 34 Contingent Assets.

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. We intend to issue the Auditor's Annual Report by January 2024.

Status of our work

We are yet to complete our work in respect of the Council's arrangements for the year ended 31 March 2023. 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 by January 2024.

Appendix A: Draft management representation letter

Mazars LLP
First floor,
Two Chamberlain Square,
Birmingham
B3 3AX

Rushcliffe Borough Council- Audit for Year Ended 31 March 2023

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 2023 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 2022/23 (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 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 current and/or 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 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 potential risk of RAAC as well as 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.

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.

Ukraine

We confirm that we have carried out an assessment of the potential impact of Russian Forces entering Ukraine on the business, including the impact of mitigation measures and uncertainties, and that the disclosure in the Narrative Report fairly reflects that assessment.

Current banking crisis

We confirm that we have assessed the impact on Rushcliffe Borough Council of the on-going Global Banking challenges, in particular whether there is any impact on the council’s ability to continue as a going concern, and on the post balance sheet events disclosures.

We confirm that our exposure where applicable (either direct cash exposure or direct / indirect through investments) with Silicon Valley Bank, Credit Suisse, Signature Bank or any other bank in a distress situation, is not material.

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.

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 and internal control recommendations set out at Appendix A are immaterial, both individually and in aggregate, to the financial statements as a whole.

Yours faithfully,
Section 151 officer

Appendix B: Draft audit report (subject to finalisation)

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) for the year ended 31 March 2023, which comprise the Comprehensive Income and Expenditure Statement, the Movement in Reserves Statement, the Balance Sheet, the Cash Flow Statement, Collection Fund statement,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 2022/23, as amended by the Update to the Code and Specifications for Future Codes for Infrastructure Assets (“the Code Update”), published in November 2022.

In our opinion, the financial statements:

give a true and fair view of the financial position of the Council as at 31st March 2023 and of its 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 2022/23 as amended by the Code Update.

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 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 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, and taking into account the requirements of the CIPFA/LASAAC Code of Practice on Local Authority Accounting in the United Kingdom 2022/23 as amended by the Code Update, 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 Director of Finance and Corporate Services with respect to going concern are described in the relevant sections of this report.

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. The Director of Finance and Corporate Services is responsible for the other information. 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 Director of Finance and Corporate Services for the financial statements

As explained more fully in the Statement of the Director of Finance and Corporate Services’ Responsibilities, the 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 2022/23 as amended by the Code Update, and for being satisfied that they give a true and fair view. The Director of Finance and Corporate Services is also responsible for such internal control as the 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 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 2022/23 as amended by the Code Update 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 Director of Finance and Corporate Services is responsible for assessing each year whether or not it is appropriate for the Council 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.

The extent to which our procedures are capable of detecting irregularities, including fraud is detailed below.

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 noncompliance 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.

To help us identify instances of non-compliance with these laws and regulations, and in identifying and
assessing the risks of material misstatement in respect to non-compliance, our procedures included, but were
not limited to:

inquiring with management and the Governance Scrutiny Group, as to whether the Council is in compliance with laws and regulations, and discussing their 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 which were contrary to applicable laws and regulations, including fraud.

We evaluated the 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 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 Director of Resources 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 February 2023.

A further description of our responsibilities for the audit of the financial statements is located on the Financial Reporting Council’s website. 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 2023.

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 January 2023, we have not identified any significant weaknesses in arrangements for the year ended 31 March 2023.

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 Accounting Officer

The Council is responsible for putting in place proper arrangements to secure economy, efficiency and effectiveness in the Council’s 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, and to report where we have not been able to satisfy ourselves that it has done so. 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 January 2023.

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;
the work necessary to satisfy ourselves that the Council] has made proper arrangements for securing economy, efficiency, and effectiveness in its use of resources.

Mark Surridge, Key Audit Partner
For and on behalf of Mazars LLP

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

Other communications
Other communication	Response
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 confirmations	We had delays in receiving one of the external confirmations from the counterparty, despite being chased by both the finance team and audit. However, we have now received all 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: they have disclosed to us the identity of related parties and all the related party relationships and transactions of which they are aware; and 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 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. We will obtain written representations from management, confirming that all relevant information covering a period of at least 12 months from the date of approval of the financial statements has been taken into account in assessing the appropriateness of the going concern basis of 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 Those Charged With Governance, confirming that they acknowledge their responsibility for the design, implementation and maintenance of internal control to prevent and detect fraud; 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; 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 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.

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