2008-2009 - Annual Audit Letter - Merseyside Fire and Rescue Authority v1.0
Description
Annual Audit Letter Merseyside Fire And Rescue Authority Audit 2008/09 December 2009 Contents Key messages 3 Financial statements and annual governance statement 5 Value for money and use of resources 8 Closing remarks 11 Appendix 1 – Audit fees 12 Status of our reports The Statement of Responsibilities of Auditors and Audited Bodies issued by the Audit Commission explains the respective responsibilities of auditors and of the audited body. Reports prepared by appointed auditors are addressed to non-executive directors/ members or officers. They are prepared for the sole use of the audited body. Auditors accept no responsibility to: • any director/member or officer in their individual capacity; or • any third party. Key messages Key messages This annual audit letter summarises the key issues arising from my audit of the 2008/09 accounts. It has been prepared to meet the requirements set out in the Statement of Responsibilities of Auditors and Audited Bodies issued by the Audit Commission. I have addressed this letter to Authority members as it is the responsibility of the Authority to ensure that arrangements are in place for the conduct of its business and that it safeguards and properly accounts for public money. Audit opinion 1 I gave an unqualified opinion on your 2008/09 financial statements on 28 September 2009. My draft audit report was included as Appendix 1 to my Annual Governance Report, as reported to the Authority ...
Informations
| Publié par | Choon |
| Nombre de lectures | 92 |
| Langue | English |
Extrait
Annual Audit Letter
Merseyside Fire And Rescue Authority
Audit 2008/09
December 2009
Contents Key messages Financial statements and annual governance statement Value for money and use of resources Closing remarks Appendix 1 Audit fees
Status of our reports The Statement of Responsibilities of Auditors and Audited Bodies issued by the Audit Commission explains the respective responsibilities of auditors and of the audited body. Reports prepared by appointed auditors are addressed to non-executive directors/ members or officers. They are prepared for the sole use of the audited body. Auditors accept no responsibility to: • any director/member or officer in their individual capacity; or any third party. •
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Key messages
Key messages This annual audit letter summarises the key issues arising from my audit of the 2008/09 accounts. It has been prepared to meet the requirements set out in the Statement of Responsibilities of Auditors and Audited Bodies issued by the Audit Commission. I have addressed this letter to Authority members as it is the responsibility of the Authority to ensure that arrangements are in place for the conduct of its business and that it safeguards and properly accounts for public money.
Audit opinion 1 I gave an unqualified opinion on your 2008/09 financial statements on 28 September 2009. My draft audit report was included as Appendix 1 to my Annual Governance Report, as reported to the Authority on 17 September 2009.
Financial statements 2 The financial statements were submitted for audit on time and were supported by clear working papers prepared by finance staff. Three material errors were identified in the financial statements and there were a number of non-material errors in the disclosure notes. The Executive Director of Resources adjusted the financial statements for the errors and amendments identified in Appendix 2 of my Annual Governance Report. The most significant changes in the accounts related to the valuation of the Authority's fixed assets. It is important that the Authority strengthens its asset management arrangements to ensure the asset register is comprehensive and that it remains up to date. 3 For the 2010/11 financial year the Authority needs to prepare its accounts under International Financial Reporting Standards (IFRS). Preparations are underway but there is more work to do to ensure the accounts are properly compiled under IFRS.
Value for money 4 I issued an unqualified value for money conclusion on 28 September 2009 confirming that the Authority had adequate arrangements to secure economy, efficiency and effectiveness in its use of resources. 5 I have completed my work on the Use of Resources assessment for 2008/09. Use of Resources is a scored judgement which determines how well Fire and Rescue Authorities manage and use their resources. I concluded that the Authority exceeded the minimum standards and is performing well.
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Key messages
6 The Authority continues to manage its finances effectively. It has a well established process of budget setting and monitoring that is integrated with operational planning. The Authority has invested heavily in working with communities across Merseyside developing partnerships and innovative ways of working to achieve its objectives. Whilst the overall assessment is positive there are areas where the Authority needs to improve and it is important that there is a continued focus on the modernisation and efficiency programmes.
Comprehensive Area Assessment and Organisational Assessment 7 The Audit Commission introduced a new assessment regime during 2009. The Comprehensive Area Assessment aims to review the performance of local partners in delivering better outcomes for local people. The assessment is designed to focus attention on areas that need attention in order to deliver additional and sustained improvement. Our work in this area is being led by the local Comprehensive Area Assessment Lead (CAAL). The CAAL has shared draft findings with officers and he will formally report on 9th December 2009. Alongside the CAA report we will issue our organisational assessment which combines our judgements on your use of resources and managing performance. Any issues arising will be discussed with you and planned into future years' audit and assessment activity.
Key issues 8 The main issues for Members to note are: • the unqualified opinion on the financial statements and the unqualified value for money conclusion; • the level 3 assessment of use of resources which reflects that the Authority is performing well; and • in order to maintain the overall strong position it is important that the Authority’s financial performance continues to be well managed and continued attention is given to workforce planning.
Independence 9 I can confirm that the audit has been carried out in accordance with the Audit Commission’s policies on integrity, objectivity and independence.
Audit fees 10 Details of my audit fees for 2008/09 are shown in Appendix 1.
Merseyside Fire And Rescue Authority 4
Financial statements and annual governance statement
Financial statements and annual governance statement The financial statements are an important means by which Merseyside Fire and Rescue Authority accounts for the stewardship of public money. The Authority is required to prepare its accounts by 30 June and I am required to issue my audit opinion by 30 September. Both deadlines were met. I gave an unqualified opinion which means that the financial statements present fairly the financial position of the Authority as at 31 March 2009.
Significant issues arising from the audit 11 In my annual governance report I reported to you that my audit was complete except for a number of elements including receipt of the necessary pension fund assurances. Before giving my opinion I received the necessary assurances from the pension fund auditor and cleared the outstanding matters. I issued an unqualified opinion on the Authority's financial statements on 28 September 2009. 12 My audit of the financial statements identified three material errors. I have summarised the errors and the action taken by the Authority to correct them in the table below. The Executive Director of Resources has adjusted the accounts to correct the errors that I have identified. Table 1 Summary of material amendments to the accounts
Description of the error Amount The Authorit ca italised ex enditure on £4.452m its ro ramme of smoke alarm installation and recorded the balance as a fixed asset.
The fixed assets balance included the £8.270m cost of vehicles and e ui ment that had been fully depreciated. Chan es to the national uidance on the £15.802m accountin for ensions to u rant were not reflected in the accounts.
Action taken The Authorit has re-classified smoke alarm ex enditure as revenue ex enditure funded from ca ital under statute and disclosed a rior eriod ad ustment for ex enditure incurred in previous financial years. The ad ustment removes the ross book value of full de reciated assets from the accounts. The ension fund to -u rant is now accounted for throu h the Authorit ’s Income and Expenditure Account.
13 The changes to the draft accounts shown in table 1 above did not affect the net Income and Expenditure figures and therefore the Authority’s reserves and balances.
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Financial statements and annual governance statement
Material weaknesses in internal control 14 I did not identify any weaknesses in the design or operation of an internal control that might result in a material error in your financial statements of which you are not aware. I reviewed the internal audit provision against the Chartered Institute of Public Finance and Accountancy (CIPFA) Code of Practice for Internal Audit in Local Government in the UK 2006 (the Code). My conclusion is that the Authority’s internal audit provision complies with the standards set out in the Code.
Accounting Practice and financial reporting 15 I considered the qualitative aspects of your financial reporting. 16 The audit identified the following areas where the procedures for compiling the financial statements could be further improved: • review the methodology for fixed asset valuation to ensure that assets are valued on the appropriate basis; • keep up to date and reconcile the asset register on a timely and regular basis; and • strengthen quality assurance arrangements for the production of the 2009/10 accounts.
International Financial Reporting Standards (IFRS) 17 In March 2008 the Treasury announced that the annual financial statements of government departments and other public sector bodies would be prepared using International Financial Reporting Standards (IFRS) from 2009/10 onwards. For local government bodies the first full year of application is the 2010/11 financial statements but the starting period for this (the transition date) is 1 April 2009. Local government bodies including Fire and Rescue Authorities will be required to produce their 2009/10 Whole of Government Accounts return on an IFRS basis. 18 As part of my 2008/09 audit I have completed an Audit Commission survey on the Authority's progress in preparing for the implementation of the IFRS. The Authority has started its preparations for IFRS. At the time of my audit, officers were preparing a project plan identifying the risk areas and the actions required to implement IFRS. However, officers recognise that, in keeping will many Fire and Rescue Authorities, considerable further work will be needed during 2009/10 to ensure required timeframes are met. In particular it is important that the Authority considers the implications of fixed asset component accounting and produces an analysis of assets across the four categories comprising structures, services, ground works and roofing.
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Financial statements and annual governance statement
Treasury management 19 As members will be aware developments in the banking sector have increased the focus on the effect of treasury management in public sector bodies. The Authority uses Liverpool City Council to manage its cash position and at the year end a total of £8m was placed with external bodies. As part of my 2008/09 audit, I completed a return on the Authority's Treasury Management arrangements. The Authority had no investments with Icelandic banks in 2008/09 and there were no key issues identified in my review. I noted that the Authority plans to review its Treasury Management framework following updated CIPFA guidance.
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Merseyside Fire And Rescue Authority
Value for money and use of resources
Value for money and use of resources I am required to conclude on whether the Authority has put in place proper arrangements for securing economy, efficiency and effectiveness in its use of resources. This is known as the value for money (VFM) conclusion. I am also required to assess how well the Authority is managing and using its resources by providing scored judgements on the Authority's arrangements in three specific themes.
VFM Conclusion 20 I concluded that the Authority had adequate arrangements in place to secure economy, efficiency and effectiveness in the use of resources. I gave an unqualified value for money conclusion on 28 September 2009. The value for money conclusion is largely based on the use of resources review, the details of which are set out below.
Use of resources judgements 21 In forming my scored use of resources judgements, I used the methodology set out in the use of resources framework . Judgements have been made for each key line of enquiry (KLOE) using the Audit Commission’s current four point scale from 1 to 4, where • 1 inadequate and below minimum standards; • 2 meets only minimum requirements performs adequately; • 3 exceeds minimum requirements performs well; and • 4 significantly exceeds minimum requirements performs excellently. 22 The Authority's final use of resources theme scores are shown in Table 2. The key findings and conclusions for the three themes are provided in Appendix 4 of my Annual Governance Report and summarised below. Table 2 Use of resources theme scores Use of resources theme Managing finances Governing the business Managing resources
Scored judgement 3 3 3
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Value for money and use of resources
23 Nationally the score of level 3 was achieved by 17 out of the 45 fire and rescue authorities and no authority achieved level 4. 24 The Authority's performance demonstrates that there is continued commitment to achieve value for money in the use of its resources. The theme scores of 3 reflect that the Authority continues to have arrangements that are above the minimum requirements and these arrangements assist the Authority in achieving its strategic goals.
Managing finances 25 The Authority continues to make progress in the way that it manages its financial resources. Over the last year the Authority's financial management arrangements were particularly effective. The Authority has a good track record of delivering efficiency savings and took significant action to plan its finances and maintain its spending within the available resources. In 2009/10 the Authority has approved a number of options to deliver the savings target of £3.872m and the implementation plans are progressing well. As at the end of September 2009, savings of £2.862m have been formally allocated within the budget, leaving £1.010m to be approved and allocated.
Governing the business 26 The Authority has a clear vision for the role of fire and rescue services in Merseyside and actively engages with the local community to shape and deliver the service. It continues to promote the importance of home fire safety while maintaining a focus on the importance of operational response. The Authority is working with communities across Merseyside to develop partnerships and innovative ways of delivering the service. The Authority recognises that there is scope to improve its understanding of the way in which the resources allocated to the key partnerships, and the contribution they make, deliver the Service's priorities.
Managing resources - workforce planning 27 The Authority plans, organises and develops its workforce effectively by focusing on current and future capacity and skills issues. The Authority maintains the skills of its workforce through a programme of training and development. Staff costs have been reduced through the modernisation of working practices including approaches such as the LLAR system. Levels of sickness and the number of shifts lost are reducing due to firmer absence management and the promotion of healthier lifestyles. The Authority is working to improve the diversity of its workforce and is beginning to see some success by increasing the number of applications from under represented groups.
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Value for money and use of resources
28 The Authority, as with some other parts of the public sector, is in a situation where it has to reduce staff numbers and this presents a number of challenges and risks. Members should ensure the Authority continues to have robust workforce planning arrangements in place and that the risks associated with any approach are understood and addressed. It is important that in key skills areas that progress is made in identifying and developing new talent and members should be mindful of the increased focus and sensitivity on public sector pension and remuneration packages.
National Fraud Initiative 29 The National Fraud Initiative (NFI) is a data matching exercise that compares sets of data between public bodies to identify inconsistencies or other circumstances that might indicate fraud or error. It also helps auditors to assess the arrangements that audited bodies have put in place to deal with fraud. The data matches from the current exercise were released to participating bodies, including the Authority in June 2009. 30 At the end of November 2009 the Authority has successfully investigated and cleared 400 of the 703 data matches. It is important that the remaining investigation is completed and the outcome reported to the Performance and Audit Committee.
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Closing remarks
Date issued May 2008 September 2009 October 2009 December 2009
Closing remarks 31 I have discussed and agreed this letter with the Chief Fire Officer and the Executive Director of Resources. I will present this letter at the Authority on 17 December 2009 and will provide copies to all members. 32 Further detailed findings, conclusions and recommendations in the areas covered by our audit are included in the reports issued to the Authority during the year. Table 3 Report Audit plan Annual Governance Report Final accounts memorandum Annual audit letter 33 The Authority has taken a positive and constructive approach to my audit. I wish to thank your staff for their support and co-operation during the audit. Robin Baker Engagement Lead December 2009
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