ITEM NO: 7 · presentational changes to the accounts, as detailed in the Audit Findings report (Appendix 1). ... financial resilience. It is a key tool is assessing how well the

ITEM NO: 7

Report To: OVERVIEW (AUDIT) PANEL

Date: 30 September 2014

Reporting Officer: Councillor J M Fitzpatrick - First Deputy Performance and Finance

Pam Williams – Executive Director of Finance

Subject: AUDIT FINDINGS REPORT (ISA 260)

Report Summary: This report highlights the key matters arising from Grant Thornton’s audit of the 2013/14 financial statements of both Tameside MBC and Greater Manchester Pension Fund, (Appendix 3) which Grant Thornton is required to report under the Audit Commission’s Code of Audit Practice and the International Standard of Auditing.

Recommendations: It is recommended that the Panel:

1. Considers the matters raised in the report. 2. Notes the positive relationship with the audit team

and successful progress of the audit. 3. Agrees to the small number of adjustments and

presentational changes to the accounts, as detailed in the Audit Findings report (Appendix 1).

4. Agrees the action plan included in the Audit Findings report (Appendix 1).

5. Notes the value for money conclusion included in the Audit Findings report (Appendix 1).

6. Confirms that the Council has complied with all matters set out in the Letter of Representation and ensure that a signed copy is forwarded to the External Auditor (Appendix 2).

Financial Implications:

(Authorised by the Borough Treasurer)

The Statement of Accounts sets out full details of the Council’s financial position as at 31 March 2014. The audit process ensures that this position is stated clearly and accurately in line with the relevant guidance. The Council has adequate reserves and balances to help it meet the requirements of future years’ budgets and contingent liabilities, which are set out in the report.

Legal Implications:

(Authorised by the Borough Solicitor)

This is the annual report/assessment prepared by our external auditors following the audit of the financial statements/accounts and consideration of the Council’s financial resilience. It is a key tool is assessing how well the Council is performing in respect of its finance and governance.

Policy Implications: There are no policy implications flowing from the Statement of Accounts.

Risk Management: The audit provides external verification of the Council’s financial statements.

Access to Information: The background papers relating to this report can be inspected by contacting the report writer, Ben Jay, Assistant Executive Director - Finance by:

Telephone:0161 342 3864

e-mail: [email protected]

mailto:[email protected]

1.0 BACKGROUND 1.1 The Audit Findings Report (ISA260), as attached at Appendix 1, is a standard report

delivered by the External Auditors – Grant Thornton. 1.2 The report highlights the key issues following the results of the audit carried out by Grant

Thornton on the Council’s Statement of Accounts for the year ended 31 March 2014. A separate report, also on this agenda, considers the audit of the accounts of the Greater Manchester Pension Fund. Once these two reports have been considered, the audited accounts can be agreed (subject to any further changes that are proposed by the Panel).

1.3 Many of the terms used in the report are defined and have precise meanings. Grant

Thornton has guideline formulae which specify the importance of any adjustments they recommend. These are specific to each Council, but any recommended changes must be considered for their individual and overall impact on the accuracy of the accounts as well as for the specific value of the change. For Tameside MBC, amounts around £100,000 or less are regarded as ‘trivial’. Amounts which are above this level but (in total) less than about £10m are described as ‘non-trivial. Cumulative amounts above £10m are regarded as material, although this may vary for different statements.

2.0 INTRODUCTION

External Auditor – Grant Thornton 2.1 This is the second year that Grant Thornton has audited the accounts. The Panel will be

aware that subsequent to the Department for Communities and Local Government announcing that the Audit Commission had been wound up, audit work within the North West Region is now carried out by Grant Thornton.

Financial Statements

2.2 There have been minimal changes in the requirements for the 2013/14 accounts. Details of

the proposed accounting policies, critical judgements made in applying the accounting policies and assumptions made about the future and other major sources of estimated uncertainty within the accounts were outlined to Members in June 2014, in preparation for the closure of the accounts.

2.3 The accounts have been prepared by Officers on behalf of the Council. Following the

conclusion of the audit, possible adjustments are recommended to the Panel by Grant Thornton, as set out in the Audit Findings report in Appendix 1.

3.0 OUTCOMES OF THE AUDIT 3.1 This year has again proved to be a very challenging year to close the accounts. The

finance team has continued to reduce in size following the previous service review and efficiencies have needed to be embedded into the closure process for 2013/14.

3.2 Despite these challenges, the year end closure of the accounts and the subsequent

external audit process has been completed within the statutory timescales and the conclusion of the audit indicates that the accounts continue to be prepared to a high degree of accuracy and reliability. Members should take considerable reassurance from the reliability of the accounts. Once again, this year the auditors have been very positive about the overall quality of the accounts and they have commented on the high level of support given by Council Officers.

3.3 The audit identified a small number of adjustments and presentational changes to the accounts, as detailed in the Audit Findings report prepared by Grant Thornton (attached at Appendix 1). Members are advised that none of the adjustments altered the reported surplus on the Council’s General Fund Balance. A number of changes were made to improve the disclosure notes to the financial statements, but these had no impact on the overall financial position of the Council.

3.4 It should be noted that the absence of any impact from these changes on the General Fund

Balance confirms that they are technical and presentational and do not change the financial position of the Council first calculated by Officers.

3.5 Officers are currently reviewing the outcomes of the audit and the recommendations arising

from it to identify changes needed to improve the closure process in 2014/15. 4.0 LETTER OF REPRESENTATION 4.1 Appendix 2 includes the Council’s Letter of Representation for 2013/14. The Panel are

asked to confirm that the Council has complied with all matters set out in the Letter of Representation and ensure that a signed version is forwarded to the External Auditor.

5.0 VALUE FOR MONEY 5.1 Grant Thornton is also required to provide a value for money conclusion. The conclusion

as set out in Section 3 of the Audit Findings Report (Appendix 1) follows a review of the arrangements put in place by the Council to:

Secure economy, efficiency and effectiveness in its use of resources.

Ensure proper stewardship and governance.

Review regularly the adequacy and effectiveness of these arrangements. 5.2 Grant Thornton is required to give a value for money conclusion based on two criteria:

1) Proper arrangements in place for securing financial resilience.

2) Proper arrangements for challenging how it secures economy, efficiency and

effectiveness. 5.3 The outcome of this detailed review is included in Section 3 of the Audit Findings Report

(Appendix 1). The key findings from this are as follows: 5.4 Grant Thornton has issued an unqualified value for money conclusion stating that the

Council has proper arrangements for challenging how it secures economy, efficiency and effectiveness in its use of resources.

5.5 The Council remains better placed compared to most peer authorities to deal with the

current and anticipated financial environment within Local Government. 5.6 The Council continues to respond well to the challenges of the Local Government Finance

Settlement, delivering savings and targeting its resources effectively.

6.0 RECOMMENDATIONS 6.1 As set out in the attached report, it is recommended that the Panel:

Considers the matters raised in the report.

Notes the positive relationship with the audit team and successful progress of the audit.

Agrees to the small number of amendments to the accounts that have been included in the audited statement of accounts.

Agrees the action plan included in the Audit Findings Report.

Notes the value for money conclusion included in the Audit Findings Report

Confirms that the Council has complied with all matters set out in the Letter of Representation and ensure that a signed copy is forwarded to the External Auditor

© 2014 Grant Thornton UK LLP | TMBC ISA260 Audit Findings Report | September 2014

The Audit Findings (ISA260 Report) for

Tameside Metropolitan Borough Council

Year ended 31 March 2014 – Appendix 1

9 September 2014

Cover page

Mark Heap

Engagement Lead

T 0161 953 6900

E [email protected]

Gareth Mills

Engagement Manager

T 0113 200 2535

E [email protected]

Mark Stansfield

Engagement In-charge

T 0161 234 6356

E [email protected]

© 2014 Grant Thornton UK LLP | TMBC ISA260 Audit Findings Report | September 2014 2

Contents

Section Page

1. Executive summary 3

2. Audit findings 6

3. Value for Money 16

4. Fees, non audit services and independence 18

5. Communication of audit matters 20

Appendices

A Action Plan

B Proposed Audit Opinion

C Proposed Letter of Representation

Contents

The contents of this report relate only to those matters which came to our

attention during the conduct of our normal audit procedures which are

designed primarily for the purpose of expressing our opinion on the financial

statements. Our audit is not designed to test all internal controls or identify all

areas of control weakness. However, where, as part of our testing, we identify

any control weaknesses, we will report these to you. In consequence, our work

cannot be relied upon to disclose defalcations or other irregularities, or to

include all possible improvements in internal control that a more extensive

special examination might identify.

We do not accept any responsibility for any loss occasioned to any third party

acting, or refraining from acting on the basis of the content of this report, as

this report was not prepared for, nor intended for, any other purpose.


Section 1: Executive summary

01. Executive summary

02. Audit findings

03. Value for Money

04. Fees, non audit services and independence

05. Communication of audit matters


Executive summary

Executive summary

Overall review of

financial

statements

Purpose of this report

This report highlights the key matters arising from our audit of Tameside

Metropolitan Borough Council's ('the Council') financial statements for the year

ended 31 March 2014. It is also used to report our audit findings to management

and those charged with governance in accordance with the requirements of

International Standard on Auditing 260 (ISA).

Under the Audit Commission's Code of Audit Practice we are required to report

whether, in our opinion, the Council's financial statements present a true and fair

view of the financial position, its expenditure and income for the year and whether

they have been properly prepared in accordance with the CIPFA Code of Practice

on Local Authority Accounting. We are also required to reach a formal conclusion

as to whether or not the Council has put in place proper arrangements to secure

economy, efficiency and effectiveness in its use of resources (the Value for Money

conclusion).

Introduction

In the conduct of our audit we have not had to alter or change our planned audit

approach, which we communicated to you in our Audit Plan dated 23 April 2014.

Our audit is substantially complete although we are finalising our procedures in the

following areas:

• completion of a small number of tests and review of the work done on PPE,

PFI accounting, provisions, remuneration expenses and operating expenses,

including obtaining the bank confirmation letter

• the audit of the Council's Whole of Government Accounts (WGA) submission

• updating the manager and engagement lead review of our audit file

• review of the revised version of the financial statements

• obtaining and reviewing the management letter of representation

• updating our post balance sheet events review, including key Council meeting

minutes, to the date of signing the opinion.

We received the draft financial statements and accompanying working papers on 30

June - the statutory deadline. The financial statements and supporting working

papers submitted for audit built on the improvements we highlighted last year.

However, we have raised some new recommendations that would assist us in

relation to strengthening initial working papers to support key movements in the

accounts (for example, the movement in non-current asset valuations).

The Government is currently consulting on proposals to bring forward audit and

opinion deadlines perhaps to as early as 31 July by 2017-18. We have agreed to

work in partnership with the Council to bring forward the date of the audit opinion

in the run up 2018 to ensure both the Council and ourselves are appropriately

prepared. The development of some of the Council's initial working papers -

particularly in the key areas of estimate and judgement - will be key factors in

ensuring earlier sign offs are achieved.

Key issues arising from our audit

Financial statements opinion

We anticipate providing an unqualified opinion on the financial statements at the

Overview (Audit) Panel on 30 September 2014.

At the time of producing this report, we have not identified any fundamental

adjustments affecting the primary statements or the level of useable reserves.

We did identify a small a number of amendments to enhance the disclosures and

the presentation of the notes to the accounts and some of the more significant

presentational changes are detailed in section two.


Executive summary

Overall review of

financial

statements

The key messages arising from our audit of the Council's financial statements are:

• the draft accounts and working papers continued to build on the improvements

noted in 2012-13 and we will be working closely with the finance team to

further enhance the process for 2014-15 as we both plan for the anticipated

earlier accounts sign off dates in future years

• the audit did not identify any material misstatements that impacted on the level

of useable reserves

• the audit identified a small number of adjustments and presentational changes.

Further details are set out in section two of this report.

Value for money conclusion

We are pleased to report that, based on our review of the Council's arrangements

to secure economy, efficiency and effectiveness in its use of resources, we propose

to give an unqualified VFM conclusion.

Further detail of our work on Value for Money is set out in section three of this

report.

Whole of Government Accounts (WGA)

We will complete our work in respect of the Whole of Government Accounts in

accordance with the national timetable. We will update the Overview (Audit)

Panel on 30 September with any significant issues arising from our WGA review, if

applicable.

Controls

The Council's management is responsible for the identification, assessment,

management and monitoring of risk, and for developing, operating and monitoring

the system of internal control.

Our audit is not designed to test all internal controls or identify all areas of control

weakness. However, where, as part of our testing, we identify any control

weaknesses, we report these to the Council.

Whilst our work has not identified any significant control weaknesses within the

Council's financial systems our audit did identify a limited number of areas where

controls and/or procedures could be enhanced.

Further details are provided within section two of this report with corresponding

recommendations highlighted in the Action Plan at Appendix A.

The way forward

Matters arising from the financial statements audit and review of the Council's

arrangements for securing economy, efficiency and effectiveness in its use of

resources have been discussed with the Assistant Executive Director of Finance

and the senior finance team throughout the audit.

This report has been discussed and agreed with the Assistant Executive Director

of Finance and his senior finance team at the accounts clearance meeting on 12

September 2014 and is due to be presented to the Overview (Audit) Panel on 30

September 2014. We will provide a verbal update to the Overview (Audit) Panel

on any further significant developments in our audit findings.

We anticipate providing an unqualified opinion on the Council’s financial

statements, following approval of the accounts by the Overview (Audit) Panel on

30 September 2014. Our proposed audit opinion is included at Appendix B and

the draft Letter of Representation is attached at Appendix C.

Acknowledgment

We would like to take this opportunity to record our appreciation for the

assistance provided by the finance team and other staff during our audit. Our

engagement with and cooperation from key finance staff helped to ensure the

continued improvement in the accounts audit process.

Grant Thornton UK LLP

September 2014


Section 2: Audit findings


02. Audit findings

03. Value for Money




Audit findings against significant risks

Risks identified in our Audit Plan Work completed Assurance gained and issues arising

1. Improper revenue recognition

Under ISA 240 there is a presumed risk that revenue

may be misstated due to improper recognition.

We have performed the following work:

review and testing of revenue recognition policies

Identification of significant revenue streams

testing of material revenue streams

review of unusual significant transactions.

Our audit work has not identified any issues in respect of

revenue recognition.

2. Management override of controls

Under ISA 240 there is a presumed risk of

management over-ride of controls.

We have performed the following work:

review of accounting estimates, judgements and

decisions made by management

testing of journal entries

review of unusual significant transactions


decisions made by management.

Our audit work has not identified any evidence of

management override of controls. In particular the

findings of our review of journal controls and testing of

journal entries has not identified any significant issues.

However, we did note a minor issue regarding the input

fields for dating journals. We discuss this point in more

detail on page 14.

We set out later in this section of the report our work and

findings on key accounting estimates and judgements,

and associated recommendations.

Audit findings

Significant findings

"Significant risks often relate to significant non-routine transactions and judgmental matters. Non-routine transactions are transactions that are unusual, either due to size

or nature, and that therefore occur infrequently. Judgmental matters may include the development of accounting estimates for which there is significant measurement

uncertainty" (ISA 315).

In this section we detail our response to the significant risks of material misstatement which we identified in the Audit Plan. As we noted in our Plan, there are two

presumed significant risks which are applicable to all audits under auditing standards.


Audit findings against other risks

Transaction cycle Description of risk Work completed Assurance gained & issues arising

Operating expenses

Trade creditors /

accruals

Operating expenses / creditors

understated or not recorded in

the correct period

We have undertaken the following work in relation to this risk:

updated our understanding and documentation of the accounting system

processes and key controls

walkthrough of key controls to determine whether controls are designed

effectively

in conjunction with internal audit, we tested a sample of operating expenses

from the first nine months of the year to gain assurance that expenditure has

been appropriately expensed during 2013-14.

we carried out top up testing of a further sample of expenditure from the last

quarter of 2013-14.

reviewed large and unusual expenditure items and creditor balances

performed substantive testing on a sample of items of post year-end

payments to gain assurance that expenditure has been correctly classified,

occurred and recorded in the appropriate accounting period.

Our audit work to date has not

identified any significant issues in

relation to the risk identified.

Employee

remuneration

Employee remuneration

accrual understated


updated our understanding and documentation of the accounting system

processes and key controls

walkthrough test of key controls to determine whether controls are designed

effectively

in conjunction with internal audit, we tested a sample of payroll costs from the

first nine months of the year to gain assurance that employees have been

remunerated at the correct rates during 2013-14.

we carried out top up testing of a further sample of payroll costs from the last

quarter of 2013-14

tested disclosure of sensitive items of payroll expenditure.

Our audit work to date has not

identified any significant issues in

relation to the risk identified.

Audit findings


(continued)

In this section we detail our response to the other risks of material misstatement which we identified in the Audit Plan. Recommendations, together with management

responses, are attached at Appendix A.


Audit findings against other risks (continued)


Welfare expenditure Welfare benefits improperly

computed

We have undertaken the following work in relation to

this risk:

documentation of our understanding of processes

and key controls over the transaction cycle

walkthrough of the key controls to determine if

those controls are designed effectively

substantive testing of a sample of benefit

payments to individual claimants to support our

audit opinion on the accounts and our certification

of the Housing Benefit Subsidy claim.

Building on the improvements we reported last year, we have

continued to work closely with the Council's benefits team in

planning and performing our work on the Housing Benefit subsidy

claim.

Our audit work has not identified any significant issues in relation

to the risk identified.

There are some non-significant issues noted from our testing of

individual benefit claimants but these are not material to the

Council's accounts. We will report our findings from the Housing

Benefit work in our Grants Report later in the year.

Property, plant &

equipment

PPE activity not valid &

revaluation measurement

not correct

We have undertaken the following work in relation to

this risk:

updated our understanding and documentation of

the accounting system process and key controls

walkthrough of key controls to determine whether

controls are designed effectively

substantive testing of sample of additions and

disposals, and testing of existence and ownership

reviewed the arrangements put in place by the

Council to obtain asset valuations

agreed a sample of revaluation entries to

information provided by the valuer

reviewed related disclosures in the accounts

Our audit work has not identified any significant issues in relation

to the risk identified.

In common with a number of local authorities, we have identified

that the Council's arrangements for periodic revaluation of land

and buildings is not strictly compliant with the Code of Practice

and have raised a recommendation on this matter in the Action

Plan at Appendix A. [Rec 1]

We discussed the significant decrease of £84m in PPE valuation

in 13-14 with the finance team. Many of the assets subject to

valuation this year were specialised assets being valued by the

Council's external valuers for the first time and included the main

Tameside Administrative Centre building which is due for

demolition as part of the Vision Tameside project.

We are satisfied that the valuations recognised in the balance

sheet are appropriate and that those assets not subject to

revaluation in 13-14 do not have a materially different value to

their current carrying fair value at 31 March 2014. However, we

have raised a recommendation to strengthen the Council's initial

documentation to support the movement in this key area of

estimate and judgement for 2014-15. [Rec 2]


Accounting policies, estimates & judgements and other issues

Accounting area Summary of policy Comments Assessment

Revenue

recognition

Revenue from the provision of services is

recognised when the Council can measure reliably

the level of completion of the transaction and it is

probable that benefits will flow to the Council

Government Grants are recognised when there is

reasonable assurance that the Council will

comply with any conditions attached to the

payments.

The Council's policy is appropriate and consistent with the relevant accounting

framework set out in the CIPFA Code. Minimal judgement is involved and the

Council accounting policy is appropriately disclosed.

Green

Judgements and

estimates

Key estimates and judgements include:

useful life of capital equipment

pension fund valuations and settlements

revaluations

impairments

provisions and contingent liabilities

review for post balance sheet events.

We have noted the 'accounting policies and estimates' paper that was

presented to the Audit Panel in June 2014 and see this as good practice by

the Council to highlight to members those areas of the accounts that are

subject to estimate and judgement.

Our audit work has not identified any significant issues on estimates and

judgements. However, there continues to be scope to develop the

documentation of the Council's judgement in respect of accounting for

provisions and contingent liabilities and reviewing for events after the balance

sheet date. In our prior year Audit Findings Report, and reiterated in our Audit

Plan in April 2014, we raised a recommendation for the Council to document

its assessment in these key areas with reference to the relevant Accounting

Standard and latest legal advice.

Given the potential impact that provisions and crystallising contingent liabilities

could have on the Council's financial position, and the Council's wish to bring

forward future audit opinion sign off dates, we recommend that formal

documentation of these areas is reflected in the initial working papers for

2014-15. [Rec 3]

Green

(with some

improvements

identified)

Accounting

policies

The Council has adopted accounting policies in

accordance with the Local Government Code of

Accounting Practice.

We have reviewed the Council's policies against the Code and do not have

any comments to make. We note that the Council's accounting policies have

been presented to and agreed by the Audit Panel in June 2014.

Green

Assessment

Marginal accounting policy which could potentially attract attention from regulators Accounting policy appropriate but scope for improved disclosure Accounting policy appropriate and disclosures sufficient

Audit findings


– accounting

policies#

In this section we report on our consideration of accounting policies, in particular revenue recognition policies, and key estimates and judgements made and included

with the Council's financial statements.


Accounting policies, estimates & judgements and other issues

Accounting area Summary of issue from our audit planning Comments

Airport Valuation We have reviewed the work of the Council's expert on the valuation of

the Council's non voting minority shareholding in the Manchester

Airport Group.

Our audit work has not identified any significant issues in relation to the

valuation of the airport within the Council's accounts.

Property, plant and

equipment (PPE)

accounting,

including:

• "non-enhancing"

capital

expenditure

• Review of the

Council's PFI

schemes.

We have discussed a number of accounting issues in relation to PPE (fixed assets) accounting with senior members of the finance team, including:

• the treatment of "non-enhancing" capital expenditure and the need to ensure significant in-year capital expenditure is valued on a timely basis to ensure assets are not artificially overstated in value

• requesting that the Council shares the original Operator's financial model and signed Project Agreements for the Council's three PFI schemes to inform our audit of the Council's PFI schemes.

As part of our final accounts audit we reviewed these areas and our summary

findings are noted below:

• following our discussion on "non-enhancing" capital expenditure, the Council

has agreed to ask its valuers to perform a valuation of all in-year capital

expenditure schemes over £750k at the start of the subsequent financial year.

This will ensure that the risk of potential over-statement of asset values is

reduced going forward

• we obtained the original PFI models and signed agreements for all three

schemes. There were no significant issues arising from our review of the

schemes or in the accounting entries and disclosures in the 2013-14 accounts.

Accounting for the

share of the Greater

Manchester Pension

Fund (GMPF)

In our audit of the 2012-13 accounts we raised a significant adjustment (albeit one that did not affect the Council's useable reserves) in relation to the Council's share of the Pension Fund deficit.

During our interim audit, we discussed the Council's 2013-14 proposed approach to the valuation of its share of the Pension Fund with the Director of Finance who confirmed that the Council would be obtaining a valuation on a consistent basis with other GM authorities.

Our audit work on the Council's accounting for its share of the Greater

Manchester Pension Fund, and associated IAS19 accounting requirements and

disclosures, did not highlight any significant issues to report to those charged with

governance.

Collection Fund

review, including

non-domestic

business rates

appeals

The Business Rates Retention Scheme came into force on 1 April 2013. The Scheme includes the requirement to settle successful rating appeals from Council funds, including not only claims from April 2013 but claims relating to the period before the introduction of the new Scheme.

Appeals are made to the Valuation Office (VO). Therefore there is a risk that the Council may not know the full extent of appeals, possibly impacting on the Council's calculation of a reliable estimate for any provisions for the 2013-14 accounts.

We discussed the issue of the business rate appeals £3.3m provision disclosed in

the Collection Fund (of which £1.65m relates to the Council) with senior members

of the finance team and concluded it was a reasonable estimate to be included in

the 2013-14 accounts.

Our audit work on the Collection Fund, including balances for non-domestic rates

appeals, did not highlight any significant issues to report to those charged with

governance. Our audit work demonstrated that the Collection Fund showed a true

and fair view, free from material misstatement; a good outcome in a year of

change.

Audit findings


– accounting

policies#


Accounting policies, estimates & judgements and other issues Accounting area Summary of issue Comments

Future

accounting

developments:

• Accounting for

schools

We have previously highlighted that future changes to accounting for schools will be introduced by CIPFA, following the publication of the CIPFA consultation in relation to the different types of schools which will be 'on' and 'off' balance sheet.

It is now confirmed that all maintained schools will come on balance sheet from 2014-15 and, as a change in accounting policy, the prior year comparatives will require restating as at 1 April 2013.

Currently, the Council only includes Community schools as assets on its balance sheet, however, from 2014-15, foundation voluntary aided and voluntary controlled schools will all be recognised. Academies and free schools will continue to remain outside of the Council's balance sheet.

We have discussed the latest schools accounting guidance with the Council's

senior finance team and will be working with them to support the recognition and

restatement in 2014-15.

In order to ensure the Council's preparations for the accounting change are

robust, we recommend the Council:

• Liaises with its valuers in order to establish appropriate valuations for those

schools that will need to be recognised for the first time, including their

opening valuation as at 1 April 2013

• Reviews any previous capital related spend on these schools to ensure this

taken into account in any valuation

• Reviews any long term leases in place at these schools for any potential

equipment that needs to be capitalised by the Council eg leased computers .

[Rec 4]

Future

accounting

developments:

• Transport

infrastructure

accounting

Looking further ahead to 2016-17, infrastructure assets (such as roads,

bridges, street lighting) will be required to be recognised in the Council's

accounts from 2016-17, with a restatement requirement of 1 April 2015.

This is likely to have a significant impact on the Council's balance sheet

as the roads network represents by far the biggest asset the public sector

holds. In order to support this significant development, CIPFA's has

produced LAAP Bulletin 100 'Project Plan for Implementation of the

Measurement Requirements for Transport Infrastructure Assets by 2016-

17'.

We are aware from discussions with the senior finance team that the Council has

reviewed the LAAP Bulletin and noted the consequences and requirements in

order to prepare for this major change in local authority accounting.

Given the impact of this issue, we recommend the Council formally produces an

action plan, in line with that suggested in LAAP 100, including considering a 'dry-

run' in 2014-15. [Rec 5]

As with the schools accounting developments noted above, we are keen to work

closely with the Council on this matter and will be including this on our agenda for

our planning meetings next year to monitor the Council's progress.

Audit findings


– accounting

policies#


Disclosure changes Audit findings

Adjusted

misstatements

Adjustment type Value

£'000

Account balance Summary of the change and impact on the financial statements

1 Disclosure Net nil Debtors

Note 24

Presentational change within Note 24 to move £4.6m of debtors initially disclosed in 'other entities and

individuals' into £3m of NHS debtors, £1.2m of central government debtors and £0.4m of local

authority debtors. There is no change to the overall total of debtors.

2 Disclosure (70) Movement in Reserves

& School Balances

Note 28

The Council prepared its draft accounts at a time when school balances were being finalised and an

estimated balance was included. The process was completed during our audit and an adjustment of

£70k to decrease the schools balances has been processed.

3 Disclosure Net nil Cashflow Statement &

Notes 37 and 38

Presentational change to increase 'interest paid' by £195k offset by a corresponding reduction in the

movement in 'creditor'. A further change was made to the 'investing activities' breakdown in note 38

principally in relation to the entry for 'purchase of non-current assets'. There is no net effect arising from

these presentational changes given that the cashflow statement balances overall.

4 Disclosure Net nil Grant Income

Note 9

A presentational change to move £86k from 'Disabled Facilities Grant' and 'Other Capital Grants and

Contributions' within note 9.

5 Disclosure 1,196 Financial Instruments

Note 21B

A disclosure change to the fair value amount of PWLB debt in order that the figure agreed to the third

party confirmation correspondence received from PWLB.

6 Disclosure Nil Manchester Airport

Note 21A

An update to the narrative disclosure to reflect that the financial statements for the airport become

available during the period between the draft and final Council accounts.

7 Disclosure (11) Audit Fee

Note 47

A disclosure change to decrease the 'fees payable in respect of other services provided by the appointed

auditor' by £13k. Removing £2k in respect of National Fraud Initiative costs payable to Audit

Commission (not Grant Thornton) and £11k of our non-audit costs that were already disclosed in the

2012-13 comparative audit fees.

Also an addition of £2k to the 'fees payable to the external auditors with regard to external audit

services' to reflect the additional fee for auditing material business rates, as discussed on page 19.

8 Disclosure Net nil Note 15 A presentational change to re-analyse the split of fair values at the year-end contained within the

revaluation table in note 15.

The table below provides details of misclassification and disclosure changes identified during the audit which have been made in the final set of financial statements (this

excludes typographical, trivial differences of below £250k or non-sensitive changes).


Internal controls The purpose of an audit is to express an opinion on the financial statements.

Our audit included consideration of internal control relevant to the preparation of the financial statements in order to design audit procedures that are appropriate in the

circumstances, but not for the purpose of expressing an opinion on the effectiveness of internal control. The matters reported here are limited to those deficiencies that

we have identified during the course of our audit and that we have concluded are of sufficient importance to merit being reported to you in accordance with auditing

standards.

These and other recommendations, together with management responses, are included in the Action Plan attached at Appendix A.

Assessment Issue and risk Recommendations

1.

Green

Review of Information Technology (IT) controls:

Our information systems specialist has performed a high

level review of the general IT control environment, as

part of the overall review of the internal controls system.

In common with other public sector bodies, our work on reviewing high level IT controls,

whilst not identifying any significant issues, did identify a minor weakness around password

controls. This recommendation is accepted good practice and is reflected in the Action

Plan at Appendix A. [Rec 6]

2.

Green

(with some

improvements

identified)

Review of Journals:

Our risk based review of journals processed by the Council

in 2013-14 overall was satisfactory. However, we did

identify a minor issue around the potential for one of the

two input dates to be altered and updated by the inputter.

Whilst we have gained assurance that nobody had altered journal input dates

inappropriately, this issue did raise the potential risk of manipulating the dating of journals

around period and year-ends.

In order to reduce the risk of inappropriate dating of journals, the Council should consider

how to prevent the system from allowing input date changes. The Council should also

perform a periodic review of journals for any that have been subject to a change of date to

ensure any changes are reasonable. [Rec 7]

3.

Amber

Follow up of prior year recommendations – the

Markazi Jamia mosque constructed in 2011-12:

Whilst again the Council can demonstrate progress in

implementing the prior year recommendations raised, we

note that the mosque in Ashton-under-Lyne - constructed

after the previous building had to be demolished to make

way for the Northern Bypass - has still to be legally

transferred over to the Trustees of the mosque.

The mosque was derecognised in the 2011-12 accounts and has no value or impact on

the 2013-14 accounts.

We have raised this issue in the three previous years' audit reports. Legal ownership is

still to formally pass to the mosque Trustees, the Council could be liable for any structural

or internal damages that may occur prior to the legal transfer.

As a result, we have once again raised this issue in the Action Plan and we recommend

the Council resolves this matter as soon as possible. [Rec 8]

Audit findings

Assessment (Red) Significant deficiency – risk of significant misstatement (Amber) Deficiency – risk of inconsequential misstatement (Green) Minor finding – best practice to implement

Internal controls


Other communication requirements

Issue Commentary

1. Matters in relation to fraud We have previously discussed the risk of fraud with the Audit Panel and have been made aware of a number of small non-material frauds

as noted in the report of the Head of Risk Management and Audit Services. These frauds do not impact on our audit opinion and we have

not been made aware of any other incidents in the period and no other issues have been identified during the course of our audit

procedures.

2. Matters in relation to laws and

regulations

We are not aware of any significant incidences of non-compliance with relevant laws and regulations.

3. Written representations A standard letter of representation has been requested from the Council and is detailed at Appendix C. It is anticipated this will be signed

at the Overview (Audit) Panel on 30 September 2014.

4. Disclosures Our review found no material omissions in the financial statements. Management have amended the accounts and narrative notes for

the disclosure changes noted on page 13.

5. Matters in relation to related

parties

Both the Council and ourselves performed a review of members' and senior managements' declarations and cross-referenced these to a

review of Companies House to consider any potential under-reporting of interests and related parties. In common with other local

authorities, to further enhance the governance in this area (in line with section 3.9.2.1 of the Code), we have recommended that this

review is extended to cover spouses/partners and dependants of members and senior management in 2014-15 [Rec 9].

We are not aware of any related party transactions (RPTs) which have not been disclosed.

6. Review of the Annual

Governance Statement (AGS)

& Explanatory Foreword (EF)

We reviewed both the draft AGS and EF and noted a small number of points for amendment and inclusion in the final versions of both

documents, principally enhancing the commentary and transparency within the EF on the Council's level of useable reserves.

We discussed our comments with the Assistant Director of Finance (on the EF) and the Head of Risk Management and Audit Services

(on the AGS) and note additional commentary and updated disclosures are expected to be included in the revised versions of both

documents which are due to be discussed, reviewed and agreed at the Overview (Audit) Panel on 30 September. Overall, subject to the

amendments agreed, the AGS and EF comply with CIPFA guidance and are in accordance with our knowledge of the Council.

7. Going concern We are not aware of any issues relating to going concern. The Chair of Audit Panel and Executive Director of Finance have formally

considered this issue of going concern and presented a paper to us for review setting out the Council's assessment that it remains a

going concern. Our work has not identified any indication that the accounts should not be prepared on a going concern basis.

The Council's wider financial position has been reviewed by us as part of our financial resilience review to inform our VFM conclusion and our report on this will be presented to the Overview (Audit) Panel on 30 September.

Audit findings

Other

communication

requirements#

We set out below details of other matters which we, as auditors, are required by auditing standards to communicate to those charged with governance.


Section 3: Value for Money


02. Audit findings

03. Value for Money




Value for Money

Value for Money

Overall review of

financial

statements

Value for Money conclusion

The Code of Audit Practice 2010 (the Code) describes the Council's

responsibilities to put in place proper arrangements to:

• secure economy, efficiency and effectiveness in its use of resources

• ensure proper stewardship and governance

• review regularly the adequacy and effectiveness of these arrangements.

We are required to give our VFM conclusion based on the following two criteria

specified by the Audit Commission which support our reporting responsibilities

under the Code.

• The Council has proper arrangements in place for securing financial

resilience. The Council has robust systems and processes to manage effectively

financial risks and opportunities, and to secure a stable financial position that

enables it to continue to operate for the foreseeable future.

• The Council has proper arrangements for challenging how it secures

economy, efficiency and effectiveness. The Council is prioritising its

resources within tighter budgets, for example by achieving cost reductions and

by improving efficiency and productivity.

Key findings

Securing financial resilience

We have undertaken a review which considered the Council's arrangements against

the following three expected characteristics of proper arrangements as defined by

the Audit Commission:

• Financial governance

• Financial planning

• Financial control.

To support our VFM conclusion against the specified criteria we performed a risk

assessment against VFM risk indicators specified by the Audit Commission.

Following completion of our work we have not identified any significant residual

risks to our VFM conclusion.

Our overall conclusion is that whilst the Council faces challenges - particularly from

2016-17 onwards - its current arrangements for securing financial resilience remain

good. The Council remains better placed compared to most peer authorities to deal

with the current and anticipated financial environment within local government.

A separate report on our review of the Council's financial resilience arrangements has

been prepared and agreed with management. It is due to be presented to the Overview

(Audit) Panel on 30 September and forms a key part of our work to inform our overall

VFM conclusion.

Challenging economy, efficiency and effectiveness

We have reviewed whether the Council has prioritised its resources to take account of

the tighter constraints it is required to operate within and whether it has achieved cost

reductions and improved productivity and efficiencies.

Our work concentrated on how the Council has delivered its £26.5m saving plan for

2013-14 and its plans for delivering savings of £38.15m over the next two years. Our

overall conclusion is that the Council continues to respond well to the challenges of the

Local Government Finance Settlement, delivering savings and targeting its resources

effectively.

Better Care Fund (BCF)

The Council has played a key role alongside other key public sector stakeholders in planning for the BCF. The Council and Tameside and Glossop CCG are committed to going beyond the BCF to establish an Integrated Care Organisation (ICO) with a combined health and social care resource of c£293m. The pooling of funds across health and social care will create a significant opportunity to transform the way that services are commissioned. Ensuring sufficient management capacity is maintained as the BCF/ICO is implemented will continue to be an important issue for the Council.

Given the importance of successful delivery of the BCF/ICO to both the Council's and CCG's financial resilience, and in our capacity as joint auditors of both organisations, we will continue to monitor delivery of this process in future audit work.

Overall VFM conclusion

On the basis of our work, and having regard to the guidance on the specified criteria

published by the Audit Commission, we are satisfied that in all significant respects the

Council put in place proper arrangements to secure economy, efficiency and

effectiveness in its use of resources for the year ending 31 March 2014.


Section 4: Fees, non audit services and independence


02. Audit findings

03. Value for Money




Fees

Per Audit Plan

£

Actual fees

£

Council audit 138,553 140,023*

Grant certification 51,697** 51,697**

Total audit fees 190,250 191,720

Fees, non audit services and independence

We confirm below our proposed final fees (net of VAT) charged for the audit.

Independence and ethics

We confirm that there are no significant facts or matters that impact on our independence as auditors

that we are required or wish to draw to your attention. We have complied with the Auditing Practices

Board's Ethical Standards and therefore we confirm that we are independent and are able to express an

objective opinion on the financial statements.

The audit of the Council's Regional Growth Fund grant (RGF) was performed by the audit engagement

team. As in the prior year, it is shown as non-audit work as the Audit Commission does not make

certification arrangements for the RGF claim.

We confirm that we have implemented policies and procedures to meet the requirements of the

Auditing Practices Board's Ethical Standards.

Fees for other services

Service Fees £

Regional Growth Fund (RGF) grant (February 2014) 7,000

* There is an additional fee of £1,470 in respect of work

on material business rates balances. This additional work

was necessary as auditors are no longer required to carry

out work to certify NNDR3 claim. The additional fee is

50% of the average fee previously charged for NNDR3

certifications for metropolitan borough councils and is

subject to agreement by the Audit Commission.

** This is the reduced grants certification fee compared

with that originally quoted of £59,600 in our 2013-14

Audit Fee Letter. The reduction takes into account the

removal of schemes no longer requiring certification. In

addition, the fee for the certification of housing benefit

subsidy claim has been reduced by 12 per cent, to reflect

the removal of council tax benefit from the scheme.

At present we do not anticipate any further changes to

the grants certification fee. However, the final grants fee

will be confirmed in the Grants Report 2013-14, due to

be discussed with management in December 2014.



Section 5: Communication of audit matters


02. Audit findings

03. Value for Money




Communication of audit matters to those charged with governance

Our communication plan

Audit

Plan

Audit

Findings

Respective responsibilities of auditor and management/those

charged with governance

Overview of the planned scope and timing of the audit. Form, timing

and expected general content of communications

Views about the qualitative aspects of the entity's accounting and

financial reporting practices, significant matters and issues arising

during the audit and written representations that have been sought

Confirmation of independence and objectivity

A statement that we have complied with relevant ethical

requirements regarding independence, relationships and other

matters which might be thought to bear on independence.

Details of non-audit work performed by Grant Thornton UK LLP and

network firms, together with fees charged

Details of safeguards applied to threats to independence

Material weaknesses in internal control identified during the audit

Identification or suspicion of fraud involving management and/or

others which results in material misstatement of the financial

statements

Compliance with laws and regulations

Expected auditor's report

Uncorrected misstatements

Significant matters arising in connection with related parties

Significant matters in relation to going concern

Delay in certification of completion of Audit

International Standard on Auditing (ISA) 260, as well as other ISAs, prescribe matters

which we are required to communicate with those charged with governance, and which

we set out in the table opposite.

The Audit Plan outlined our audit strategy and plan to deliver the audit, while this Audit

Findings report presents the key issues and other matters arising from the audit, together

with an explanation as to how these have been resolved.

Respective responsibilities

The Audit Findings Report has been prepared in the context of the Statement of

Responsibilities of Auditors and Audited Bodies issued by the Audit Commission

(www.audit-commission.gov.uk).

We have been appointed as the Council's independent external auditors by the Audit

Commission, the body responsible for appointing external auditors to local public bodies

in England. As external auditors, we have a broad remit covering finance and

governance matters.

Our annual work programme is set in accordance with the Code of Audit Practice ('the

Code') issued by the Audit Commission and includes nationally prescribed and locally

determined work. Our work considers the Council's key risks when reaching our

conclusions under the Code.

It is the responsibility of the Council to ensure that proper arrangements are in place for

the conduct of its business, and that public money is safeguarded and properly

accounted for. We have considered how the Council is fulfilling these responsibilities.

Communication of audit matters

http://www.audit-commission.gov.uk/




Appendices

Appendices


Appendix A: Action Plan

Rec

No. Recommendation Priority Management response

Implementation date

& responsibility

1. Periodic Revaluation of Assets:

The CIPFA Accounting Code of Practice requires local authorities to revalue all assets within a particular class in the same financial year. In common with a number of local authorities, the Council's approach is to value all assets over a five year period on a rolling basis. The Council should consider adopting practice in accordance with CIPFA requirements.

Medium Agreed- -

The CIPFA requirements will continue to be adhered to in

complying with IAS16.

The Council will address in line with good practise - If there

was found to be significant movement within a class of

assets consideration would be given to the impact for

other assets within that class.

The Council’s approach to asset valuation will continue to

ensure that there is not an over-reliance on the 5 year

revaluation cycle. This will consider the wider implications

of the evidence obtained from the valuations in year in

terms of the impact on those assets not subject to

revaluation in year.

Beverley Stephens /

Julie Hardman

October 2014 – March

2015

2. PPE revaluation working papers:

Given the significant decrease of £84m in PPE valuation in 13-14, and as a

key area of estimate and judgement, we recommend the Council

strengthens the initial documentation to support the movement in this key

area of estimate and judgement for 2014-15..

Medium .Agreed - any significant changes in valuation within the

core financial statements will be evidenced and supported

by an additional commentary, (if applicable) and provided

following the sign-off of the unaudited accounts.

Beverley Stephens

/Julie Hardman

June 2015

3. Documentation supporting provisions, contingent liabilities and post balance sheet events:

Given the potential impact that provisions and crystallising contingent

liabilities could have on the Council's financial position, and the Council's

wish to bring forward future audit opinion sign off dates, we recommend that

formal documentation of these areas is reflected in the initial working papers

for 2014-15.

A documented review against the relevant Accounting Standard (IAS37) to

ascertain whether or not a liability is required to be recognised in the 2013-14

accounts should be prepared as part of the Council's audit working papers.

Medium .Agreed - the review against IAS37 will be fully evidenced

and supported by an additional working paper and

provided following the sign-off of the unaudited accounts.

Beverley Stephens /

Julie Hardman

June 2015

4. Future accounting developments: Schools accounting

In order to ensure the Council's preparations for the schools accounting

change are robust, we recommend the Council:

• Liaises with its valuers in order to establish appropriate valuations for

those schools that will need to be recognised for the first time, including

their opening valuation as at 1 April 2013

• Reviews any previous 'Refcus' related spend on these schools to ensure

this taken into account in any valuation

• Reviews any long term leases in place at these schools for any potential

equipment that needs to be capitalised by the Council eg leased

computers .

High Agreed –

This is a significant future issue for the Council. An early

review of the implications for all responsible for the issues

will need to take place.

A timely, robust timetable and action plan will need to be

put in place, adequately resourced and adhered to.

Beverley Stephens

Stephen Wilde

Julie Hardman

November 2015

Appendices

The recommendations set out in this Action Plan are in the order that they appeared in section two of this report.


Rec

No. Recommendation Priority Management response

Implementation date

& responsibility

5. Future accounting developments: Transport infrastructure assets recognition

Given the significant impact of this issue, we recommend the Council formally produces an action plan, in line with that suggested in LAAP 100, including considering a 'dry-run' in 2014-15. The Council should monitor the implementation of the plan and communicate its progress to us and other key stakeholders.

High Agreed –

This is a significant future issue for the Council. An early review

of the implications for all responsible for the issues will need to

take place.

A timely, robust timetable and action plan will need to be put in

place, adequately resourced and adhered to.

Beverley Stephens /

Julie Hardman

March 2015

6. IT Password controls: Accepted good practice is to have a maximum password age of no longer than 42 days. Currently network passwords are set to expire after 90 days and Academy passwords are set to expire after 100 days.

The Council should increase the frequency of enforced password changes for both the Windows network and Academy; passwords should be used for no longer than 42 days.

Low Agreed Stephen Wilde /

Alastair Smith

December 2014

7. Review of Journals – changes to input dates: In order to reduce the risk of inappropriate dating of journals, the Council should consider how to prevent the system from allowing input date changes. The Council should also perform a periodic review of journals for any that have been subject to a change of date to ensure any changes are reasonable.

Low Agreed Stephen Wilde /

Alastair Smith

December 2014

8. Follow up of prior year recommendations – the Markazi Jamia

mosque constructed in 2011-12:

There is a risk that because legal ownership is yet to formally pass to

the mosque Trustees, the Council could be liable for any structural or

internal damages that may occur prior to the legal transfer. As a

result, we recommend the Council resolves this matter as soon as

possible.

High Agreed Pam Williams, Ben Jay,

Beverley Stephens –

December 2014

9. Related Party Transactions (RPTs):

To further enhance the governance in RPTs, we recommend that the

current review is extended to cover spouses /partners of members

and senior management in 2014-15.

Medium Agreed – subject to the consideration that this will be a

development affecting procedures wider than just the financial

standing orders.

The Council will commit to considering how this may be

progressed by the authority and will report the outcome.

Ben Jay,

Beverley Stephens

December 2014

Appendices


Appendix B: Proposed Audit Opinion

We anticipate we will provide the Council with an unmodified audit report

Audit opinion –

option 1

INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS OF TAMESIDE

METROPOLITAN BOROUGH COUNCIL

Opinion on the Authority financial statements

We have audited the financial statements of Tameside Metropolitan Borough Council

for the year ended 31 March 2014 under the Audit Commission Act 1998. The financial

statements comprise the Movement in Reserves Statement, the Comprehensive

Income and Expenditure Statement, the Balance Sheet, the Cash Flow Statement,

Collection Fund and Greater Manchester Metropolitan Debt Administration Fund and

the related notes. 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 2013-14.

This report is made solely to the members of Tameside Metropolitan Borough Council

in accordance with Part II of the Audit Commission Act 1998 and for no other purpose,

as set out in paragraph 48 of the Statement of Responsibilities of Auditors and Audited

Bodies published by the Audit Commission in March 2010. To the fullest extent

permitted by law, we do not accept or assume responsibility to anyone other than the

Authority and the Authority's Members as a body, for our audit work, for this report, or

for the opinions we have formed.

Respective responsibilities of the Executive Director of Finance and auditor

As explained more fully in the Statement of the Executive Director of Finance's

Responsibilities, the Executive Director of Finance 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, and for being satisfied that they give a true and fair

view. Our responsibility is to audit and express an opinion on the financial statements in

accordance with applicable law and International Standards on Auditing (UK and

Ireland). Those standards require us to comply with the Auditing Practices Board’s

Ethical Standards for Auditors.

Scope of the audit of the financial statements

An audit involves obtaining evidence about the amounts and disclosures in the

financial statements sufficient to give reasonable assurance that the financial

statements are free from material misstatement, whether caused by fraud or error.

This includes an assessment of: whether the accounting policies are appropriate to the

Authority’s circumstances and have been consistently applied and adequately

disclosed; the reasonableness of significant accounting estimates made by the

Executive Director of Finance; and the overall presentation of the financial statements.

In addition, we read all the financial and non-financial information in the explanatory

foreword to identify material inconsistencies with the audited financial statements and

to identify any information that is apparently materially incorrect based on, or materially

inconsistent with, the knowledge acquired by us in the course of performing the audit.

If we become aware of any apparent material misstatements or inconsistencies we

consider the implications for our report.

Opinion on financial statements

In our opinion the financial statements:

give a true and fair view of the financial position of Tameside Metropolitan

Borough Council as at 31 March 2014 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 2013/14 and

applicable law.

Opinion on other matters

In our opinion, the information given in the explanatory foreword for the financial year

for which the financial statements are prepared is consistent with the financial

statements.

Appendices


Audit opinion –

option 1

Matters on which we report by exception

We report to you if:

in our opinion the annual governance statement does not reflect compliance

with ‘Delivering Good Governance in Local Government: a Framework’

published by CIPFA/SOLACE in June 2007;

we issue a report in the public interest under section 8 of the Audit

Commission Act 1998;

we designate under section 11 of the Audit Commission Act 1998 any

recommendation as one that requires the Authority to consider it at a public

meeting and to decide what action to take in response; or

we exercise any other special powers of the auditor under the Audit

Commission Act 1998.

We have nothing to report in these respects.

Conclusion on the Authority’s arrangements for securing economy, efficiency

and effectiveness in the use of resources

Respective responsibilities of the Authority and the auditor

The Authority 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.

We are required under Section 5 of the Audit Commission Act 1998 to satisfy

ourselves that the Authority has made proper arrangements for securing economy,

efficiency and effectiveness in its use of resources. The Code of Audit Practice

issued by the Audit Commission requires us to report to you our conclusion relating

to proper arrangements, having regard to relevant criteria specified by the Audit

Commission.

We report if significant matters have come to our attention which prevent us from

concluding that the Authority has put in place 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 Authority’s

arrangements for securing economy, efficiency and effectiveness in its use of

resources are operating effectively.

Scope of the review of arrangements for securing economy, efficiency and

effectiveness in the use of resources

We have undertaken our audit in accordance with the Code of Audit Practice, having

regard to the guidance on the specified criteria, published by the Audit Commission in

October 2013, as to whether the Authority has proper arrangements for:

securing financial resilience; and

challenging how it secures economy, efficiency and effectiveness.

The Audit Commission has determined these two criteria as those necessary for us to

consider under the Code of Audit Practice in satisfying ourselves whether the Authority

put in place proper arrangements for securing economy, efficiency and effectiveness in

its use of resources for the year ended 31 March 2014.

We planned our work in accordance with the Code of Audit Practice. Based on our risk

assessment, we undertook such work as we considered necessary to form a view on

whether, in all significant respects, the Authority had put in place proper arrangements

to secure economy, efficiency and effectiveness in its use of resources.

Conclusion

On the basis of our work, having regard to the guidance on the specified criteria

published by the Audit Commission in October 2013, we are satisfied that, in all

significant respects, Tameside Metropolitan Borough Council put in place proper

arrangements to secure economy, efficiency and effectiveness in its use of resources

for the year ended 31 March 2014.

Certificate

We certify that we have completed the audit of the financial statements of Tameside

Metropolitan Borough Council in accordance with the requirements of the Audit

Commission Act 1998 and the Code of Audit Practice issued by the Audit Commission.

Mark Heap, Director

for and on behalf of Grant Thornton UK LLP, Appointed Auditor

4 Hardman Square

Spinningfields

Manchester

M3 3EB

30 September 2014

Appendices


Appendix C: Proposed Letter of Representation

Audit opinion –

option 1

[***Prepare on client letterhead***]


4 Hardman Square

Spinningfields

Manchester

M3 3EB

30 September 2014

Dear Sirs

Tameside Metropolitan Borough Council

Financial Statements for the year ended 31 March 2014

This representation letter is provided in connection with the audit of the financial

statements of Tameside Metropolitan Borough Council for the year ended 31 March

2014 for the purpose of expressing an opinion as to whether the financial statements

give a true and fair view in accordance with International Financial Reporting

Standards.

We confirm that to the best of our knowledge and belief having made such inquiries as

we considered necessary for the purpose of appropriately informing ourselves:


i. We have fulfilled our responsibilities for the preparation of the financial

statements in accordance with proper practices as set out in the CIPFA/LASAAC

Code of Practice on Local Authority Accounting in Great Britain ("the Code") as

adapted for International Financial Reporting Standards; in particular the

financial statements give a true and fair view in accordance therewith.

ii. We have complied with the requirements of all statutory directions and these

matters have been appropriately reflected and disclosed in the financial

statements.

iii. The Council has complied with all aspects of contractual agreements that could

have a material effect on the financial statements in the event of non-

compliance.

iv. We acknowledge our responsibility for the design, implementation and

maintenance of internal control to prevent and detect fraud.

v. Significant assumptions used by us in making accounting estimates, including

those measured at fair value, are reasonable.

vi. We are satisfied that the material judgements used by us in the preparation of

the financial statements are soundly based, in accordance with the Code, and

adequately disclosed in the financial statements. There are no further material

judgements that need to be disclosed.

vii. Except as stated in the financial statements:

a. there are no unrecorded liabilities, actual or contingent

b. none of the assets of the Council has been assigned, pledged or

mortgaged

c. there are no material prior year charges or credits, nor exceptional or

non-recurring items requiring separate disclosure.

viii. We confirm that we are satisfied that the actuarial assumptions underlying the

valuation of pension scheme liabilities for IAS19 disclosures are consistent with

our knowledge. We confirm that all settlements and curtailments have been

identified and properly accounted for. We also confirm that all significant

retirement benefits have been identified and properly accounted for.

ix. Related party relationships and transactions have been appropriately

accounted for and disclosed in accordance with the requirements of

International Financial Reporting Standards and the Code.

x. All events subsequent to the date of the financial statements and for which

International Financial Reporting Standards and the Code require adjustment or

disclosure have been adjusted or disclosed.

xi. Actual or possible litigation and claims have been accounted for and disclosed

in accordance with the requirements of International Financial Reporting

Standards.

Appendices


Audit opinion –

option 1

xii. We have not adjusted the misstatements brought to our attention in the Audit

Findings Report, as they are considered to be immaterial to the results of the

Council and its financial position at the year-end. The financial statements are

free of material misstatements, including omissions.

xiii. We have no plans or intentions that may materially alter the carrying value or

classification of assets and liabilities reflected in the financial statements.

xiv. We believe that the Council’s financial statements should be prepared on a

going concern basis 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.

Information Provided

xv. We have provided you with:

a. 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 matters;

b. additional information that you have requested from us for the purpose

of your audit; and

c. unrestricted access to persons within the Council from whom you

determined it necessary to obtain audit evidence.

xvi. We have communicated to you all deficiencies in internal control of which

management is aware.

xvii. All transactions have been recorded in the accounting records and are reflected

in the financial statements.

xviii. We have disclosed to you the results of our assessment of the risk that the

financial statements may be materially misstated as a result of fraud.

xix. We have disclosed to you all information in relation to fraud or suspected fraud

that we are aware of and that affects the Council and involves:

a. management;

b. employees who have significant roles in internal control; or

c. others where the fraud could have a material effect on the financial

statements.

xx. We have disclosed to you all information in relation to allegations of fraud, or

suspected fraud, affecting the Council’s financial statements communicated by

employees, former employees, regulators or others.

xxi. We have disclosed to you all known instances of non-compliance or suspected

non-compliance with laws and regulations whose effects should be considered

when preparing financial statements.

xxii. We have disclosed to you the entity of the Council's related parties and all the

related party relationships and transactions of which we are aware.

xxiii. We have disclosed to you all known actual or possible litigation and claims

whose effects should be considered when preparing the financial statements.

Annual Governance Statement

xxiv. We are satisfied that the Annual Governance Statement (AGS) fairly reflects

the Council's risk assurance and governance framework and we confirm that

we are not aware of any significant risks that are not disclosed within the AGS.

Approval

The approval of this letter of representation was minuted by the Council's Overview

(Audit) Panel at its meeting on 30 September 2014.

Signed on behalf of the Panel:

Name…………………………… Name……………………………

Position…………………………. Position………………………….

Date: 30 September 2014 Date: 30 September 2014

Appendices


© 2014 Grant Thornton UK LLP. All rights reserved.

'Grant Thornton' means Grant Thornton UK LLP, a limited liability partnership.

Grant Thornton is a member firm of Grant Thornton International Ltd (Grant Thornton International). References to 'Grant Thornton' are to the brand under which the Grant Thornton member firms operate and refer to one or more member firms, as the context requires. Grant Thornton International and the member firms are not a worldwide partnership. Services are delivered independently by member firms, which are not responsible for the services or activities of one another. Grant Thornton International does not provide services to clients.

grant-thornton.co.uk

Back page

Dear Sirs Tameside Metropolitan Borough Council Financial Statements for the year ended 31 March 2014 This representation letter is provided in connection with the audit of the financial statements of Tameside Metropolitan Borough Council for the year ended 31 March 2014 for the purpose of expressing an opinion as to whether the financial statements give a true and fair view in accordance with International Financial Reporting. We confirm that to the best of our knowledge and belief having made such inquiries as we considered necessary for the purpose of appropriately informing ourselves: Financial Statements i. We have fulfilled our responsibilities for the preparation of the financial statements in

accordance with proper practices as set out in the CIPFA/LASAAC Code of Practice on Local Authority Accounting in Great Britain ("the Code") as adapted for International Financial Reporting Standards; in particular the financial statements give a true and fair view in accordance therewith.

ii. We have complied with the requirements of all statutory directions and these matters have been appropriately reflected and disclosed in the financial statements.

iii. The Council has complied with all aspects of contractual agreements that could have a material effect on the financial statements in the event of non-compliance.

iv. We acknowledge our responsibility for the design, implementation and maintenance of internal

control to prevent and detect fraud.

v. Significant assumptions used by us in making accounting estimates, including those measured at fair value, are reasonable.

vi. We are satisfied that the material judgements used by us in the preparation of the financial statements are soundly based, in accordance with the Code, and adequately disclosed in the financial statements. There are no further material judgements that need to be disclosed.

Grant Thornton UK LLP 4 Hardman Square Spinningfields Manchester M3 3EB

GOVERNANCE Robert Landon Head of Democratic Services Council Offices, Wellington Road Ashton-under-Lyne, Tameside. OL6 6DL www.tameside.gov.uk e-mail : [email protected] Doc Ref Ask for Carolyn Eaton Direct Line 0161 342 3050 Date

vii We confirm that we are satisfied that the actuarial assumptions underlying the valuation of

pension scheme liabilities for IAS19 disclosures are consistent with our knowledge. We confirm that all settlements and curtailments have been identified and properly accounted for. We also confirm that all significant retirement benefits have been identified and properly accounted for.

viii Related party relationships and transactions have been appropriately accounted for and

disclosed in accordance with the requirements of the Code. ix All events subsequent to the date of the financial statements and for which the Code requires

adjustment or disclosure have been adjusted or disclosed. x Actual or possible litigation and claims have been accounted for and disclosed in accordance

with the requirements of International Financial Reporting Standards. xi Except as stated in the financial statements: a there are no unrecorded liabilities, actual or contingent b. none of the assets of the Council have been assigned, pledged or mortgaged c. there are no material prior year charges or credits, nor exceptional or non- recurring

items requiring separate disclosure. xii We have no plans or intentions that may materially alter the carrying value or classification of

assets and liabilities reflected in the financial statements. xiii We believe that the Council’s financial statements should be prepared on a going concern

basis 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.

Information Provided xiv We have provided you with:

a. 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 matters

b. additional information that you have requested from us for the purpose of your audit c. unrestricted access to persons within the entity from whom you determine it necessary to obtain audit evidence.

xv We have disclosed to you the results of our assessment of the risk that the financial statements may be materially misstated as a result of fraud.

xvi We have communicated to you all deficiencies in internal control of which management is

aware. xvii All transactions have been recorded in the accounting records and are reflected in the financial

statements. xviii We have disclosed to you our knowledge of fraud or suspected fraud affecting the entity

involving: a. management; b. employees who have significant roles in internal control; or c. others where the fraud could have a material effect on the financial statements.

xix We have disclosed to you our knowledge of any allegations of fraud, or suspected fraud, affecting the entity's financial statements communicated by employees, former employees, analysts, regulators or others.

xx We have disclosed to you all known instances of non-compliance or suspected non

compliance with laws and regulations whose effects should be considered when preparing financial statements.

xxi We have disclosed to you the identity of the entity's related parties and all the related party

relationships and transactions of which we are aware. xxii We have disclosed to you all known actual or possible litigation and claims whose effects

should be considered when preparing the financial statements. Annual Governance Statement xxiii We are satisfied that the Annual Governance Statement (AGS) fairly reflects the Council's risk

assurance and governance framework and we confirm that we are not aware of any significant risks that are not disclosed within the AGS.

Approval The approval of this letter of representation was minuted by the Council's Overview Audit Panel at its meeting on 30 September 2014. Signed on behalf of the Overview Audit Panel Name ........................................ Name…………………………… Position ........................................ Position ………………………… Date ...................................... Date …………………………….

© 2014 Grant Thornton UK LLP | Audit Findings Report 2013-14 | September 2014

The Audit Findings Report

for Greater Manchester Pension Fund

Year ended 31 March 2014

Mark Heap

Engagement Lead

T +44 (0)161 234 6375

E [email protected]

Marianne Dixon

Engagement Manager

T +44 (0)7880 456 157

E [email protected]

Mark Stansfield

Executive

T +44 (0)161 234 6356

E [email protected]

11 September 2014

Cover page

© 2014 Grant Thornton UK LLP | Audit Findings Report 2013-14 | September 2014 2

The contents of this report relate only to those matters which came to our

attention during the conduct of our normal audit procedures which are

designed primarily for the purpose of expressing our opinion on the financial

statements. Our audit is not designed to test all internal controls or identify all

areas of control weakness. However, where, as part of our testing, we identify

any control weaknesses, we will report these to you. In consequence, our work

cannot be relied upon to disclose defalcations or other irregularities, or to

include all possible improvements in internal control that a more extensive

special examination might identify.

We do not accept any responsibility for any loss occasioned to any third party

acting, or refraining from acting on the basis of the content of this report, as

this report was not prepared for, nor intended for, any other purpose.

Disclaimer


Contents

Section Page

1. Executive summary 4

2. Audit findings 6

3. Fees, non audit services and independence 14

4. Developments relevant to your pension fund and the audit 16

5. Communication of audit matters 18

Appendices

A Proposed audit opinion on the financial statements

B Proposed audit opinion on the annual report

C Proposed Letter of Representation

Contents


Section 1: Executive summary


02. Audit findings



04. Future developments


Executive summary

Executive summary

Overall review of

financial

statements

Purpose of this report

This report highlights the key issues arising from the audit of Greater Manchester

Pension Fund's ('the Fund') financial statements for the year ended 31 March

2014. It is also used to report our audit findings to management and those charged

with governance in accordance with the requirements of International Standard on

Auditing (UK & Ireland) 260.

Under the Audit Commission's Code of Audit Practice we are required to report

whether, in our opinion, the Fund's financial statements present a true and fair

view of the financial position, the financial transactions of the Fund during the

year and whether they have been properly prepared in accordance with the Code

of Practice on Local Authority Accounting.

Introduction

In the conduct of our audit we have not had to alter or change our planned audit

approach, which we communicated to you in our Audit Plan dated 6 July 2014.

Our audit is substantially complete although we are finalising our procedures in the

following areas:

• reviewing outstanding third party confirmation

• review of the final version of the financial statements

• review of the final Annual Report

• obtaining and reviewing the management letter of representation

• updating our post balance sheet events review, to the date of signing the

opinion;

• our final review procedures

We received draft financial statements and accompanying working papers at the

start of our audit, in accordance with the agreed timetable.

Key issues arising from our audit

Financial statements opinion

We anticipate providing an unqualified opinion on the Fund's financial

statements. We have not identified any material adjustments affecting the

Fund's reported financial position - which shows net assets carried forward of

£13.284m - although we have agreed with management a small number of

adjustments to improve the presentation of the financial statements.

The key messages arising from our audit of the Fund's financial statements are:

• an early draft of the financial statements was made available, enabling us to

recommend a small number of adjustments before the financial statements

were incorporated into Tameside Metropolitan Borough Council's financial

statements;

• good quality working papers were made available from the start of the audit;

• officers were available throughout our audit fieldwork to provide additional

supporting information;

• a small number of amendments have been made to the supporting notes in

the draft financial statements - mainly to provide clearer disclosures - and

these are set out on page 11;

Further details are set out in Section 2 of this report.

Acknowledgement

We would like to take this opportunity to record our appreciation for the

assistance provided by the finance team and other staff during our audit.


September 2014


Section 2: Audit findings


02. Audit findings





Audit findings

Audit findings

Overview of audit

findings

In this section we present our findings in respect of matters and risks identified at the planning stage of the audit and additional matters that arose during the course of

our work. We set out on the following pages the work we have performed and findings arising from our work in respect of the audit risks we identified in our audit plan,

presented to the Ethics and Audit Committee on 25 July 2014. We also set out the adjustments to the financial statements from our audit work and our findings in

respect of internal controls.

Changes to Audit Plan

We have not made any changes to our Audit Plan as previously communicated to you

Audit opinion

We anticipate that we will provide the Fund with an unmodified opinion. Our audit opinion is set out in Appendix A. We have also included our anticipated opinion on

the Annual Report at Appendix B.

Letter of Representation

We have provided the Fund with a suggested letter of representation at Appendix C. We are not seeking any specific representations.

IAS 19 Assurances

We are in the process of completing work to support the IAS19 assurances required by a number of scheduled bodies to the pension scheme. Where this work is likely to

incur an extra fee we will liaise with the Audit Commission to determine whether a fee variation is required and will update you as necessary.


Audit findings against significant risks

Risks identified in our audit plan Work completed Assurance gained and issues arising

1. Improper revenue recognition

Under ISA 240 there is a presumed risk that revenue

may be misstated due to improper recognition

We have rebutted this presumption and therefore do not

consider this to be a significant risk for Greater

Manchester Pension Fund (as per our Audit Plan of 6

July 2014).

Our work has included:

review and testing of revenue recognition policies

testing of material revenue streams


Our audit work has not identified any issues in respect

of revenue recognition.

2. Management override of controls

Under ISA 240 there is a presumed risk of

management over-ride of controls

Our work addressing this presumes risk, included:


decisions made by management

testing of journal entries


Our audit work has not identified any evidence of

management override of controls. In particular the

findings of our review of journal controls and testing of

journal entries has not identified any significant issues.

We set out later in this section of the report our work

and findings on key accounting estimates and

judgements.

Audit findings


"Significant risks often relate to significant non-routine transactions and judgmental matters. Non-routine transactions are transactions that are unusual, either due to size

or nature, and that therefore occur infrequently. Judgmental matters may include the development of accounting estimates for which there is significant measurement

uncertainty" (ISA 315).

In this section we detail our response to the significant risks of material misstatement which we identified in the Audit Plan. As we noted in our plan, there are two

presumed significant risks which are applicable to all audits under auditing standards.


Audit findings against other risks


Investments • Investments not valid

• Alternative investments

not valid

• Investment activity not

valid

• Fair value

measurements not

correct


Reviewed the reconciliation between information provided by the fund

managers, the custodian, the accounting service provider and the

Pension Fund's own records

Obtained independent, direct confirmation of balances from

Investment Managers, external valuation experts, Custodian and

accountancy service provider

Sample testing of valuations at year end

Our audit work has not identified any investments

held by the Fund that are not valid, or where the

fair value measurement is not correct.

Our audit work supports the valuations of

investments where estimation techniques and

judgement have been applied.

Benefit Payments • Benefits improperly

computed/ liability

understated

Sample testing of pension payments, lump sums, and refunds

Analytical procedures rationalising pensions paid with changes in

pensioner numbers and annual pension increases.

Our audit work did not identify any evidence that

benefit payments have been improperly

computed, or the claims liability understated.

Contributions • Recorded contributions

not correct Reviewed design of controls regarding receipt of contributions at the

Fund, and walkthrough to ensure these controls are operating

effectively.

Sample testing of individual members' contributions received by the

Fund.

Analytical procedures rationalising contributions received to changes

in member data and payroll data.

Our audit work has not identified any evidence

that contributions been recorded incorrectly.

Member data • Member data not correct

• Regulatory/scheme

rules requirements not

met

• Actuarial amounts not

determined properly

Examined the system of controls and reconciliations covering the

determination of member eligibility, the input of evidence into the

Pensions Administration System and the maintenance of member

records

Substantive testing of changes to underlying member data

Reconciliation of movements in membership statistics to transactions

in the accounting records

Our audit work has not identified any evidence

that member data is not correct, or that regulatory

/ scheme rules have not been met.

Audit findings


(continued)

In this section we detail our response to the other risks of material misstatement which we identified in the Audit Plan. Recommendations together with management

responses are attached at Appendix A.


Accounting policies, estimates & judgements

Accounting area Summary of policy Comments Assessment

Revenue recognition Contribution Income

Transfers to and from the scheme

Investment Income

The revenue recognition policies of the Fund are appropriate and

in line with the relevant accounting framework, though we have

made some recommendations on disclosure improvements

which the Fund will introduce next year

The application of the revenue recognition policies at the Fund is

not considered complex, and our testing has not identified any

inappropriate revenue recognition

Green

Judgements and estimates Key estimates and judgements include :

investment valuations

pension fund actuarial valuations and

settlements

The valuation of the Fund's investments have been substantively

tested to gain assurance that it is not materially misstated.

We have confirmed that the work of the actuary is in line with

professional standards and regulation, and that they are a

reliable source of estimation relating to the pension fund

liabilities.

Green

Other accounting policies We have reviewed the Fund's policies

against the requirements of the CIPFA

Code and accounting standards.

Our review of accounting policies has not highlighted any

significant issues which we wish to bring to your attention.

The Pension Fund is however, reviewing its disclosure of

Financial Instruments next year to improve the clarity.

Green

Assessment

Marginal accounting policy which could potentially attract attention from regulators Accounting policy appropriate but scope for improved disclosure Accounting policy appropriate and disclosures sufficient

Audit findings


– accounting

policies#

In this section we report on our consideration of accounting policies, in particular revenue recognition policies, and key estimates and judgements made and included with the Fund's

financial statements.


Misclassifications & disclosure changes

Audit findings

Guidance note

The table is available in the

‘Audit Findings template’ on the

Mercury tab in Excel.

Tab: Adjusted misstatements

Adjusted

misstatements

Adjustmen

t type

Value

£'000

Account balance Impact on the financial statements

1 Disclosure None Note 4 – Market

Risk

Improved disclosure on change in methodology used (from previous year) in

previous years for illustrating risk exposure.

2 Disclosure None Note 4 – Liquidity

Risk

Correction of disclosure of investments in terms of liquidity.

3 Disclosure None Note 8 –

Administrative

expenditure

Improved disclosure of Audit Fees to confirm "The total fee paid to the external

auditors is £56,341 (2012/13 £56,341) in addition to which a further £5,996

(2012/13 £5,996) is paid in relation to work carried out on behalf of the Fund's

main scheme employers. This additional amount is recovered by the Fund directly

from the relevant employers. "

4 Disclosure None Note 11 –

Investment

property

Correction of disclosure on investment property

5 Disclosure None Future Lease

rentals

Correction of disclosure to reflect 'stepped' change in lease rentals receivable over

the relevant disclosure periods.

The table below provides details of disclosure changes identified during the audit which have been made in the final set of financial statements.


Internal controls

The purpose of an audit is to express an opinion on the financial statements.

Our audit included consideration of internal controls relevant to the preparation of the financial statements in order to design audit procedures that are appropriate in the

circumstances, but not for the purpose of expressing an opinion on the effectiveness of internal control. The matters reported are limited to those deficiencies that we

have identified during the course of our audit and that we have concluded are of sufficient importance to merit being reported to you in accordance with auditing

standards.

From the work we have completed we have not identified any significant weaknesses in internal controls.

Audit findings

Internal controls

Assessment

Significant deficiency – risk of significant misstatement

Deficiency – risk of inconsequential misstatement


Other communication requirements

Issue Commentary

1. Matters in relation to fraud We have previously discussed the risk of fraud with the Ethics and Audit Committee. We have not been made aware of any incidents

in the period and no other issues have been identified during the course of our audit.

2. Matters in relation to laws and

regulations

We are not aware of any significant incidences of non-compliance with relevant laws and regulations.

3. Written representations A standard letter of representation has been requested from the Fund.

4. Disclosures Our review found no material omissions in the financial statements

5. Matters in relation to related

parties

We are not aware of any related party transactions which have not been disclosed

6. Going concern Our work has not identified any reason to challenge the Fund's decision to prepare the financial statements on a going concern basis.

Audit findings

Other

communication

requirements#

We set out below details of other matters which we, as auditors, are required by auditing standards to communicate to those charged with governance.


Section 3: Fees, non audit services and independence


02. Audit findings





Fees

Per Audit plan

£

Actual fees

£

Fund audit 56,341 56,341

Total audit fees 56,341 56,341


We confirm below our final fees charged for the audit and provision of non-audit services.

Independence and ethics

We confirm that there are no significant facts or matters that impact on our independence as auditors

that we are required or wish to draw to your attention. We have complied with the Auditing Practices

Board's Ethical Standards and therefore we confirm that we are independent and are able to express an

objective opinion on the financial statements.

We confirm that we have implemented policies and procedures to meet the requirements of the

Auditing Practices Board's Ethical Standards.

Fees for other services

Service Fees £

IAS 19 assurances provided to other auditors in accordance with Audit Commission

Protocol

5,996

Guidance note

'Fees for other services' is to be

used where we need to

communicate agreed fees in

advance of the audit. At the

time of preparation of the Audit

Plan it is unlikely that full

information as to all fees

charged by GTI network firms

will be available. Disclosure of

these fees, threats to

independence and safeguards

will therefore be included in the

Audit Findings report.

Red text is generic and should

be updated specifically for your

client.

Once updated, change text

colour back to black.



Section 4: Future developments


02. Audit findings



04. Future development


Developments relevant to your Pension Fund and the audit

Future developments

Political Environmental Social Technological

Developments relevant to the next financial year

Developments relevant to future periods

1. Financial reporting

CIPFA has published best practice guidance

relating to the identification and disclosure

of administrative and investment

management expenditure. This applies from

2014/15 and will enable consistent reporting

across the LGPS facilitating more

meaningful comparisons in this area. The

definition is separated into three distinct

categories of costs.

2. Legislation

Under the Local Government Pension

Scheme (LGPS 2014), pensions will be

calculated on Career Average Revalued

Earnings (CARE) rather than a final

salary basis from 1 April 2014.

Administering authorities will need to

ensure their updated administration

systems are calculating new pensions

accruals correctly from 1 April 2014,

dealing effectively with more complex

data requirements and that new

contribution rates are being correctly

applied by employers.

3. Actuarial valuation

Following the 31 March 2013 actuarial

valuation all employers will need to

consider the level of additional employer

deficit contributions required and how to

fund them.

4. Other issues

The number of LGPS employers

continues to grow as local authorities

outsource services. Affected funds need to

consider the impact this has on its

exposure to risks and reflect on the impact

this has for their investment strategies.

1. Financial reporting

Changes to the Pension Statement of

Recommended Practice (SORP) may affect

the investment disclosures in the Net Asset

Statement and Fair Value determination

(changing the classification from level 1, 2 &

3 to A, B & C). A revised SORP will be

issued in 2014 and may find its way into the

LG code in 2015/16.

2. Legislation

From April 1 2015 The Pensions

Regulator will have formal powers and

responsibilities for oversight of the LGPS.

This will include monitoring

implementation of new governance

arrangements, which require the creation

of a scheme manager and pension board

for each LGPS.

The Administering Authority will need to

determine how it will meet the

requirement to have a pension board and

the consequent changes it will need to

make to its general governance

arrangements.

3. Structural reform

The Department for Communities and

Local Government (DCLG) is

consulting on the potential use of

Collective Investment Vehicles and

passive management of funds.

The outcome of this consultation may

lead to a change in administration of

some schemes and significant changes

in investment strategies.

4. Other issues

The Pensions Regulator, Financial

Conduct Authority and HMRC continue to

commit resources to combat pension

liberation schemes. More guidance and

potential changes to HMRC registration of

new schemes is likely.

Future

developments

relevant to your

business and the

audit


Section 5: Communication of audit matters


02. Audit findings





Communication of audit matters to those charged with governance

Our communication plan

Audit

Plan

Audit

Findings

Respective responsibilities of auditor and management/those

charged with governance

Overview of the planned scope and timing of the audit. Form, timing

and expected general content of communications

Views about the qualitative aspects of the entity's accounting and

financial reporting practices, significant matters and issues arising

during the audit and written representations that have been sought

Confirmation of independence and objectivity

A statement that we have complied with relevant ethical

requirements regarding independence, relationships and other

matters which might be thought to bear on independence.

Details of non-audit work performed by Grant Thornton UK LLP and

network firms, together with fees charged

Details of safeguards applied to threats to independence

Material weaknesses in internal control identified during the audit

Identification or suspicion of fraud involving management and/or

others which results in material misstatement of the financial

statements

Compliance with laws and regulations

Expected auditor's report

Uncorrected misstatements

Significant matters arising in connection with related parties

Significant matters in relation to going concern

International Standards on Auditing (ISA) 260, as well as other ISAs, prescribe matters

which we are required to communicate with those charged with governance, and which

we set out in the table opposite.

The Audit Plan outlined our audit strategy and plan to deliver the audit, while this Audit

Findings report presents the key issues and other matters arising from the audit, together

with an explanation as to how these have been resolved.

Respective responsibilities

The Audit Findings Report has been prepared in the context of the Statement of

Responsibilities of Auditors and Audited Bodies issued by the Audit Commission

(www.audit-commission.gov.uk).

We have been appointed as the Fund's independent external auditors by the Audit

Commission, the body responsible for appointing external auditors to local public bodies

in England. As external auditors, we have a broad remit covering finance and

governance matters.

Our annual work programme is set in accordance with the Code of Audit Practice ('the

Code') issued by the Audit Commission and includes nationally prescribed and locally

determined work. Our work considers the Fund's key risks when reaching our

conclusions under the Code.

It is the responsibility of the Fund to ensure that proper arrangements are in place for the

conduct of its business, and that public money is safeguarded and properly accounted

for. We have considered how the Fund is fulfilling these responsibilities.

Communication of audit matters





Appendices

Appendices


Appendix A: Audit opinion

We anticipate that we will provide the Fund with an unmodified audit report

Audit opinion –

option 1

INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS OF TAMESIDE

METROPOLITAN BOROUGH COUNCIL - GREATER MANCHESTER PENSION FUND

DRAFT

Opinion on the pension fund financial statements

We have audited the pension fund financial statements of Greater Manchester Pension Fund for the year

ended 31 March 2014 under the Audit Commission Act 1998. The pension fund financial statements

comprise the Fund Account, the Net Assets Statement and the related notes. 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 2013/14.

This report is made solely to the members of Tameside Metropolitan Borough Council in accordance with

Part II of the Audit Commission Act 1998 and for no other purpose, as set out in paragraph 48 of the

Statement of Responsibilities of Auditors and Audited Bodies published by the Audit Commission in March

2010. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than

the Authority and the Authority's Members as a body, for our audit work, for this report, or for the opinions

we have formed.

Respective responsibilities of the Executive Director of Finance and auditor

As explained more fully in the Statement of the Responsibilities of the Executive Director of Finance, the

Executive Director of Finance is responsible for the preparation of the Authority’s Statement of Accounts,

which includes the pension fund 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, and for being

satisfied that they give a true and fair view. Our responsibility is to audit and express an opinion on the

financial statements in accordance with applicable law and International Standards on Auditing (UK and

Ireland). Those standards require us to comply with the Auditing Practices Board’s Ethical Standards for

Auditors.

Scope of the audit of the pension fund financial statements

An audit involves obtaining evidence about the amounts and disclosures in the financial statements sufficient

to give reasonable assurance that the financial statements are free from material misstatement, whether

caused by fraud or error. This includes an assessment of: whether the accounting policies are appropriate to

the fund’s circumstances and have been consistently applied and adequately disclosed; the reasonableness of

significant accounting estimates made by the Executive Director of Finance and the overall presentation of

the financial statements.

In addition, we read all the financial and non-financial information in the explanatory foreword and financial

summary to identify material inconsistencies with the audited financial statements. If we become aware of

any apparent material misstatements or inconsistencies we consider the implications for our report.

Opinion on the pension fund financial statements

In our opinion the pension fund’s financial statements:

give a true and fair view of the financial transactions of the pension fund during the year ended 31

March 2014 and the amount and disposition of the fund’s assets and liabilities as at 31 March 2014,

other than liabilities to pay pensions and other benefits after the end of the scheme year; and

have been properly prepared in accordance with the CIPFA/LASAAC Code of Practice on Local

Authority Accounting in the United Kingdom 2013/14 and applicable law.

Opinion on other matters

In our opinion, the information given in the explanatory foreword and the financial summary for the

financial year for which the financial statements are prepared is consistent with the financial statements.

DRAFT

Mark Heap

Director


4 Hardman Square

Spinningfields

Manchester

M3 3EB

September 2014

Appendices


Audit opinion –

option 1

INDEPENDENT AUDITOR’S STATEMENT TO THE MEMBERS OF TAMESIDE

METROPOLITAN BOROUGH COUNCIL ON THE PENSION FUND FINANCIAL

STATEMENTS

DRAFT

We have examined the pension fund financial statements for the year ended 31 March 2014,

which comprise the Fund Account, the Net Assets Statement and the related notes.

This report is made solely to the members of Tameside Metropolitan Borough Council in

accordance with Part II of the Audit Commission Act 1998 and for no other purpose, as set out

in paragraph 48 of the Statement of Responsibilities of Auditors and Audited Bodies published

by the Audit Commission in March 2010. To the fullest extent permitted by law, we do not

accept or assume responsibility to anyone other than the Authority and the Authority's

Members as a body, for our audit work, for this report, or for the opinions we have formed.

Respective responsibilities of the Section 151 Officer and the auditor

As explained more fully in the Statement of the Section 151 Officer' Responsibilities, the

Section 151 Officer is responsible for the preparation of the pension fund’s financial statements

in accordance with applicable United Kingdom law.

Our responsibility is to report to you our opinion on the consistency of the pension fund

financial statements within the pension fund annual report with the pension fund financial

statements in the statement of accounts of Tameside Metropolitan Borough Council, and its

compliance with applicable law and the CIPFA/LASAAC Code of Practice on Local Authority

Accounting in the United Kingdom 2013/14.

We also read the other information contained in the pension fund annual report and consider

the implications for our report if we become aware of any apparent misstatements or material

inconsistencies with the pension fund financial statements. The other information consists of

only the Chairman's Introduction; Management Structure; Top 20 Equity Holdings; Investment

Report; Statement of Accounts; and Actuarial Statement.

We conducted our work in accordance with Bulletin 2008/3 issued by the Auditing Practices

Board. Our report on the administering authority’s full annual statement of accounts describes

the basis of our opinion on those financial statements.

Opinion

In our opinion, the pension fund financial statements are consistent with the full annual

statement of accounts of Tameside Metropolitan Borough Council for the year ended 31 March

2014 and comply with applicable law and the CIPFA/LASAAC Code of Practice on Local

Authority Accounting in the United Kingdom 2013/14.

DRAFT

Mark Heap

Director


4 Hardman Square

Spinningfields

Manchester

M3 3EB

September 2014

Appendices

Appendix B: Proposed audit opinion on the annual report

We anticipate that we will provide the Fund with an unmodified audit report


Audit opinion –

option 1


4 Hardman Square

Manchester

M3 3EB

Dear Sirs

Greater Manchester Pension Fund - Financial Statements for the year ended 31 March

2014

This representation letter is provided in connection with your audit of the financial statements of

Greater Manchester Pension Fund for the year ended 31 March 2014 for the purpose of

expressing an opinion as to whether the financial statements show a true and fair view of the

financial transactions of the Fund during the year ended 31 March 2014, and of the amount

and disposition at that date of its assets and liabilities other than liabilities to pay pensions and

benefits after the end of the Fund year in accordance with applicable law and the

CIPFA/LASAAC Code of Practice on Local Authority Accounting in the United Kingdom

2013/14 (the Code).


1. We have fulfilled our responsibilities for the preparation of the financial statements in

accordance with the Code; in particular the financial statements show a true and fair view

in accordance therewith, and for keeping records in respect of contributions received in

respect of active members.

2. We acknowledge our responsibility for the design and implementation of internal control to

prevent and detect error and fraud.

3. Significant assumptions used by us in making accounting estimates, including those

measured at fair value, are reasonable.

4. Related party relationships and transactions have been appropriately accounted for and

disclosed in accordance with the requirements of the Code.

5. Actual or possible litigation and claims have been accounted for and disclosed in

accordance with the requirements of the Code.

6. All events subsequent to the date of the financial statements and for which the Code

requires adjustment or disclosure have been adjusted or disclosed.

7. We have adjusted the misclassifications and disclosure changes brought to our attention

in the Audit Findings Report. Following these adjustments, the financial statements are

free of material misstatements, including omissions.

8. We believe that the Fund's financial statements should be prepared on a going concern

basis on the grounds that current and future sources of funding or support will be more

than adequate for the Fund's needs. We believe that no further disclosures relating to the

Fund's ability to continue as a going concern need to be made in the financial statements.

9. We have no plans or intentions that may materially alter the carrying value or classification

of assets and liabilities reflected in the financial statements.

10. We acknowledge our responsibilities for making the accounting estimates included in the

financial statements. Where it was necessary to choose between estimation techniques

that comply with the Code, we selected the estimation technique considered to be the

most appropriate to the Fund's particular circumstances for the purpose of giving a true

and fair view. Those estimates reflect our judgment based on our knowledge and

experience about past and current events and are also based on our assumptions about

conditions we expect to exist and courses of action we expect to take.

Information Provided

11. We have provided you with:

a. 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 matters;

b. additional information that you have requested from us for the purpose of your audit;

and

c. unrestricted access to persons from whom you determine it necessary to obtain audit

evidence.

12. We have disclosed to you the results of our assessment of the risk that the financial

statements may be materially misstated as a result of fraud.

13. All transactions have been recorded in the accounting records and are reflected in the

financial statements.

14. We are not aware of any fraud or suspected fraud affecting the Fund involving:

a. management;

b. employees who have significant roles in internal control; or c. others where the fraud could have a material effect on the financial statements.

Appendices

Appendix C: Letter of Representation


Audit opinion –

option 1

15. We have no knowledge of any allegations of fraud, or suspected fraud, affecting the

Fund's financial statements communicated by employees, former employees, analysts,

regulators or others.

16. We are not aware of any instances of non-compliance or suspected non-compliance with

laws and regulations whose effects should be considered when preparing financial

statements.

17. There have been no communications with The Pensions Regulator or other regulatory

bodies during the year or subsequently concerning matters of non-compliance with any

legal duty.

18. We are not aware of any reports having been made to The Pensions Regulator by any of

our advisors.

19. We have disclosed to you the identity of the Fund's related parties and all the related

party relationships and transactions of which we are aware.

Approval

The approval of this letter of representation was minuted by the Council's Overview Audit Panel

at its meeting on 30 September 2014.

Signed on behalf of the Council

Name…………………………………. Name…………………………….......

Position………………………………. Position……………………………….

Date…………………………………… Date…………………………………...

Appendices


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