To consider a report of the External Auditors Forvis Mazars (DFP/05/2526)

Director of Finance and Procurement, Mike Rea introduced the report noting its purpose to present to Members the Forvis Mazars Audit Strategy Memorandum, which outlined the auditing approach to the Authority’s 2024/25 Financial Statements.

It was advised that the plan considered the risks, materiality and other matters Forvis Mazars had identified in their audit planning process, and the value for money work to be carried out.

Katie Kingston, Senior Audit Manager at Forvis Mazars, presented the draft Audit Strategy Memorandum for 2024/25 to Members which outlined the external auditor’s risk-based planning approach. Members noted that it was still in draft form pending a few planning confirmations. It was highlighted that there were no significant changes expected before the final version would be issued.

Highlighting that the plan was risk based, it was confirmed that initial planning had begun, with main audit fieldwork scheduled from October 2025 and the audit opinion expected before year-end, ahead of the statutory deadline for the Authority to publish the audited accounts, February 2026.

Katie Kingston noted that the materiality had been provisionally set at £2.5 million (1.8% of the Authority’s gross revenue expenditure), based on prior year figures, which may be adjusted once updated financial data was received from officers.

Members were advised that three areas of significant audit risks had been identified: the presumed risk of management override of controls, and the valuations of both the defined benefit pension scheme and valuation of property plant and equipment. There were highlighted as areas which involved high value figures, that required complex judgement.

Katie Kingston highlighted that no risks of significant weaknesses had been identified in relation to value for money work, which was now required to be completed by the end of November 2025. It was noted that the timeline preceded the completion of the financial audit publishing, but it was emphasised that it was not expected to cause any issues.

Katie Kingston noted that an increase to the core audit fee had been proposed to reflect recurring additional work. It was highlighted that the remainder of the report contained standard content required under auditing standards.

Councillor Page referred to the risk-based approach diagram on page 55 and queried whether the identified key risk areas, beyond the standard risk of management override, were informed by findings specific to Merseyside Fire and Rescue Authority (MFRA), whether these were prescribed risks common across the Fire and Rescue Services or if they reflected in generic risk categories.

Katie Kingston explained that the audit team at Forvis Mazars held regular discussions with Officers to identify any changes or new developments throughout the year. Members were advised that the key risks identified remained consistent with the previous year. While management override was a standard presumed risk, the other risks relating to the valuation of the defined benefit pension scheme and property, plant, and equipment were not prescribed but were common across the sector. It was noted that the plan remained risk-based and would be adjusted if new information emerged.

Councillor Bell asked whether Mike Rea and his team were confident they had mitigated the risks identified in the audit document, particularly regarding potential delays in providing information. Councillor Bell referred specifically to the section on page 67 and requested a brief overview.

In response, Mike Rea confirmed that the Finance Team had updated the year end process as part of the Finance Functional Plan. It was noted that the format and presentation of the Statement of Accounts had been revised, along with improvements to the supporting working papers.  Members noted that the Chief Accountant of Finance, had prepared comprehensive working papers to be shared at the start of the audit and would address all other requests for information in a timely manner.  Mike Rea also highlighted an application which was used within the Finance Department to manage audit requests and responses, allowing for clear tracking and prompt communication throughout the process in a timely manner. Katie Kingston clarified that the wording on the referenced page indicated that any issues arising during the audit would be reported to Members. She confirmed that this did not imply any past issues with the Authority, stating clearly that no such issues had been experienced.

RESOLVED that the Forvis Mazars 2024/2025 Audit Strategy Memorandum and the timing of the Authority’s 2024/2025 audit of the financial statements be noted.