www.pwc.co.uk
Government and Public Sector
North Norfolk District
Council
Report to those charged with
governance (ISA 260 (UK&I))
September 2012
2011/12 Audit
www.pwc.co.uk
The Members of the Audit Committee
North Norfolk District Council
Council Offices
Holt Road
Cromer
Norfolk. NR27 9EN
September 2012
Ladies and Gentlemen
We are pleased to enclose our report to the Audit Committee in respect of our audit of
North Norfolk District Council (“the Authority” ) for the year ended 31 March 2012,
the primary purpose of which is to communicate the significant findings arising from
our audit.
The scope and proposed focus of our audit work was summarised in our audit plan,
which we presented to the Audit Committee in March 2012. We have subsequently
reviewed our audit plan and concluded that our original risk assessment remains
appropriate. The procedures we have performed in response to our assessment of
significant audit risks are detailed on page 5.
We have completed the majority of our audit work and expect to be able to issue an
unqualified audit opinion on the financial statements on, or before, 30 September
2012. At the time of writing, the key outstanding matters, where our work has
commenced but is not yet finalised are provided on page 8.
We will provide an oral update on these matters at the meeting on 18 September
2012.
We look forward to discussing our report with you on 18 September. Attending the
meeting from PwC will be Julian Rickett and Charlotte Kennedy.
Yours faithfully
Julian Rickett
PricewaterhouseCoopers LLP
www.pwc.co.uk
Contents
Executive summary
4
Audit Approach
5
Significant audit and accounting matters
8
Fees update
12
Fees update for 2011/12
12
Appendices
13
Appendix 1: Letter of representation
14
Appendix 2: Control weaknesses and deficiencies
20
Code of Audit Practice and Statement of Responsibilities of Auditors and of Audited Bodies
In April 2010 the Audit Commission issued a revised version of the ‘Statement of responsibilities of
auditors and of audited bodies’. It is available from the Chief Executive of each audited body. The
purpose of the statement is to assist auditors and audited bodies by explaining where the responsibilities
of auditors begin and end and what is to be expected of the audited body in certain areas. Our reports
and letters are prepared in the context of this Statement. Reports and letters prepared by appointed
auditors and addressed to members or officers are prepared for the sole use of the audited body and no
responsibility is taken by auditors to any member or officer in their individual capacity or to any third
party.
North Norfolk District Council
Executive summary
The purpose of this report
Under the Auditing Practices Board’s International Auditing Standard (UK and Ireland) 260 (ISA (UK&I) 260)
- “Communication of audit matters with those charged with governance” we are required to report to those
charged with governance on the significant findings from our audit before giving our audit opinion on the
accounts of North Norfolk District Council (‘the Authority’). As agreed with you, we consider that “those
charged with governance”, at the Authority, are the Audit Committee.
This letter contains the significant matters we wish to report to you arising from all aspects of our audit
programme of work in accordance with ISA (UK&I) 260.
Our audit work during the year was performed in accordance with the plan that we presented to you on 6 March
2012. An audit of financial statements is not designed to identify all matters that may be relevant to those
charged with governance. Accordingly, the audit does not ordinarily identify all such matters.
We have set out below what we consider to be the most significant matters that we have discussed with you in
the course of our work.
Significant Matters
There are no significant matters that we have discussed with management during the course of our work
affecting our ability to issue our “true and fair” opinion and therefore wish to raise with you. However, as is the
case with any audit, we have identified a number of other less significant matters which we have included in this
report for your information. These include:




The difficulties encountered in the extraction of the required data set through Computer Assisted
Auditing Techniques (CAATs) to facilitate our testing of the Authority’s manual journal transactions;
The appropriateness of inclusion of transactions as Contingent Liabilities;
The calculation of the Minimum Revenue Provision and the appropriate inclusion of finance leases
within this calculation and how it is reported to members; and
The inclusion of an accrual for over claimed benefit subsidy.
Please note that this report will be sent to the Audit Commission in accordance with the requirements of their
standing guidance.
We would also like to take this opportunity to express our thanks for the co-operation and assistance we have
received from the management and staff of the Authority throughout our work.
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North Norfolk District Council
Audit Approach
ISA (UK&I) 260 requires us to communicate to you relevant matters relating to the audit of the financial
statements sufficiently promptly to enable you to take appropriate action.
In the table below we have detailed the risks and planned responses shown in our March audit plan, as updated
for the work we have subsequently performed.
Audit plan risk
Significant Risks
Fraud and management
override of controls
ISA (UK&I) 240 requires that we
plan our audit work to consider
the risk of fraud, which is
presumed to be a significant risk
in any audit.
This includes consideration of the
risk that management may
override controls in order to
manipulate the financial
statements.
Recognition of income and
expenditure
Under ISA (UK&I) 240 there is a
(rebuttable) presumption that
there are risks of fraud in revenue
recognition.
We extend this presumption to
the recognition of expenditure in
local government.
Proposed Audit Approach
Outcome
We will perform procedures to:
 test the appropriateness
of journal entries;
 review accounting
estimates for biases and
evaluate whether
circumstances
producing any bias,
represent a risk of
material misstatement
due to fraud;
 evaluate the business
rationale underlying
significant transactions;
 perform ‘unpredictable’
procedures; and
 perform other audit
procedures if necessary.
A key process in this area is the
authorisation and supporting evidence
for journals.
We found no exceptions in relation to
our testing of journals.
We will obtain an understanding
of revenue and expenditure
controls.
We will evaluate and test the
accounting policy for income
and expenditure recognition to
ensure that this is consistent
with the requirements of the
Code of Practice on Local
We have reviewed the work of internal
audit around key financial systems
controls.
We have been able to place the planned
level of reliance on the work of internal
audit.
We have completed unpredictable
procedures as referred to in our audit
plan without additional indicators of
fraud or management override being
detected. These consisted of:
 review of transactions under
the waste management
contract.
We have reviewed management
estimates as part of our audit
procedures. Our audit testing did not
identify any areas of management bias
in respect of estimation techniques and
we are not minded to challenge the
appropriateness of estimates used in
the accounts.
We have considered the accounting
policies adopted by the Authority and
subjected income and expenditure to
the appropriate level of testing to
identify any material misstatement.
This included testing of selected income
and expenditure transactions, review of
journals and also testing on some
smaller value income and expenditure
items.
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North Norfolk District Council
Authority Accounting.
Other Risks
Heritage assets
For the first time in the 2011/12
Statement of Accounts, the Code
of Practice on Local Authority
Accounting in the United
Kingdom requires authorities to
present information about the
heritage assets that they hold.
Where it is practicable to obtain a
valuation (at a cost
commensurate with the benefits
to users of the Statement of
Accounts), the Code also now
requires material amounts of
heritage assets to be carried in
the Balance Sheet at that
valuation.
Valuation and accounting
treatment of leases
The Council continues to be party
to several significant and complex
leases. The Council changed the
supplier of its waste management
contract from 01 April 2011. The
terms of this new arrangement
will need to be carefully
considered against the
requirements of International
Financial Reporting
Interpretations Committee
(IFRIC) 4 – Determining whether
an arrangement contains a lease
and, if applicable, International
Accounting Standard (IAS) 17 –
Leases.
Redundancy costs
As a result of continuous increase
in pressure on budgets, the
Council will need to continue to
review its current workforce. Any
termination of contracts, in
particular in relation to senior
staff could be high profile and are
likely to result in initial one-off
costs.
We will assess the approach
taken by the Council to
implement the new accounting
requirements, including the
methods used to identify and
assess heritage assets.
We will assess whether the
Council has made all
appropriate accounting
disclosures in relation to
heritage assets, including
carrying material heritage assets
in the Balance Sheet.
We will assess the approach
taken by the Council in
determining the value and
classification of leases.
We found that the Authority had
followed its accounting policies in
accounting for transactions and that
these accounting policies were
appropriate and in line with the CIPFA
Code.
We have considered and are not
minded to challenge the approach
taken by the Council in identifying
heritage assets.
Our review of the treatment of heritage
assets identified a minor disclosure
issue which has been adjusted for by
the Council.
We have considered significant lease
transactions as part of our audit
approach and found no significant
matters to report to you in this context.
We will evaluate and test a
sample of leases to determine
whether the Council’s approach
to leases has been followed and
applied correctly.
We will review any significant
redundancies, early retirement,
severance and ex-gratia
payments as part of our audit
work on the accounts including,
where appropriate the Council’s
arrangements with respect to
consideration of the legality and
value for money of such
payments.
We have reviewed the exit packages
disclosed in the Council’s financial
statements. At the time of writing this
work is ongoing and we will therefore
provide members with a verbal update
at the meeting on 18 September 2012
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North Norfolk District Council
Savings Plans
The Council continues to need to
achieve significant savings to
meet its medium term financial
plan, following a reduction in
central government funding.
We will continue to monitor the
Council’s progress against its
savings plans and budgets and
the actions it is taking to identify
future savings.
We have reviewed the Authority’s
savings plans as part of our value for
money conclusion work.
We identified the following matters:
 Whilst the Council is using
reserves in the short term to
balance its budgets, it is of the
view that a prudent level of
reserves remains on the
balance sheet.
 There remain significant
challenges in maintaining the
medium term financial stability
of the Council. In particular,
the Council should:
- Ensure savings are identified
early on and action taken to
address budgetary shortfalls;
- Consider very closely the use
of reserves in funding revenue
expenditure;
- Ensure members remain
actively involved in the budget
setting process so that the
budget is aligned to the
strategic direction of the
Council.
Our work has not identified any current
indications that the Council is not
putting in place appropriate procedures
to address these points.
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North Norfolk District Council
Significant audit and accounting
matters
Accounts
We have completed the audit of the financial statements in line with current Auditing Standards apart from the
following:









completion of our testing of exit packages;
review of the explanatory foreword to ensure consistency with the Code and the rest of the accounts;
conclusion of our testing of NNDR balances;
completion of our testing of related parties;
completion of our testing of members allowances;
completion of our internal review and quality control procedures;
our review of the final version of the financial statements with all of the agreed changes having been
made;
approval of the financial statements by the Audit Committee; and
receipt of all relevant signed statements and the management representation letter.
We will update the Audit Committee on our progress at its meeting on 18 September 2012.
Accounting issues
Testing of Manual Journals
As part of our planned audit approach, we have engaged with our Data Assurance team to assist us in extracting
a complete list of manual journals from the Authority’s general ledger system. This process was not as effective
as it could have been as the Authority could not provide the data extracted in the format required. At the time of
writing this report, we are working with the Authority to get to a satisfactory outcome. We will provide the
committee with a verbal update at its meeting on 18 September 2012.
Contingent Liabilities
The Authority included a number of contingent liabilities within its draft financial statements. We have
considered the appropriateness of these items under the relevant accounting standards. The Authority has
agreed to make a small number of changes to the disclosure of contingent liabilities to comply with the
prevailing accounting standards.
Minimum Revenue Provision
The Authority is required to report annually to members its MRP position under the CIPFA Prudential Code.
Whilst the Authority is ‘debt free’, it does have a number of finance leases in order to deliver the waste
management contract with Kier. These leases were excluded from the report to members in February 2012. The
Authority has agreed that it will report the MRP including the leases going forward and we have confirmed that
the provision in the financial statements has been calculated in line with the relevant guidance.
Housing Subsidy liability
A liability of £103,000 was included within the Authority’s draft financial statements in relation to the potential
claw back of housing and Council Tax subsidy income received by Authority from the Department of Work and
Pensions (DWP). The Authority based this amount on 0.5% of the subsidy within the 2011/12 claim. However,
the Authority is unable to provide evidence to demonstrate that the DWP had clawed back, or intended to claw
back or retain, subsidy due as a result of exceptions noted in previous audit certifications of the Housing and
Council Tax Benefit Subsidy claim. In addition, the Council could not provide any evidence to support the
liability at 0.5% of 2011/12 subsidy due.
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North Norfolk District Council
We do not consider that the £103,000 creditor meets the definition of liability because there is no contractual
obligation. The authority has agreed to adjust its accounts for this, thus creating a reserve for this potential
liability.
Valuation of Property
The Council’s accounting policy is for assets classified as infrastructure, community assets and assets under
construction to be valued at depreciated historical cost with all other assets being valued at fair value in existing
use.
The Council arranges for periodic, professional valuations of property every five years with interim valuations
considered in the intervening years to identify any factors that may indicate whether the fair value stated in the
Balance Sheet might be materially misstated.
The Council’s properties were valued by NPS or the Council’s internal valuers.
In estimating the fair value to be included in the 2011/12 accounts, management has utilised the expertise of the
Council’s internal valuers. However, the assumptions used by these experts remain the responsibility of
management.
Our internal valuers have reviewed the work performed by the Council. We are currently not minded to
challenge the Council’s property valuations.
Misstatements and significant audit adjustments
We are required to report to you all uncorrected misstatements which we have identified during the course of
our audit, other than those of a trivial nature (which we have agreed with you are those below £50,000). There
are no such misstatements to report to you.
We have also brought to your attention the misstatement relating to the DWP liability earlier in this report
which has been corrected by management but which we consider you should be aware of in fulfilling your
governance responsibilities.
Significant accounting principles and policies
Significant accounting principles and policies are disclosed in the notes to the financial statements. We will ask
the Audit Committee to represent to us that they have considered the selection of, or changes in, significant
accounting policies and practices that have, or could have, a material effect on the entity's financial statements.
Judgements and accounting estimates
The following significant judgments and accounting estimates were used in the preparation of the financial
statements:





Property, Plant and Equipment - Depreciation and Valuation – The Council charges
depreciation based on an estimate of the Useful Economic Lives for the majority of Property, Plant and
Equipment (PPE). This involves a degree of estimation. The Council also values PPE in accordance
with its accounting policies to ensure that the carrying value is appropriate. This involves some
judgement and reliance on the Council’s internal valuers.
Bad Debt Provision – The Bad Debt Provision for sundry debtors is calculated on the basis of age
and an assessment of the potential recoverability of invoices. There is an inherent level of judgement
involved in calculating these provisions and the Council relies on the knowledge of the Departments for
information on specific transactions.
Accruals - The Council raises accruals for expenditure where an invoice has not been raised or
received at the year end, but there is a known liability to be met which relates to the current year. This
involves a degree of estimation.
Provisions: Because provisions are liabilities of an uncertain timing or amount, there is an inherent
level of judgement to be applied.
Pensions: The Council relies on the work of an actuary in calculating these balances.
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North Norfolk District Council

Provision for accumulated absences - The Council calculates its accrual for untaken holiday and
employment benefits at the year-end based on returns completed by managers.
We will ask you to represent to us that you are satisfied with the assumptions made in arriving at these
judgements and estimates in the accounts.
Disagreements with management
There have been no disagreements with management during the course of the audit which individually or in
aggregate could be significant to your financial statements or our audit report.
Management representations
The final draft of the representation letter that we are requesting management to sign and those charged with
governance to approve is attached in Appendix 1. Whilst much of this letter is standard for local government
entities, we have specifically asked the Audit Committee to confirm the values attributed to the Authority’s
property, plant and equipment in the financial statements are not materially misstated.
Related parties
There are no significant related party matters to be communicated.
Audit independence
We confirm that, in our professional judgment, as at the date of this document, we are independent of the
Authority, within the meaning of UK regulatory and professional requirements and that the objectivity of the
audit engagement leader and the audit staff is not impaired.
Accounting systems and systems of internal control
You have to develop and implement systems of internal financial control and put in place proper arrangements
to monitor their adequacy and effectiveness. As auditors, we review these arrangements for the audit of the
financial statements and our review of the Annual Governance Statement.
We have no significant control issues to bring to your attention. We have included a report of minor internal
control issues in Appendix 2 to this report.
Annual Governance Statement
Local Authorities are required to produce an Annual Governance Statement (AGS), which is consistent with
guidance issued by CIPFA / SOLACE: ‘Delivering Good Governance in Local Government’.
We reviewed the draft AGS to consider whether it complied with the CIPFA / SOLACE ‘Delivering Good
Governance in Local Government’ framework and whether it is misleading or inconsistent with other
information known to us from our audit work. We found no areas of concern to report in this context.
Economy, efficiency and effectiveness
Our value for money code responsibility requires us to carry out sufficient and relevant work in order to
conclude on whether you have put in place proper arrangements to secure economy, efficiency and effectiveness
in the use of resources.
In accordance with guidance issued by the Audit Commission, in 2011/12 our conclusion is based on two
criteria:


The organisation has proper arrangements for securing financial resilience; and
The organisation has proper arrangements for challenging how you secure economy, efficiency and
effectiveness.
As was the case last year, but unlike in previous years, we have not had to reach a scored judgment on these
criteria and the Audit Commission has not developed ‘key lines of enquiry’ for each criteria. Instead, we have
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North Norfolk District Council
determined a local programme of audit work based on our audit risk assessment, informed by these criteria and
our statutory responsibilities.
We anticipate issuing an unqualified value for money conclusion.
Risk of Fraud
We discussed with the Audit Committee their understanding of the risk of fraud and corruption and any
instances thereof when presenting our Audit Plan.
In presenting this report to the Audit Committee we seek members’ confirmation that there have been no
changes to their view of fraud risk and that no additional matters have arisen that should be brought to our
attention. A specific confirmation from management in relation to fraud is included in the letter of
representation.
11
North Norfolk District Council
Fees update
Fees update for 2011/12
We reported our fee proposals as part of the Audit Plan for 2011/12.
2011/12 proposed
Financial Statements
Whole of Government Accounts
Use of Resources
Grant Certification
Total
£118,750
£48,650
£167,400
As noted above, our audit is still ongoing at the time of writing this report. Until we have finalised our work, we
are not in a position to provide members with an update on actual fees for 2011/12. We will include this analysis
as part of our Annual Audit Letter to be issued later in the year.
Fees proposal for 2012/13
We are able to report to you the 2012/13 initial fee proposals as set out by the Audit Commission on its website
(http://www.audit-commission.gov.ukaudit-regime/audit fees/201213fees/pages/201213
feesandworkprogramme.aspx ).
The scale fee for North Norfolk District Council is as follows:
2012/13 Scale Fee
Financial Statements
Whole of Government Accounts
Use of Resources
Grant Certification
Total
71,250
36,000
107,250
This represents an overall reduction of 36%.
At this stage, we are not aware of any factors that would cause our fees to vary from the scale fee shown.
The Audit Committee may also wish to be aware that we are no longer required to rebate a proportion of our
audit fee to the Audit Commission for 2012/13 as we have done in previous years. This accounts for the
apparent disparity in fees.
12
[Date]
Appendices
13
North Norfolk District Council
Appendix 1: Letter of representation
18 September 2012
To: PricewaterhouseCoopers LLP
The Atrium
St Georges Street
Norwich
NR3 1AG
Your Ref: JCR/CK
Dear Sirs
This representation letter is provided in connection with your audit of the Statement of Accounts of North
Norfolk District Council (the “Authority”) for the year ended 31 March 2012 for the purpose of expressing an
opinion as to whether the Statement of Accounts gives a true and fair view, and has been properly prepared in
accordance with the CIPFA/LASAAC Code of Practice on Local Authority Accounting in the United Kingdom
2011/12 and the Service Reporting Code of Practice 2011/12.
My responsibilities as Chief Financial Officer for preparing the financial statements are set out in the Statement
of Responsibilities for the Statement of Accounts. I am also responsible for the administration of the financial
affairs of the Authority I also acknowledge that I am responsible for making accurate representations to you.
I confirm that the following representations are made on the basis of enquiries of other chief officers and
members of North Norfolk District Council with relevant knowledge and experience and, where appropriate, of
inspection of supporting documentation sufficient to satisfy myself that I can properly make each of the
following representations to you.
I confirm, to the best of my knowledge and belief, and having made the appropriate enquiries, the following
representations:
Financial Statements
I have fulfilled my responsibilities, for the preparation of the Statement of Accounts in accordance with the
CIPFA/LASAAC Code of Practice on Local Authority Accounting in the United Kingdom; in particular the
financial statements give a true and fair view in accordance therewith.
Where instances of non compliance with the CIPFA/LASAAC Code of Practice on Local Authority Accounting in
the United Kingdom have been identified within the Authority’s accounting policies, I confirm that the policies
adopted are the most appropriate to give a true and fair view for the authority's particular circumstances, as
required by the aforementioned Code.
All transactions have been recorded in the accounting records and are reflected in the financial statements.
Significant assumptions used by the Authority in making accounting estimates, including those surrounding
measurement at fair value, are reasonable.
All events subsequent to the date of the financial statements for which the CIPFA/LASAAC Code of Practice on
Local Authority Accounting in the United Kingdom requires adjustment or disclosure have been adjusted or
disclosed.
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North Norfolk District Council
Information Provided
I have taken all the steps that I ought to have taken in order to make myself aware of any relevant audit
information and to establish that you (the Authority's auditors) are aware of that information.
I have provided you with:

access to all information of which I am aware that is relevant to the preparation of the financial
statements such as records, documentation and other matters, including minutes of the Council,
relevant committees including the pension fund management board and other relevant
management meetings;

additional information that you have requested from us for the purpose of the audit; and

unrestricted access to persons within the Authority from whom you determined it necessary to
obtain audit evidence.
So far as I am aware, there is no relevant audit information of which you are unaware.
Fraud and non-compliance with laws and regulations
I acknowledge responsibility for the design, implementation and maintenance of internal control to prevent and
detect fraud.
I 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.
I have disclosed to you all information in relation to fraud or suspected fraud that we are aware of and that
affects the Authority and involves:

management;

employees who have significant roles in internal control; or

others where the fraud could have a material effect on the financial statements.
I have disclosed to you all information in relation to allegations of fraud, or suspected fraud, affecting the
Authority’s financial statements communicated by employees, former employees, analysts, regulators or others.
I 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.
I am not aware of any instances of actual or potential breaches of or non-compliance with laws and regulations
which provide a legal framework within which the Authority conducts its business and which are central to the
Authority’s ability to conduct its business or that could have a material effect on the financial statements.
I am not aware of any irregularities, or allegations of irregularities including fraud, involving members,
management or employees who have a significant role in the accounting and internal control systems, or that
could have a material effect on the financial statements.
Related party transactions
I confirm that we have disclosed to you the identity of the Authority’s related parties and all the related party
relationships and transactions of which we are aware.
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North Norfolk District Council
Related party relationships and transactions have been appropriately accounted for and disclosed in accordance
with the requirements of Section 3.9 of the CIPFA/LASAAC Code of Practice on Local Authority Accounting in
the United Kingdom.
We confirm that we have identified to you all senior officers, as defined by the Accounts and Audit Regulations
2011, and included their remuneration in the disclosures of senior officer remuneration.
Employee Benefits
I confirm that the Authority has made you aware of all employee benefit schemes in which employees of the
Authority participate.
Contractual arrangements/agreements
All contractual arrangements (including side-letters to agreements) entered into by the Authority have been
properly reflected in the accounting records or, where material (or potentially material) to the financial
statements, have been disclosed to you.
Litigation and claims
I have disclosed to you all known actual or possible litigation and claims whose effects should be considered
when preparing the financial statements and such matters have been appropriately accounted for and disclosed
in accordance with the Code of Practice on Local Authority Accounting in the United Kingdom.
Taxation
I have complied with UK taxation requirements and have brought to account all liabilities for taxation due to
the relevant tax authorities whether in respect of any indirect taxes. I am not aware of any non-compliance that
would give rise to additional liabilities by way of penalty or interest and I have made full disclosure regarding
any Revenue Authority queries or investigations that we are aware of or that are ongoing.
In particular:

In connection with any tax accounting requirements, I am satisfied that our systems are capable of
identifying all material tax liabilities and transactions subject to tax and have maintained all documents
and records required to be kept by the relevant tax authorities in accordance with UK law or in
accordance with any agreement reached with such authorities.

I have submitted all returns and made all payments that were required to be made (within the relevant
time limits) to the relevant tax authorities including any return requiring us to disclose any tax
planning transactions that have been undertaken for the Authority’s benefit or any other party’s benefit.

I am not aware of any taxation, penalties or interest that are yet to be assessed relating to either the
Authority or any associated company for whose taxation liabilities the Authority may be responsible.
Pension fund assets and liabilities
All known assets and liabilities including contingent liabilities, as at the 31 March 2012, have been taken into
account or referred to in the financial statements.
Details of all financial instruments, including derivatives, entered into during the year have been made available
to you. Any such instruments open at the 31 March 2012 have been properly valued and that valuation
incorporated into the financial statements.
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North Norfolk District Council
Bank accounts
I confirm that we have disclosed all bank accounts to you including those that are maintained in respect of the
pension fund.
Going Concern
An assessment has been made of the financial health of the Authority for a period of at least one year from the
approval of the financial statements.
Accounting Estimates
Regarding the accrual for uncompensated absences, an accounting estimate that was recognised in the financial
statements:
 The Authority has used appropriate measurement processes, including related assumptions and odels,
in determining the accounting estimate in the context of the CIPFA/LASAAC Code of Practice on Local
Authority Accounting in the United Kingdom.
Assets and liabilities
All known assets and liabilities including contingent liabilities, as at the 31 March 2012, have been taken into
account or referred to in the financial statements.
Details of all financial instruments, including derivatives, entered into during the year have been made available
to you. Any such instruments open at the 31 March 2012 have been properly valued and that valuation
incorporated into the financial statements. When appropriate, open positions in off-balance sheet financial
instruments have also been properly disclosed in the financial statements.
The value at which assets and liabilities are recorded in the net assets statement is, in the opinion of the
Authority, the market value. We are responsible for the reasonableness of any significant assumptions
underlying the valuation, including consideration of whether they appropriately reflect our intent and ability to
carry out specific courses of action on behalf of the pension fund. Any significant changes in those values since
the date of the financial statements have been disclosed to you.
The Authority has no plans or intentions that may materially alter the carrying value and where relevant the fair
value measurements or classification of assets and liabilities reflected in the financial statements.
In my opinion, on realisation in the ordinary course of the business the current assets in the balance sheet are
expected to produce no less than the net book amounts at which they are stated.
The Authority has no plans or intentions that will result in any excess or obsolete inventory, and no inventory is
stated at an amount in excess of net realisable value.
The Authority has satisfactory title to all assets and there are no liens or encumbrances on the Authority's
assets, except for those that are disclosed in the financial statements.
I confirm that the current accounting for government grants whilst not in accordance with the CIPFA/LASAAC
Code of Practice on Local Authority Accounting in the United Kingdom is the most appropriate treatment to
give a true and fair view for the authority's particular circumstances, as required by the aforementioned Code.
I confirm that we have carried out impairment reviews appropriately, including an assessment of when such
reviews are required, where they are not mandatory. I confirm that we have used the appropriate assumptions
with those reviews.
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North Norfolk District Council
Using the work of experts
I agree with the findings of our valuation experts in evaluating the value of our non-current assets and have
adequately considered the competence and capabilities of the experts in determining the amounts and
disclosures used in the preparation of the financial statements and underlying accounting records. The
Authority did not give or cause any instructions to be given to experts with respect to the values or amounts
derived in an attempt to bias their work, and I am not otherwise aware of any matters that have had an impact
on the objectivity of the experts.
Retirement Benefits
All significant retirement benefits that Authority is committed to providing, including any arrangements that
are statutory, contractual or implicit in Authority’s actions, wherever they arise, whether funded or unfunded,
approved or unapproved, have been identified and accounted for in accordance with the CIPFA/LASAAC Code
of Practice on Local Authority Accounting in the United Kingdom and disclosed.
All settlements and curtailments in respect of retirement benefit schemes have been identified and properly
accounted for.
The following actuarial assumptions underlying the valuation of retirement benefit scheme liabilities are
consistent with my knowledge of the business and in my view would lead to the best estimate of the future cash
flows that will arise under the scheme liabilities:
Rate of Inflation
Rate of Increase in Salaries
Rate of Increase in Pensions
Discount Rate
Expected Return on Assets
Longevity at 65 for current pensioners
Men
Women
Longevity at 65 for future pensioners
Men
Women
3.3%
4.8% (1% until 2015)
2.5%
4.8%
5.5%
21.2 years
23.4 years
23.6 years
25.8 years
We have considered the assumptions made by our actuary in relation to the take-up of the entitlement to a
lump sum under Regulation 3 of the Local Government Pension Scheme (Amendment) Regulations 2006
(Statutory Instrument 2006/966), and, in our view, the assumption of 50% take-up reflected in the accounts is
the most appropriate assumption for the preparation of our financial statements and leads to the best estimate
of scheme liabilities.
Financial Instruments
All embedded derivatives and embedded leases have been identified and appropriately accounted for under the
CIPFA/LASAAC Code of Practice on Local Authority Accounting in the United Kingdom.
Where we have assigned fair values to financial instruments, we confirm that the valuation techniques, the
inputs to those techniques and assumptions that have been made are appropriate, and reflect market conditions
at the balance sheet date, and are in line with the business environment in which we operate.
18
North Norfolk District Council
As minuted by the Audit Committee at its meeting on 18 September 2012
Chief Financial Officer
For and on behalf of North Norfolk District Council
Date:
19
North Norfolk District Council
Appendix 2: Control weaknesses and
deficiencies
Ref
1
Description
Password Parameters
The password parameters for
eFinancials do not meet the
requirements of GSX Connect (also
known as CoCo).
The password parameters for Civica
do not meet the requirements of the
Authority’s own ICT security policy.
2
ITGC – Back Ups
No recoverability testing has been
undertaken or necessary in 2011/12.
3
ITGC – Back Ups
We were unable to obtain reports to
verify that back ups are run for the
Civca system and the Network on a
regular scheduled basis.
4
Collection Fund Reconciliation
The council reconciles its council
tax cash collections and refunds to
the council tax system on a monthly
basis however this reconciliation is
not evidenced as having taken
place.
Recommendation
Management Response
Password parameters,
should be set as follows:
 20 passwords
should be
remembered;
 Password expiry
time period should
be a maximum of
90 days;
 Minimum
password length
should be 7
characters; and
 Passwords should
have at least one
alpha numeric
digit.
Efin password
parameters:
10 remembered;
Max 30 days;
Minimum length
6;
At least one alpha
numeric.
Recoverability testing
should be run on a regular
basis to test the integrity of
back ups.
A script to transfer information
from the live system to the test
system, is run regularly which
provides a mitigating control.
Reports should be retained
to evidence that back ups
have taken place.
Records and reports are retained
to verify that backups have been
run for the old Civica system (now
read only) and the Network. These
can be inspected if required.
A formal reconciliation
process should be put into
operation.
Prior to the change of the cash
receipting system monthly three
way reconciliations (Cash
Receipting System – General
Ledger – Revenues System) were
being completed. Some initial
problems with reporting from the
new (cash receipting) system
meant that only two way
reconciliations were being carried
out. This has been rectified and
monthly reconciliations are now
being carried out which are
reviewed by the Revenues
Manager.
An annual reconciliation will be
completed for the position at 31
March.
Civica
parameters:
20
remembered;
Max 30 days;
Minimum
length 7;
At least one
alpha
numeric.
Efin upgrade is due to take place
November 2012, password
parameters will be reviewed as
part of the upgrade.
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North Norfolk District Council
5
Officers’ Emoluments
In previous years, details of the
members of staff paid over £55k
from the GL were compared to
Payroll information to ensure all
details were accurately taken from
the GL. This was not completed this
year which resulted in
discrepancies. Amendments have
subsequently been made to the
accounts to ensure appropriate
disclosure.
Officers’ emoluments data
per the GL should be
reconciled to the payroll
system.
Agreed
21
In the event that, pursuant to a request which North Norfolk District Council has received under the Freedom
of Information Act 2000, it is required to disclose any information contained in this report, it will notify PwC
promptly and consult with PwC prior to disclosing such report. North Norfolk District Council agrees to pay
due regard to any representations which PwC may make in connection with such disclosure and North
Norfolk District Council shall apply any relevant exemptions which may exist under the Act to such report. If,
following consultation with PwC, North Norfolk District Council discloses this report or any part thereof, it
shall ensure that any disclaimer which PwC has included or may subsequently wish to include in the
information is reproduced in full in any copies disclosed.
©2012 PricewaterhouseCoopers LLP. All rights reserved. PricewaterhouseCoopers refers to
PricewaterhouseCoopers LLP (a limited liability partnership in the United Kingdom) or, as the context
requires, other member firms of PricewaterhouseCoopers International Limited, each of which is a separate
and independent legal entity.