Cairngorms Nation­al Park Author­ity (CNPA)

Extern­al Audit Plan for the fin­an­cial year end­ing 31 March 2021

DRAFT Audit Plan for dis­cus­sion at the Audit and Risk Com­mit­tee on 3 Feb­ru­ary 2021

John Boyd Engage­ment Leader

Rachel King Audit Associate

Jack McAr­thur Audit Associate

Our audit at a glance

Per­form­ance mater­i­al­ity: 75% of over­all mater­i­al­ity. Con­sist­ent with the pri­or year, reflect­ing our audit know­ledge and under­stand­ing with no mater­i­al adjust­ments in the pri­or year.

Audit plan­ning mater­i­al­ity: £170,300 (approx­im­ately 2% of gross expendit­ure based on ²⁰¹⁹⁄₂₀ fin­an­cial state­ments). Based on our assess­ment of what mis­state­ment, indi­vidu­ally or in aggreg­ate, could be sig­ni­fic­ant as to be mis­lead­ing to the users of fin­an­cial state­ments. Our mater­i­al­ity bench­mark is oper­at­ing expendit­ure. A lower mater­i­al­ity threshold will be applied to the review of the Remu­ner­a­tion and Staff report (£1,000). Mater­i­al­ity will be revis­ited through­out the audit, includ­ing to reflect the unaudited fin­an­cial statements.

Sig­ni­fic­ant audit risks:

• Man­age­ment over­ride of controls
• Risk of fraud in rev­en­ue recognition
• Risk of fraud in expendit­ure recog­ni­tion (as set out in Fin­an­cial Report­ing Council’s (FRC) Prac­tice Note 10)
• The impact of Covid-19

At the plan­ning stage, no oth­er areas of par­tic­u­lar audit risk have been iden­ti­fied. (Once our plan­ning pro­ced­ures are com­plete, the audit plan will be final­ised and sub­mit­ted to CNPA and Audit Scot­land.) Audit risk will con­tin­ue to be reviewed through­out the year.

Con­tents

Sec­tion	Page
1. Over­arch­ing prin­ciples of our audit	4
2. Respect­ive responsibilities	5
3. Audit pro­cess and timetable	6
4. Mater­i­al­ity	7
5. A risk based audit methodology	8
6. Sig­ni­fic­ant fin­an­cial state­ment risks	9
7. Oth­er audit areas	13
8. Audit deliverables	14

Appen­dices:

1. Fees and independence
2. Fraud arrange­ments
3. Com­mu­nic­a­tion with those charged with governance

Over­arch­ing prin­ciples of our audit

Our audit is risk-based and under­taken in accord­ance with Inter­na­tion­al Stand­ards on Audit­ing (ISAs) (UK) and the Audit Scot­land Code of Audit Prac­tice 2016 (“the Code”). Our over­all object­ive is an effect­ive, qual­ity-focused extern­al audit which adds value through wider insights and chal­lenge. Our audit found­a­tions are:

• Pro­fes­sion­al scepticism
• A focus on audit risks and key areas of man­age­ment judgement
• Deliv­er­ing a qual­ity audit through our exper­i­enced pub­lic sec­tor audit team, use of data ana­lyt­ics to focus our audit and under­stand­ing of the organisation
• Clear and upfront com­mu­nic­a­tions, with reg­u­lar com­mu­nic­a­tion dur­ing the year
• Report­ing with focused actions which will sup­port you in improv­ing your controls/​operations

Extern­al Audit Plan: Due to the impact of Cov­id-19, Audit Scot­land plan­ning guid­ance was not issued until Novem­ber 2020. A draft plan is provided for dis­cus­sion at the Audit and Risk Com­mit­tee on 3 Feb­ru­ary 2021. The final plan will be issued to CNPA and Audit Scot­land by 31 March 2021.

Con­tinu­ous Improve­ment and Adding Value: High-qual­ity audit deliv­ery; con­tinu­ous learn­ing and devel­op­ment; robust and effect­ive audit methodology.

Respect­ive responsibilities

As set out in the Code of Audit Prac­tice, there are key respons­ib­il­it­ies for CNPA and for the aud­it­ors. These are sum­mar­ised below:

CNPA Respons­ib­il­it­ies:

• Cor­por­ate gov­ernance: Estab­lish­ing arrange­ments for prop­er con­duct of its affairs; leg­al­ity of activ­it­ies and trans­ac­tions; mon­it­or­ing adequacy and effect­ive­ness of arrangements.
• Fin­an­cial state­ments: Pre­par­ing fin­an­cial state­ments; main­tain­ing account­ing records; put­ting in place sys­tems of intern­al con­trol; pre­par­ing and pub­lish­ing an annu­al gov­ernance state­ment, man­age­ment com­ment­ary, and remu­ner­a­tion report.
• Fin­an­cial pos­i­tion: Ensur­ing the fin­an­cial pos­i­tion is soundly based.
• Fraud and error: Estab­lish­ing appro­pri­ate arrange­ments for pre­ven­tion and detec­tion of fraud, error, irreg­u­lar­it­ies, bribery and corruption.

Aud­it­or Responsibilities:

• Under­take stat­utory duties and com­ply with pro­fes­sion­al engage­ment and eth­ic­al standards.
• Provide an ISA com­pli­ant opin­ion on fin­an­cial statements.
• Review and report, as appro­pri­ate, on oth­er inform­a­tion (annu­al gov­ernance state­ments, man­age­ment com­ment­ary, remu­ner­a­tion reports).
• Noti­fy the Aud­it­or Gen­er­al when cir­cum­stances indic­ate a stat­utory report may be required.
• Demon­strate com­pli­ance with wider pub­lic audit scope.
• Provide reg­u­lar updates to Audit Scotland.
• Noti­fy Audit Scot­land of any cases of money laun­der­ing or fraud.
• Con­trib­ute to Audit Scot­land tech­nic­al guidance.

Audit pro­cess and timeline (DRAFT)

(Dia­gram show­ing timeline with key activ­it­ies and deliverables)

Mater­i­al­ity

We under­take your audit in accord­ance with Inter­na­tion­al Stand­ards on Audit­ing (UK) (ISAs) and the Audit Scot­land Code of Audit Prac­tice (May 2016). We are required to give an opin­ion on wheth­er the fin­an­cial statements:

• Give a true and fair view
• Have been prop­erly pre­pared in accord­ance with rel­ev­ant legis­la­tion and standards
• Audited parts of the remu­ner­a­tion and staff report have been pre­pared in accord­ance with the guidance
• Reg­u­lar­ity of expendit­ure and income
• The wider inform­a­tion con­tained in the fin­an­cial state­ments is con­sist­ent with our audit know­ledge and the fin­an­cial statements

Basis for Mater­i­al­ity: Fin­an­cial state­ment mater­i­al­ity is determ­ined based on a pro­por­tion of total oper­at­ing expendit­ure (£170,300, approx­im­ately 2% of your ²⁰¹⁹⁄₂₀ total oper­at­ing expenditure).

Per­form­ance Mater­i­al­ity: 75% of over­all mater­i­al­ity (£127,725).

Report­ing to those charged with gov­ernance: While audit pro­ced­ures are designed to identi­fy mater­i­al mis­state­ments, any unad­jus­ted mis­state­ments, oth­er than those clearly trivi­al, will be repor­ted to the Audit Committee.

A risk-based audit methodology

Our risk assess­ment includes:

• Con­sid­er­a­tion of crit­ic­al account­ing estimates
• Assess­ment of inher­ent risk factors
• Under­stand­ing of entity-level controls
• Fin­an­cial and oper­a­tion­al performance

Iden­ti­fied Sig­ni­fic­ant Risks:

• Risk of fraud in expendit­ure recognition
• Man­age­ment over­ride of controls
• Risk of fraud in rev­en­ue recognition
• Cov­id-19 impact on the fin­an­cial statements

IFRS 16: Leases: The impact of IFRS 16 will be reviewed in ²⁰²⁰⁄₂₁, and reflec­ted in the ²⁰²²⁄₂₃ fin­an­cial statements.

Sig­ni­fic­ant fin­an­cial state­ment risks (DRAFT)

(This sec­tion con­tains three sub­sec­tions, each address­ing a spe­cif­ic risk, detail­ing areas of focus, descrip­tion of risk, and audit response.)

• Risk of fraud in expendit­ure recog­ni­tion: Focuses on non-pay expendit­ure, par­tic­u­larly around year-end. Audit response includes walk­throughs of con­trols, sub­stant­ive test­ing, and review of accruals.
• Risk of fraud in rev­en­ue recog­ni­tion: Focuses on con­tract income (oper­a­tion­al plan income and oth­er income), receiv­able bal­ances, and year-end rev­en­ue trans­ac­tions. Audit response includes walk­throughs of con­trols, sub­stant­ive test­ing, and agree­ment of balances.
• Man­age­ment over­ride of con­trols: Focuses on account­ing estim­ates and journ­al entries. Audit response includes review of account­ing estim­ates and journ­als testing.
• Impact of Cov­id-19: Focuses on the valu­ation of receiv­ables. Audit response includes walk­throughs of con­trols, sub­stant­ive test­ing, and review of disclosures.

Oth­er audit areas

• Going con­cern con­sid­er­a­tions: In accord­ance with Audit Scot­land plan­ning guid­ance, the fin­an­cial state­ments’ pre­par­a­tion on a going con­cern basis will be considered.
• Work­ing with Intern­al Audit: Engage­ment with Azets (CNPA’s Intern­al Audit) to con­firm aware­ness of fraud or sus­pec­ted fraud.
• Intern­al con­trol envir­on­ment: Under­stand­ing of the over­all con­trol envir­on­ment (design) will be developed.
• Wider scope approach — Smal­ler body arrange­ments: CNPA will con­tin­ue to be treated as a smal­ler body under the Code.

Audit deliv­er­ables

(This sec­tion lists the require­ments and how the audit team will report findings.)

Appen­dices

(This sec­tion con­tains details on fees and inde­pend­ence, fraud arrange­ments, and com­mu­nic­a­tion with those charged with governance.)