Cairngorms Nation­al Park Authority

Fin­an­cial year end­ing 31 March 2021

Extern­al Audit Plan — Final 31 March 2021

Con­tents

Sec­tion	Page
Plan over­view	3
Intro­duc­tion	4
Audit approach	5
Mater­i­al­ity	6
Sig­ni­fic­ant audit risks	7
Oth­er matters	9
Audit fees	13
Inde­pend­ence	14
Appen­dices	15
Respons­ib­il­it­ies	16
Com­mu­nic­a­tion	17
Fraud respons­ib­il­it­ies	18
Audit­ing Account­ing Estim­ates and Related Dis­clos­ures (ISA 540 revised)	19

Your Key Grant Thornton team mem­bers are:

John Boyd Audit Dir­ect­or T: 01224 223 089 E: john.​boyd@​uk.​gt.​com

Rachel King Audit Asso­ci­ate T: 01224 223 086 E: rachel.​king@​uk.​gt.​com

Suri­anga Beg Audit Man­ager T: 01224 223 058 E: Surianga.​beg@​uk.​gt.​com

The con­tents of this report relate to the mat­ters we have agreed to per­form or oth­er­wise have been pre­pared to be sub­ject to our audit plan­ning pro­cess. This is not a com­pre­hens­ive record of all the rel­ev­ant mat­ters which may be sub­ject to change, we are pre­pared to take any respons­ib­il­it­ies for sup­port­ing all of the risks and or any oth­er mat­ters in our audit approach. This plan has been pre­pared solely for your use and is not for pub­lic release. The scope is set out in accord­ance with the Code of Prac­tice 2019. We accept no respons­ib­il­ity for any costs occa­sioned to any third party owing to or arising from the basis of the Code’s ten­ets or the report overall

Plan over­view

The audit plan for the fin­an­cial year ended 31 March 2021 sets out our risk based audit approach. This plan is repor­ted to the Account­able Officer and the Audit and Risk Com­mit­tee. Plan­ning is a con­tinu­ous pro­cess and we will con­tin­ue to review our risk assess­ment and planned approach.

01 Mater­i­al­ity

We have estab­lished plan­ning mater­i­al­ity using fin­an­cial state­ment mater­i­al­ity and per­form­ance mater­i­al­ity (as per our guid­ance notes). Plan­ning mater­i­al­ity (£107,000) is based on the mag­nitude of CNPA’s income and expendit­ure oper­at­ing expendit­ure for year.

02 Fin­an­cial state­ment audit risks

• Fin­an­cial state­ment risk
• Risk of fraud in rev­en­ue recog­ni­tion (ISA 240)
• Risk of fraud in expendit­ure (ISA 240)
• Mater­i­al mis­state­ments (ISA 240)
• Man­age­ment over­ride of con­trols (ISA 240)

03 Wider scope audit; smal­ler body arrangements

In accord­ance with Audit Scotland’s Code of Prac­tice ²⁰²⁰⁄₂₁, we con­sider the body to be a smal­ler body. As such we will update our under­stand­ing of gov­ernance arrange­ments in place to sup­port dis­clos­ures con­tained with­in your fin­an­cial statements.

04 Oth­er audit matters

We are car­ry­ing out addi­tion­al audit pro­ced­ures for the following:

• Intern­al con­trol envir­on­ment (design and operation)
• Con­sid­er­a­tion of going concern
• Account­ing estimates
• Going con­cern assessment

05 Our Audit

This fol­lows from Audit Scotland’s plan, which includes:

• Audit fees: £18,690 (includes Audit Scot­land con­trol costs and non-audit ser­vices, which are sep­ar­ately set out below)
• We have reviewed your draft Annu­al Gov­ernance State­ment and will make sure it is con­sist­ent with the fin­an­cial statements
• We are also going to review both your draft and final fin­an­cial statements.

Intro­duc­tion

Pur­pose

This doc­u­ment provides an over­view of the planned scope and tim­ing of the extern­al audit of the Cairngorms Nation­al Park Author­ity (CNPA) for those charged with gov­ernance. We are appoin­ted by the Aud­it­or Gen­er­al for Scot­land and are car­ry­ing out our audit for the fin­an­cial peri­od ended 31 March 2021.

Scope of our audit

The scope of our audit is set out in accord­ance with the Code and Inter­na­tion­al Stand­ards on Audit­ing (ISAs). We are respons­ible for form­ing and express­ing an opin­ion on:

• CNPA’s fin­an­cial state­ments that have been over­seen by man­age­ment with the over­sight of those charged with gov­ernance. The Account­able Officer is the chief account­ing officer.
• The audit of the fin­an­cial sys­tems does not extend to ensur­ing the accur­acy of every trans­ac­tion. That is the respons­ib­il­ity of CNPA to ensure that prop­er arrange­ments are in place for the accur­ate safe­guard­ing of pub­lic money. We will con­sider how CNPA is ful­filling their respons­ib­il­it­ies through our audit approach, based on our under­stand­ing of CNPA and its risk based approach.

Respect­ive responsibilities

Audit Scot­land has issued a doc­u­ment out­lining aud­it­or respons­ib­il­it­ies and those charged with gov­ernance. The Code sets out aud­it­or respons­ib­il­it­ies and respons­ib­il­it­ies of those charged with gov­ernance and what this includes with­in the pub­lic sec­tor. These are sum­mar­ised in this doc­u­ment. We draw your atten­tion to table 1 of the CNPA code.

Audit approach

(Dia­gram show­ing flow­chart of audit process)

• Audit brief
• Kick off audit
• Audit plan­ning with CNPA — includ­ing risk man­age­ment, sig­ni­fic­ant risks & scoping
• Walk­through of design and con­trols; rel­ev­ant areas of sig­ni­fic­ant audit risk
• Final audit scop­ing — test­ing approach for fin­an­cial state­ment and wider scope audit
• Early test­ing (data / logic­al foundation)
• Fin­an­cial state­ment sub­stant­ive test­ing; unplanned fin­an­cial state­ment testing
• Con­clud­ing audit; pre­par­ing our opin­ion and let­ter of representation
• Report­ing to the Audit and Risk Com­mit­tee and the Accounts Com­mis­sion Board
• Reflec­tions or audit of ²⁰²⁰⁄₂₁ and Audit Plan for ²⁰²¹⁄₂₂

Mater­i­al­ity

Fin­an­cial state­ment mater­i­al­ity is determ­ined based on a pro­por­tion of the total oper­at­ing expendit­ure. We have determ­ined plan­ning mater­i­al­ity to be £107,000 which equates to approx­im­ately 7% of CNPA’s total income and oper­at­ing expendit­ure. This is based on the mag­nitude of CNPA’s income and expendit­ure oper­at­ing expendit­ure for the year. Per­form­ance mater­i­al­ity rep­res­ents the amounts set for the fin­an­cial state­ments as a whole to reduce the prob­ab­il­ity that the aggreg­ate of uncor­rec­ted and undetec­ted mis­state­ments exceeds mater­i­al­ity. We use this to determ­ine our test­ing approach for the fin­an­cial state­ments. We have set this at 75% of plan­ning mater­i­al­ity (£80,000). This is based on our under­stand­ing of CNPA’s fin­an­cial state­ments, its industry sec­tor (the pub­lic sec­tor in Scot­land) and judge­ment on the expec­ted influ­ence of plan­ning mater­i­al­ity on the users of the fin­an­cial statements.

On this basis we apply a sep­ar­ate lower mater­i­al­ity level to the Remu­ner­a­tion and Staff Report. This is set at the lower fin­an­cial state­ments in the Remu­ner­a­tion Report (£5,000).

Sig­ni­fic­ant audit risks

Sig­ni­fic­ant risks are defined by ISAs (UK) as risks that, in the judge­ment of the aud­it­or, require spe­cial con­sid­er­a­tion. In identi­fy­ing risks, audit teams con­sider the nature of the risk, the poten­tial mag­nitude of mis­state­ment, and its like­li­hood. Sig­ni­fic­ant risks are those risks that have a high­er risk of mater­i­al mis­state­ment. We will com­mu­nic­ate sig­ni­fic­ant find­ings on these areas as well as any oth­er sig­ni­fic­ant mat­ters to you in our Annu­al Report to CNPA and the Aud­it­or General.

Man­age­ment Over­sight of Con­trols (as required with­in Audit­ing Stand­ards — ISA 260)

Our work focuses on spe­cific­ally con­sid­er­ing judge­ments on which the fin­an­cial state­ments, includ­ing man­age­ment over­ride of crit­ic­al estim­ates and judge­ments (as per income and its nor­mal use), mater­i­als dur­ing the year, and under­stand­ing busi­ness out­side nor­mal courses of busi­ness for the organ­isa­tion. These are merely the under­stand­ing of the fin­an­cial state­ments sig­ni­fic­ant trans­ac­tions we become aware of that are based on our audit know­ledge and cross-rela­tion are out­liers to the norm may be over­rid­den by budget, or that exceed appar­ently usu­al spending.

Risk of Fraud in Expendit­ure (as recom­men­ded in FRC guid­ance for Pub­lic Sec­tor entit­ies) (Com­plete­ness, occurrence)

Over­spend­ing expendit­ure is under­stated or not trans­acted in the cor­rect peri­od (risk of fraud in expendit­ure). As payroll expendit­ure is well fore­cast and agree­able to under­ly­ing payroll sys­tems, there is less oppor­tun­ity for the plan expendit­ure risk. These costs are well fore­cast and stable based on past exper­i­ence includ­ing oper­a­tion­al plan costs, there­fore the risk of mater­i­al mis­state­ment is there­fore not as high as the income and expendit­ure risk, espe­cially dur­ing a peri­od of lim­ited eco­nom­ic or fisc­al and mater­i­al resource. We there­fore focus on non-pay expendit­ure areas and there­fore set our test­ing and oth­er areas focus­ing on expendit­ure and arrange­ments, many may be par­tic­u­larly pre­val­ent around the year end and include a spe­cif­ic focus, exclud­ing auto arrange­ments. We con­sider it to be advant­age­ous for man­age­ment to achieve a strong fin­an­cial pos­i­tion in the con­text of report­ing in, to both both gov­ern­ment own­ers and the users to achieve the fin­an­cial tar­gets set.

Risk of Fraud in Rev­en­ue Recog­ni­tion (as required with­in Audit­ing Stand­ards — ISA 240) (Occur­rence, completeness)

Oth­er matters

Aud­it­or Responsibilities

We have a num­ber of respons­ib­il­it­ies as set out in the Code and our audit guidance.

• We audit your fin­an­cial state­ments and your reports in your Annu­al Report and sec­tions of your Annu­al Report which are not sub­ject to audit
• We read parts of your fin­an­cial reports which are sub­ject to audit and check that they are con­sist­ent with the fin­an­cial state­ments which we audit
• We carry out work to sat­is­fy ourselves that dis­clos­ures made in your Annu­al Gov­ernance State­ment are con­sist­ent with dis­clos­ures made in your fin­an­cial statements
• We con­sider oth­er duties under the Code and require­ments set out in Audit Scotland’s guidance.

Intern­al con­trol environment

Through­out our audit plan­ning and the work, we con­tin­ue to devel­op our under­stand­ing of the over­all con­trol envir­on­ment (design) as related to the fin­an­cial state­ments and pro­ced­ures. Our walk­throughs in par­tic­u­lar, covered key con­trols pro­cesses, journ­al entries, and oth­er pro­ced­ures. Par­tic­u­lar emphas­is was around:

• Mater­i­al risks includ­ing expendit­ure (main fund­ing payroll, expendit­ure, mater­i­al goods (e.g., man­age­ment of mater­i­als and pur­chase of materials)
• Our focus is design and imple­ment­a­tion of con­trols, not only documentation.

Oth­er mater­i­al bal­ances or transactions

Going con­cern assessment

As aud­it­ors, we are required to obtain suf­fi­cient appro­pri­ate audit evid­ence regard­ing, and con­clude on:

• wheth­er a mater­i­al uncer­tainty related to going con­cern exists; and
• the appro­pri­ate­ness of management’s use of the going con­cern basis of account­ing in the pre­par­a­tion of the fin­an­cial statements.

Account­ing estimates

Under ISA (UK) 540 aud­it­ors are required to under­stand and assess an entity’s intern­al con­trols over account­ing estim­ates, including:

• The nature and extent of over­sight and gov­ernance over management’s fin­an­cial report­ing pro­cess rel­ev­ant to account­ing estimates;
• How man­age­ment iden­ti­fies the need for and applies spe­cial­ised skills or know­ledge relat­ing to account­ing estimates;
• How the entity’s risk man­age­ment pro­cess iden­ti­fies and addresses risks relat­ing to account­ing estimates;
• The entity’s inform­a­tion system;
• The entity’s con­trol activ­it­ies in rela­tion to account­ing estim­ates; and
• How man­age­ment reviews the out­comes of pre­vi­ous account­ing estimates.

Audit timeline

(Dia­gram show­ing timeline of audit process)

• Plan­ning and risk assess­ment (Feb­ru­ary 2021)
• Draft Audit Plan (3 April 2021)
• Com­pil­a­tion of plan­ning and risk assess­ment doc­u­ment­a­tion (31 March 2021)
• Final Extern­al Audit com­pleted and cir­cu­lated to the Account­able Officer and Audit Scot­land (June/​July 2021)
• Year end audit (June/​July 2021)
• Audit and Risk Com­mit­tee / Board (August/​September 2021)
• Annu­al Report to the Account­able Officer and Aud­it­or Gen­er­al (Octo­ber 2021)
• Audit Opinion/​Rep­res­ent­a­tion (Novem­ber 2021)

Qual­ity and adding value through the audit

Our over­all approach for the audit is clear and upfront com­mu­nic­a­tion, foun­ded on our under­stand­ing of your organ­isa­tion, key pro­cesses to ensure deliv­ery of a qual­ity audit. Our approach is ​‘risk based’. We come with our audit meth­od­o­logy adding value. We bring our audit­ing stand­ards and con­tinu­ously improve and refine our approach with every audit. The Audit is car­ried out as a Firm wide pro­cess and is a Firm wide pro­cess and our audit is sup­por­ted by Audit Scot­land with Audit Scot­land spe­cif­ic guid­ance. We have par­tic­u­lar spe­cial­ist qual­it­ies (report on our qual­ity port­fo­lio). As part of our work on a nation­al arrange­ment, qual­ity review over our Scotland’s qual­ity port­fo­lio. Our wider trans­par­ency reports are set out on our annu­al audit

Audit Fees

Across all sec­tors and firms, the FRC has set out its expect­a­tion of improve­ment fin­an­cial report­ing from organ­isa­tions and the need for audits to demon­strate increased scep­ti­cism. This includes the revised ISA 240. In addi­tion, we have already iden­ti­fied and meas­ured the updated expect­a­tion of the FRC and more robust report­ing and chal­lenges to under­take. For audit qual­ity and meet­ing expect­a­tions of the Audit Scot­land, our fees cov­er the qual­ity pub­lic sec­tor report­ing. This includes extern­al audit, and the qual­ity pub­lic sec­tor report­ing. This includes changes issued by Audit Scot­land. In each year we adjust Audit Scot­land guid­ance to reviewed bod­ies. The fee is cal­cu­lated in accord­ance with Audit Scot­land guid­ance. The fee for the year ended 31 March 2021 is set out in our plan­ning guid­ance. We can reduce the fee by up from the baseline fee by Audit Scot­land. We can increase the fee with the Man­age­ment to set the fee rel­ev­ant to the baseline fee.

Inde­pend­ence

Eth­ic­al Stand­ards and ISA (UK) 260 require us to give you timely dis­clos­ure of all sig­ni­fic­ant facts that might reas­on­ably be expec­ted to influ­ence our objectiv­ity and inde­pend­ence at the firm or covered per­son, refer­ring to us. We encour­age you to con­tact us to dis­cuss issues. We will also dis­cuss with you if we make addi­tion­al judge­ments regard­ing sur­round­ing inde­pend­ence mat­ters. We con­firm that there are no sig­ni­fic­ant facts or cir­cum­stances that we are required or wants to draw to your atten­tion. We have com­plied with the Fin­an­cial Report­ing Council’s Eth­ic­al Stand­ards (Revised 2019) and that as a firm, and with each covered per­son, con­firm we com­ply with that as it relates to our inde­pend­ent object­ive pos­i­tion on the fin­an­cial state­ments. We con­firm that we have imple­men­ted policies and pro­ced­ures to meet the require­ments of the Eth­ic­al Stand­ard. Our team com­plete annu­al (self and declar­a­tion of inde­pend­ence) on prop­er con­sid­er­a­tion of risk on a case by case basis as com­plet­ing timeli­ness. The work of our Eth­ics team’s over­sight by the part­ner and all staff under­go eth­ics train­ing in past year.

Appen­dices

Respons­ib­il­it­ies

Com­mu­nic­a­tion

Fraud respons­ib­il­it­ies

Audit­ing Account­ing Estim­ates and Related Dis­clos­ures (ISA 540 revised)