Audit Planning

The Gateshead Housing Company Ltd Audit Planning Memorandum Year ending 31 March 2006
Planning meeting 15 March 2006

AUDIT
Contents
1. 2. 3. 4. 5.
Introduction Client service team Audit process Audit focus areas Audit timetable
2005 KPMG LLP, the U.K. member firm of KPMG International, a Swiss cooperative. All rights reserved. This document is confidential and its circulation and use are restricted. KPMG and the KPMG logo are registered trademarks of KPMG International, a Swiss cooperative.
Introduction
Purpose of the document The purpose of this document is to provide an overview of the KPMG audit approach for the Gateshead Housing Company Ltd for the year ended 31 March 2006, for discussion in our planning meeting on Wednesday 15th March 2006 at 10am. The audit strategy which is largely unchanged from that adopted for the 2005 audit, has been developed from an appraisal of the key risks facing Gateshead Housing Company. Objectives of the audit The objectives for the audit engagement are as follows: to act as auditors of Gateshead Housing Company and to express an opinion on the statutory financial statements of the Housing Company in accordance with the requirements of the Companies Act 1985; and to highlight key issues that have been of relevance in the forming of our audit opinions. In addition to the above formal objectives, we aim to achieve the following: the highest quality of audit opinion and client service; provide timely warning of issues requiring management's attention; provide advice and support on the resolution of key issues/interpretation of new accounting requirements; provide guidance and support to the Audit Committee; provide a constructive contribution to the Housing Company; and cause a minimum of disruption to the operations of the Housing Company.
Client service team
KPMG team
Audit team Engagement Partner Audit Manager Audit In-charge Mick Thompson Tara Thurlbeck Michael Downes 0191 401 3765 0191 401 3912 / 07770 966 942 0191 401 3945
Tax team Tax Director Tax Assistant Manager John Hart Sara James 0191 401 3756 0191 401 3731
3 3.1
Audit process Overview of process
March 2006 March 2006 Analysis of business issues Analysis of business issues and identification of audit and identification of audit focus areas. focus areas. Audit planning with Audit planning with management. management. Agreement of audit logistics. Agreement of audit logistics. Submission of fee proposal Submission of fee proposal (did not vary significantly (did not vary significantly from previous year). from previous year).
May 2006 May 2006
May 2006 May 2006
June / /July 2006 June July 2006 Finalisation of accounts. Finalisation of accounts. Clearance of financial Clearance of financial statements disclosures. statements disclosures. Issue audit opinion. Issue audit opinion.
Assessment of business Assessment of business processes and high level processes and high level controls. controls. Assessment of residual Assessment of residual audit risk and planning of audit risk and planning of remaining audit procedures. remaining audit procedures.
Performance of remaining Performance of remaining audit procedures. audit procedures. Form audit conclusions. Form audit conclusions. Discussion of key issues Discussion of key issues with management team. with management team. Preparation of highlights Preparation of highlights document. document. Issue management report. Issue management report.
Audit committee meeting
Risk analysis and identification of audit risk.
Assessment of controls/processes.
Audit fieldwork and detailed testing of areas of residual risk.
Issue audit opinion
All year round liaison with management. All year round liaison with management. Timely identification and resolution of key risks and issues. Timely identification and resolution of key risks and issues.
3 3.2
Audit process Risk based external audit

Our audit approach is designed to understand and evaluate the risks in your business. We continue to refine our audit approach to ensure that it anticipates the Housing Company's risk profile.
ROVEMENT ID S IMP EAS UOU IN nities for improving perfor o rtu man NT opp ce CO back on Im
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Business Risk Analysis and Risk Based External Audit: Provides a basis for identifying audit risk. Utilise managements understanding of risk. Focuses on key audit risks. Directs attention to key processes. Applies an understanding of the Company's environment. Provides a context for analysis of financial information and accounting policy and disclosure issues.
Comm ent on
V: Evaluation & I: Strategic Analysis Communication Understanding business Frequent and informal objectives and strategies feedback on key issues, results and opportunities for improvement
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ed Fe
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The benefits of KPMGs approach: A clear focus on key business risks and processes. Tailored audit work supporting robust opinions. Strong central leadership and strategic analysis. Added-value reporting on systems.
Int e
IV: Audit Test Work Audit during the year focusing on audit risk areas and non-routine transactions III: Risk Assessment
a ct pe ex ss cu Dis
II: Process Analysis Understand the process and factors that drive business performance
ba sis
an ue dc TI iss riti EM NU on cal tes suc a AG OU cess upd N ular factors re SC gularly Reg MA OM IOR MUN ICATION WITH SEN
EN T
tio ns
Identify business risks and evaluate the design and operating effectiveness of controls
n so
ap ro ac tiv e
N CO
Audit focus areas
Performance Performance in the year and forecast for 2007 financial year. Systems Update on segregation of systems and procedures from Gateshead Council. Management Follow up on prior year Management report points. Decent Homes Standard Update on progress towards meeting the requirements of the standard. Management of void properties Update on internal audit report. Pensions We will consider the requirements of FRS 17 for the 2006 accounts. Internal audit Internal audit reviews undertaken in the year will be assessed. The implications of the findings of these reports will be taken into account in designing our external audit work. Liabilities We will consider the completeness of creditors and accruals. Taxation Our corporate tax specialists will review the various income and expenditure streams of the company and advise on the most appropriate treatment for taxation purposes.
Audit timetable
The key progress dates after the year end are presented below: Year end audit timetable
Year end cut off
31 March 2006
Audit commences
15 May 2006
Final audit clearance meeting
Weds, 24 May 2006, 3pm
Audit Committee meeting - draft accounts
30 May 2006
Board meeting - -final draft accounts Board meeting final draft accounts
8 June 2006 8 June 2006
AGM - -final accounts AGM final accounts
13 July 2006 13 July 2006

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The Gateshead Housing Company Ltd Audit Planning Memorandum Year ending 31 March 2006

Planning meeting 15 March 2006

Client service team

Audit process Overview of process

May 2006 May 2006

May 2006 May 2006

Audit committee meeting

Risk analysis and identification of audit risk.

Audit fieldwork and detailed testing of areas of residual risk.

Issue audit opinion

Audit process Risk based external audit

Audit focus areas

Year end cut off

Final audit clearance meeting

Weds, 24 May 2006, 3pm

Audit Committee meeting - draft accounts

8 June 2006 8 June 2006

AGM - -final accounts AGM final accounts

13 July 2006 13 July 2006

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