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KEY AUDIT MATTERS

Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the
financial statements of the current period and include the most significant assessed risks of material misstatement
(whether or not due to fraud) that we identified. These matters included those which had the greatest effect on: the
overall audit strategy, the allocation of resources in the audit; and directing the efforts of the engagement team.
These matters were addressed in the context of our audit of the financial statements as a whole, and in our opinion
thereon, and we do not provide a separate opinion on these matters.
Risk Our response to the risk Key observations communicated to the
Audit Committee

Management override We carried out procedures for We did not identify any material
identifying fraud risks during the weaknesses in controls or evidence of
There is a risk that the financial
planning stages, and inquired with management override.
statements as a whole are not
management about risks of fraud
free of material misstatements
and the controls put in place to We did not identify any instances of
whether caused by fraud or
address those risks. inappropriate judgements being applied
error.
which would indicate manipulation in
We gained an understanding of the accounting records or fraudulent financial
As identified in ISA (UK and
oversight given by those charged reporting.
Ireland) 240, management is in
with governance of management’s
a unique position to perpetrate
processes over fraud. We did not identify any other transactions
fraud because of its ability to
during our audit which appeared unusual
manipulate accounting records
We considered the effectiveness of or outside the Trusts normal course of
directly or indirectly and
management’s which are controls business.
prepare fraudulent financial
designed to address the risk of
statements by overriding
fraud.
controls that otherwise appear
to be operating effectively.
We carried out specific audit
We identify and respond to
procedures to test journal entries
this fraud risk on every audit
in the accounts, particularly
engagement.
testing journal entries and other
adjustments in the preparation of the
financial statements.
Risk of fraud in revenue and We reviewed and tested revenue and Our testing did not identify any material
expenditure recognition expenditure recognition policies; misstatements from revenue and
expenditure recognition.
Under ISA 240 there is a
We reviewed accounting estimates
presumed risk that revenue
for evidence of management bias, There is a transaction where we concluded
may be misstated due to
including testing of expenditure that management’s judgements in regards
improper revenue recognition.
accruals and provisions; to the in-year recognition of revenue is not
In the public sector, this
in accordance with applicable accounting
requirement is modified by
We reviewed the financial statements standards. We did not consider this to be
Practice Note 10 issued by the
for evidence of significant or unusual a case of fraud in revenue recognition as
Financial Reporting Council,
transactions. We also tested a Management outlined at an early stage of
which states that auditors
sample of income and expenditure our audit the background to the transaction
should also consider the risk
transactions from material revenue , the basis of their judgements , they did not
that material misstatements
streams including year-end debtor take any action to conceal their proposed
may occur by the manipulation
and creditor balances; accounting treatment and the transaction
of expenditure recognition.
does not materially alter the reported
We tested cut-off of income and financial position. We recommended that
expenditure at the year-end and the financial statements be amended for
conducted testing to identify any this transaction.
unrecorded liabilities at the year-end.
Our audit work did not identify any material
issues or further unusual transactions to
indicate any improper misreporting of the
Trust’s financial position.
Alder Hey Children’s NHS Foundation Trust 196 Annual Report & Accounts 2017/18