A national comparison of Reading Borough Council’s audit performance

Pacioli, who published a book a double-entry bookkeeping

Reading Borough Council (RBC) was one of 16 local authorities where auditors were unable to give an opinion on accounts by the statutory deadline of 30 September 2016. This information is given in a report issued by Public Sector Audit Appointments (PSAA), the body responsible for appointing auditors to local authorities (LAs) and other public bodies.

The reasons given in the PSAA report for this failure were “audited body resource issues” and “various errors identified during the audit”.

Auditors were able to issue an opinion on the accounts of 341 LAs (96%) by 30 September. The earliest date on which an opinion could be issued was 15 July; this was achieved by 31 of them (9%).

Of the 16 LAs that missed this deadline, 13 are named but three are not; two where there were outstanding objections on the accounts and one where there was an auditor resource issue.

RBC’s auditors Ernst & Young (E&Y) gave their opinion on the council’s accounts on 17 November 2016, which was before the PSAA report was published on 20 December. The PSAA report states that the RBC opinion was “not yet issued” even though the reporting date for Lincolnshire County Council is shown, and this was issued a day later on 18 November.

It is unfortunate that the report does not reflect the actual situation. The RBC opinion was late but not that late.

‘Value for money’ opinion

As well as an opinion on the accounts, auditors are asked to prepare a ‘value for money’ opinion on whether:

in all significant respects, the audited body had proper arrangements to ensure it took properly informed decisions and deployed resources to achieve planned and sustainable outcomes for taxpayers and local people.

Auditors can offer one of three possible opinions:

  • unqualified (satisfied with arrangements),
  • qualified except for (satisfied except for some weaknesses),
  • adverse (not satisfied).

E&Y issued an adverse ‘value for money’ opinion on RBC for a long list of reasons covering [ref 1]:

  • the accuracy and reliability of financial and performance information, which did not identify financial pressures in 2016/17, especially in children’s services,
  • the operation of financial controls, particularly reconciliations,
  • “…that planned action had not been taken to achieve sustainable savings during 2016 that may have prevented the need for significant savings to be made as a matter of urgency in the 2016/17 budget”,
  • issues arising from the August 2016 Ofsted inspection report which concluded that children’s services were inadequate.

At the time of the PSAA report, adverse ‘value for money’ opinions had been given for three LAs but were not yet available on 12. One of these LAs must have been RBC, although they are not named.

Other LAs with adverse opinions were:

  • London Borough of Lambeth,
  • Northampton Borough Council,
  • Northamptonshire County Council.

The Whitley Pump thought it would be interesting to see how the reason for RBC’s adverse opinion compared with those of other LAs. In all three cases, the auditors were KPMG.

The London Borough of Lambeth’s adverse opinion was because of issues in two areas [ref 2]:

The Ofsted Report judged services for children in need of help and protection, children looked after and care leavers to be inadequate overall. The HMIP report concluded that although improvements had been made since the previous inspection in 2012, the Youth Offending Team had not yet achieved an overall satisfactory level of performance.

The Council’s Annual Governance Statement reports on significant weaknesses in the framework of governance, risk management and control and non-compliance with controls during the year ended 31 March 2016, together with the Council’s action plan to address these weaknesses.

Northampton Borough Council’s adverse opinion was about a £10.25 million loan made to Northampton Town Football Club in 2013, which Northampton Borough Council suspected to be unrecoverable [ref 3].

Northamptonshire County Council’s adverse opinion arose from the challenges of meeting their 2015/16 net budget requirement. The auditors explained [ref 4]:

Due to non-delivery of savings plans and overspends in Adult Social Care, and Children’s Services, the budget position was achieved through mitigating non-recurrent transactions, including a further review of MRP (minimum revenue provision) policy in year, a strategy of internal borrowing reducing net interest payable and the utilisation of £16.5 million from ear-marked reserves.

Northamptonshire County Council were unable to reach their breakeven budget through achievement of budgeted savings, instead of relying on non-recurrent measures, demonstrating there were not adequate arrangements in place to deliver agreed savings plans.

The Whitley Pump opinion is that although there is some similarity between Reading’s situation and that of Northamptonshire and Lambeth, there are also too many differences to draw parallels.

Of the 345 LAs who had a ‘value for money’ opinion by the time of the PSAA report, only 3 (<1%) had an ‘adverse’ conclusion. A further 24 LAs (7%) were ‘qualified except for’.

An update on 2015/16 statistics is expected to be provided in the 2016/17 report.

As well as local authorities, the PSAA report also includes results for police, fire and rescue authorities, other local government bodies and small organisations such as parish councils.


  1. Reading Borough Council, Statement of Accounts 2015-16, pages 30-31
  2. London Borough of Lambeth, Statement of Accounts 2015-16, pages 19-10
  3. Northampton Borough Council, Statement of Accounts 2015-16, pages 4-5
  4. Northamptonshire County Council, Statement of Accounts 2015-16, pages 26-27


  1. PSAA – Report on the Results of Auditors’ Work
  2. PSAA News Release 19 December 2016 – Report on the Results of Auditors’ Work
  3. PSAA
  4. Minimum Revenue Provision Policy – guidance
  5. Reading Borough Council Statement of Accounts 2015-16
  6. Auditors finally deliver report on council finances

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