At the Reading Borough Council (RBC) audit and governance committee on 17 April, auditors Ernst & Young (EY) announced that if their audit of accounts for the year ended 31 March 2017 (2016/17) was not completed by today, 30 April 2018, they would have to pull out until August because their resources were needed elsewhere.
If the audit is completed by today then it should be possible to sign off the accounts by the end of May. If not the more delays can be expected and EY were clear that they would not be able to start the audit of accounts for the year ended 31 March 2018 (2017/18) until after the 2016/17 audit was completed.
Accelerated timetables have been set by for all local authority accounts for 2017/18. with deadlines for draft accounts of 31 May (compared with 30 June) and approval by 31 July (compared with 30 September). This is an impossible timetable for RBC to meet.
Councillor attendance at the meeting was low. Two councillors, Tom Steele and Eileen McElligott, who were members of the committee, stood down recently from the council and Ricky Duveen was also absent. Therefore, aside from chair Conservative councillor David Stevens, only Labour councillors were present: Jo Lovelock, Emmett McKenna, Tony Page (who left before the end of the meeting) and Liz Terry.
RBC Chief Executive (CE) Peter Sloman was conspicuous by his absence, leaving new director of resources Jackie Yates alone to field questions which given her short time in post she could not always be expected to have had the answers to.
This was a grim and dour meeting with no good news. The short report did not go into many details or give a comprehensive update on the actions required to complete the accounts which had been presented to the committee in January,
Six weeks earlier at the RBC council meeting on 28 February councillor Page had said that accounts were imminent.
Accounts have been closed and submitted and are virtually ready to be signed off, there are still some minor queries to be addressed and those are being addressed.
Jo Lovelock, was surprised to hear of the ‘new items’ Private Finance Initiative (PFI) and asset valuation which were delaying sign off of the accounts. EY executive director Maria Grindley, responded that these were not ‘new items’ but had been on their list of audit issues from the beginning.
Most of the time at the meeting was spent on the report from RBC internal auditors which conveyed serious items of concern, not all of which was new. Despite their questions, councillors did not or were not able to ask questions which would elicit answers which were either coherent or confident.
RBC internal auditors described that, as set out in their report, the results of their work on accounts receivable (debtors), accounts payable (creditors) were that only “limited assurance can be taken that arrangements to secure governance, risk management and internal control within those areas under review, are suitably designed and applied effectively”. These areas were criticised last year and the lack of progress on audit points is concerning.
Not for the first time, the meeting discussed whether managers and directors of areas which had been slow to make improvements following an audit should be asked to appear before the audit & governance committee. This had been proposed by CE Peter Sloman at the audit & governance committee in July 2017 [at 0:54:00], why has this not been addressed by now?
The extended external audit and EY resources required has a high financial cost. Maria Grindley stated that an additional £200,000 had been spent up to the end of March; this compares with a planned fee of £121,396. The final bill for all EY’s work on the accounts and other audit work for the year ended 31 March 2016 was £220,735.
The Whitley Pump wants the council to be successful but somebody has got to get a grip. In July 2017 when both CE Peter Sloman and interim strategic finance director Peter Lewis both attended the audit & governance meeting, councillors hoped that things were getting better and moving forward rather than getting worse.
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- RBC full council meeting 28 February 2018 papers & webcast
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- Audit & Governance Committee 18 July 2017 papers & webcast