The Reading Borough Council (RBC) financial year 2016/17 ended on 31 March 2017. The statutory deadline for signing off its accounts was 30 September 2017. The report going to the next RBC Audit and Governance committee on 27 September 2018 says that this sign-off is not now expected until October or early November; this is over a year late.
The report includes more bad news. External auditors Ernst & Young (EY) have said that they are going to give a qualified opinion on the accounts because they are unable to substantiate some debtor (money owing to RBC) and creditor (money owed by RBC) amounts included in them.
Public Sector Audit Appointments (PSAA), the body responsible for appointing Local Authority (LA) auditors, says:
Publishing timely audited accounts, with an unqualified audit opinion, reflects well on bodies’ financial reporting and financial management arrangements and is a fundamental feature of good governance.
Qualifying the accounts of a council is a very rare occurrence. According to the annual reports produced by PSAA, there were no qualified council accounts for the years 2013/14 or 2014/15. By the time that they produced their most recent report in December 2017, three councils had still not yet finalised their accounts for 2015/16 and 26, including Reading, had not signed off their 2016/17 accounts, but all others were unqualified.
In August, the continued delay in finalising the accounts was largely blamed on the saga of public finance initiative (PFI) scheme valuation. This continues, with RBC and EY experts facing up to one another to reach an agreement on amendments to be made to the accounts.
Councillor Jason Brock, who is responsible for the new portfolio of corporate and consumer services, said at the last audit and governance committee that it was “great that the end was now in sight”. Something has badly delayed these best laid plans.
EY now say that although they may have completed their audit by early October, their opinion on the accounts will not be available for about another month. This is because it will have to be reviewed with RBC and internally by EY, and then it is likely to be reviewed by the PSAA, causing further delays until the end of October or beginning of November.
Over the last couple of years, the RBC finance team has been expanded with permanent and contract resources to tackle the accounts production crisis. That has incurred additional costs. In parallel with this, EY’s bill for the audit is (currently) expected to be almost four times the standard fee of £108,938.
As to the 2017/18 accounts, the last audit & governance committee was told that the draft accounts would be handed to the auditors at the end of August and at that time they would also be available for public inspection. This has still not happened and all that is on RBC’s website is the original notice posted on Friday 1 June when the draft accounts should have been published.
The committee report states that the accounts will not be finalised and ready for audit until late November. This was the target date for the completion and sign off of the 2017/18 accounts given in Reading’s 2018-21 corporate plan presented at the 26 June full council meeting. With continued slippage in deadline, uncertainty remains about the ability to control this runaway train.
The Whitley Pump hopes that Chief Executive Peter Sloman is able to explain what is going on to the committee.
The meeting will be held at 6.30pm on Thursday 27 September at the Civic Offices on Bridge Street and is expected to be webcast.