Reading Borough Council (RBC) is creeping slowly towards finalising their accounts for the year ended 31 March 2017 but the last few steps are painful. The report to last week’s Audit & Governance committee had explained how all the property valuations required had been received and that the accounts were being updated with final adjustments. However we learned on the night that things were not that simple.

The meeting was told that the firm undertaking this work had provided amendments to their original valuations which required further rework on the accounts. Consequently there would be a delay in providing the adjusted accounts to external auditors Ernst & Young (EY). This was now expected to take place in the week commencing 28 January.

EY’s Maria Grindley was unable to give a date by which the 2016/17 audit would be completed, stating that she was reliant on RBC providing the necessary information.

She explained that in the audit report EY were expecting to qualify debtors, creditors, income and expenditure due to lack of information [at 1:42:00 onwards].

In a short preview of their audit results report, EY set out the work that they still had to complete to finalise the audit and a catalogue of failings by RBC’s finance department resulting in audit delays and amendments to the financial statements.

In a statement issued prior to the meeting, the council said:

The Council’s updated 16/17 accounts are expected to be submitted to its external auditors Ernst & Young next week. EY have indicated they anticipate being in a position to sign off these accounts during February. Following the sign off of the 16/17 accounts the Council will submit its 17/18 accounts for audit. We anticipate the audit process for the 17/18 accounts will be completed in the Spring of 2019 and the audit of the 18/19 accounts will be completed in the autumn of 2019, which would bring the Council back on track for timely delivery of the 2019/20 audit.

The delay in signing off the 16/17 and 17/18 accounts are the result of historic failures by the Council to meet good accounting practice and control standards, as outlined in the E&Y report. The Council has fully acknowledged these past failures and put in place measures to ensure they are addressed going forward.

Work carried out to date includes:

  • Restructuring the Council’s finance function, including investment in experienced managers with the right skills and capabilities
  • Training for staff to address historic control issues and evidence requirements necessary to support transactions
  • Procurement of a fixed assets register to manage the complex accounting for assets required under the CIPFA [Chartered Institute of Public Finance and Accountancy] Code, which reduces exposure to error
  • Commissioned new valuations of its assets in accordance with CIPFA guidance
  • Implemented regular quality assurance checking in key areas
  • Put in place new control account reconciliation processes.

Many of these new arrangements have only been put in place during the last 12 months however, which means the real benefit will only be seen in closing future years account. The Council is reassured however that regular testing of key controls by the Internal Audit team show they are operating well and learning from the closure of the 16/17 accounts is being taken forward into preparation for the subsequent years accounts.


Links
  1. RBC Audit & Governance committee 25 January 2019 papers & webcast
  2. Are we there yet?