Delays to Luton council's historic accounts sign-off as auditors raise fresh concerns

Fresh concerns were raised by external auditor late in process of aiming to sign-off historic accounts
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Auditors have raised new issues delaying the planned sign-off of Luton Borough Council’s historic accounts.

External auditor Ernst and Young LLP was close to completing its work on the local authority’s 2018/19 accounts last month. But the company has asked for more information around two points, a meeting of the council’s scrutiny finance review group heard.

The audit of LBC’s accounts for 2019/20, 2020/21 and 2021/22 have still to be concluded, as well as the last financial year of 2022/23.

Exterior of Luton Town Hall (Picture: Olivia Preston via National WorldExterior of Luton Town Hall (Picture: Olivia Preston via National World
Exterior of Luton Town Hall (Picture: Olivia Preston via National World

The council’s director of finance, revenues and benefits Dev Gopal explained: “Quite late in the process, the auditors brought two new points to our attention. I couldn’t deal with those (immediately) as I was on a fortnight’s holiday. We’ve submitted our response to the firm yesterday. (October 30).

“It’s still a draft audit report, not the final document. One of those two points is something we’ve talked about and have to update, so a going concern.”

He added: “Every time there’s a delay in signing the accounts, we need to look further ahead at the next 15 to 18 months. We’re updating that over this going concern and looking at what happens after the balance sheet date.

“The other issue raised is about some of the company balances, which needs to be substantiated. We’re going through the process to provide the information.”

Liberal Democrat Barnfield councillor David Franks said: “I get the feeling Ernst and Young don’t want to sign these accounts off for their own reasons, which is why it’s dragged on as long as it has.

“The government fairly recently issued guidance or regulations about what happens with auditors unable to sign off accounts. Will it apply to this situation and what’s the implication? You’re still awaiting the final decision from the government. The whole thing is becoming more complicated the longer we go on.

“When that information becomes available, can we receive a written report on it?” he asked.

Mr Gopal replied: “We’re working with Ernst and Young. The main issue here for us is very technical in terms of valuation and big numbers.

“Once we see the final regulations, Ernst and Young will give us details of how it will deal with this backlog.

“So 2018/19 is important. The 2019/20 audit is practically complete, so whether we meet the government deadline depends on what that finally is.

“The auditors will decide as the audit planning is on them and they will tell us. We’ve enough time to work on 2022/23.”

Labour Beech Hill councillor Rumi Chowdhury wondered whether the local authority would “incur any penalties for late submissions”.

Mr Gopal added: “For a local government council, the answer is ‘no’. We need to publish a notice on our website giving the reason why. The scale of (audit) fees and charges has risen significantly.

“It could become mandatory with more responsibility on the Section 151 officer to make sure it’s done and the audit firm is properly resourced.”

Ernst and Young has a difference of opinion with Luton council over the development consent order cost relating to the council’s airport company, and could eventually present a qualified audit for 2018/19.

SOURCE: Luton Borough Council scrutiny finance review group (October 30) meeting.