Fees for Luton council audit rise to £515k amid row over accounts

Ernst and Young concluded LBC “was unable to produce revised 2018/19 accounts that properly reflect the applicable financial reporting framework and accounting standards”, according to a report to full council.

“But council officers refute most of the company’s findings and recommendations, largely on grounds of inaccuracy, fairness, context and timing,” said the report.

“The firm has been the council’s auditors since 2016, signing off the accounts for 2015/16, 2016/17 and 2017/18. The 2018/19 accounts were at the point of being signed off when the pandemic happened.

“Throughout the process, LBC has been willing and made every effort to deal with all the major issues raised by the company, which included looking into adjustments to entries carried out 15 years ago.

“In a report to the audit and governance committee in July 2023, Ernst and Young stated it had all the required information and was moving through its internal processes.

“We don’t see any reason why the remaining issues, which we don’t consider to be material, can’t be addressed.”

Ernst and Young published a public interest report concerning the audit of the 2018/19 accounts, which prompted a formal complaint by LBC to the Institute of Chartered Accountants in England and Wales (ICAEW).

Labour Poets councillor Jacqui Burnett, who chairs the council’s audit and governance committee, told the council: “Regarding the ICAEW (complaint), officers wanted to pursue that as it’s about their reputation and professionalism.

“I’ve done these things as a school governor where we didn’t like the answer,” she explained. “We spent loads of money challenging that and it doesn’t change diddly squat.

“But I respect what the officers, the chief executive and the Section 151 officer, have done to safeguard the finances. I support their desire to stand professionally, but I wouldn’t have done that. I would have moved on.

“Officers are still pursuing the reduction of fees with the PSAA (public sector audit appointments). It really grinds me that we spend an exorbitant amount of money on auditors’ time and we haven’t got a finished product.”

Liberal Democrat Barnfield councillor David Franks said: “We’ve had one official complaint dismissed. It appears to be wait and see on the other.

“The Ernst and Young fee for auditing was fixed at £94,000. Partly because of this continuing dispute, it’s gone up by £421,000 to £515,000. I don’t think this disagreement has done this council and its taxpayers any favours at all.”

Ernst and Young said in a statement: “As set out in our audit results report to the audit and governance committee, we intend to issue a disclaimed opinion on LBC’s 2018/19 accounts.

“The authority hasn’t provided sufficient appropriate audit evidence to support material balances and disclosures in the statement of accounts.

“As auditors with public interest responsibilities, we’re unable to form an opinion as to whether the financial statements give a true and fair view.

“We’ve reported those issues throughout the audit process, but the council hasn’t adequately addressed these points during the last four years.”