A lengthy spat over the audit of historic Luton Borough Council accounts has taken another dramatic twist, with the local authority making a formal complaint about its former external auditors Ernst and Young.

A public interest report has been published by the company today, (Friday) which relates to the still outstanding closure of the council’s financial records.

In response, LBC is issuing its complaint to the Institute of Chartered Accountants in England and Wales (ICAEW).

The local government and social care ombudsman’s manual for councils warns: “Issuing public interest reports is one way that we help to ensure councils, and other organisations providing public services, remain accountable to people who use those services.”

placeholder image — Town hall. Picture: Olivia Preston

In a statement, the council said: “There’s been a long-standing disagreement with Ernst and Young over the closure of LBC’s 2018/19 accounts and we believe the report isn’t fair or balanced.

“It’s full of factual inaccuracies and frustratingly fails to take into account the evidence which has been provided to the auditors on numerous occasions to counter the conclusions it makes.”

There are two issues at the heart of the public interest report, according to the council.

“The first is some historic challenges in the way LBC used to procure social care services for those in need, which was identified by our own internal team in June 2020,” explained the council.

“This had been fully resolved by 2021, working closely with Ernst and Young’s team. So we can’t understand why it’s forming part of a public interest report now.

“And there have been difficulties in recruiting to a small number of specialised finance roles at the council, amid a limited recruitment market for both public and private sector organisations.

“We’re talking about two roles in a team of 94 staff. Both of those roles have been filled now. Despite this, LBC has worked extremely hard to stabilise our financial position under extreme challenges during the last few years, while delivering a balanced budget every year.”

Labour Northwell councillor and portfolio holder for finance, Rob Roche, said: “We strongly believe that the decision of Ernst and Young to publish a public interest report is deeply flawed.

“This document is damaging to our reputation and contradicts a recent government-commissioned independent assessment into our finances, which concluded the local authority is financially well-run.

“The report isn’t a fair or accurate reflection of the current position, and we’re hugely disappointed given how hard our teams have worked to stabilise our financial position.

“That’s put us in a stronger position than other authorities facing similar challenging circumstances. The basis of what Ernst and Young has been saying has been in the public domain and discussed in great detail at LBC audit committees for several years.

“We’ve continually provided clear evidence to counter many of the points the report makes. We believe we’re left with no choice but to raise a formal complaint with the ICAEW.”

An Ernst and Young spokesman said: “We stand by the conclusions in our public interest report, which sets out our concerns in full.”