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Council audit costs rise to £640,000 after delays and issues

An audit of Nottingham City Council’s accounts has so far cost more than £640,000 after extra accounting fees were incurred due to delays and other problems.

Grant Thornton, which has been tasked with reviewing the council’s yearly accounts from 2019/20 through to 2022/23, originally began audit work in 2020.

An audit is the examination of the financial accounts of an organisation, and all local authorities to have their accounts reviewed in this way.

Audits are designed to provide assurances to taxpayers that a council’s finances are in order and being managed in the correct way.

A draft report on the city council’s 2019/20 accounts should have been finished in November 2020, but it suffered delays.

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While this report has now been drafted, there are still three sets of accounts that should have already been published with opinion from the auditor.

Some of the issues included concerns from councillors over the value for money of the auditing process and problems relating to the uncovering of misspent millions from the council’s Housing Revenue Account.

The auditor also required finalised figures following the administration of Robin Hood Energy as well as property valuations for some of the council’s larger assets.

According to documents released ahead of an Audit Committee meeting on July 28, Grant Thornton was paid £132,531 to conduct work on the 2019/20 accounts and another £132,531 for the 2020/21 accounts, before costs increased to £141,531 for 2021/22 and £141,531 for 2022/23.

The cost of an audit is set by the Public Sector Audit Appointments (PSAA).

Documents reveal that, because of the issues and delays, costs have now risen by almost £100,000.

They state: “Recent discussions between the council, Public Sector Audit Appointments and Grant Thornton have resulted in the additional fees being increased to £92,350 to reflect the issues encountered through the audit.”

This means the total cost is now £640,474.

According to the Public Accounts Committee, which examines the value for money of Government projects, programmes and service delivery, the delay to the audit process at Nottingham City Council is not a unique issue.

The committee said less than half of local authority audits met their deadlines for completion in 2019/20.

A report from the committee raised concerns that the delays and quality issues undermine the value and purpose of an audit, reducing the assurance to taxpayers and elected representatives.

Now, the Government-appointed Improvement and Assurance Board (IAB) overseeing change at Nottingham City Council has issued a directive that the outstanding issues with the accounts should be resolved by September 30, 2023.

It is just one of many directives set by the board, which was appointed to oversee improvements following the collapse of Robin Hood Energy.

Audit Committee documents add: “The council now has its draft 2019/20 statutory accounts ready for external audit certification and will have a draft set of accounts for 2020/21 and 2021/22 ready for audit by September in line with the IAB instructions.

“Additional team members have joined the accounts technical team during
June to give additional capacity and enable progress to continue with later
years whilst the team also respond to live audit queries.”

In February 2023, the IAB issued 39 instructions to the council and these
instructions had the weight of statute and sought to continue the improvement work at the pace and in the direction required by the board.

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The council’s progress to meet these other instructions will also be discussed during the Audit Committee meeting on July 28, alongside an update on its Financial Improvement Plan.

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