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A multinational firm has been accused of ‘downing tools’ without finishing the job it is paid for, leaving Wokingham Borough Council to pick up the tab.
Accountancy firm EY is responsible for carrying out the council’s annual external audits of its finances. But after long delays, EY announced in February that it will leave two years’ audit reports incomplete.
One angry councillor, Mike Smith, has accused the firm of ‘downing tools and walking away’ from the job.
He added: “Clearly something is catastrophically wrong (with the auditing process).”
By law, every local authority has to have its finances audited by an external accountancy firm. But delays that started during the coronavirus pandemic mean there is now a huge backlog, leaving years upon years’ worth of audits still to be completed.
EY has said it will no longer try to complete Wokingham Borough Council’s audits for the 2021-22 and 2022-23 financial years.
Angry members of the council’s audit committee took the firm to task for its decision at a meeting on February 7.
Mike Drake, an accountant appointed to the committee, said he was ‘absolutely astonished’ by the situation, especially as councils’ finances are under strain.
Another, Sandeep Vig, said: “I’ve never seen anything like this. It’s absolutely shocking – surprising.”
Councillor Stephen Newton asked EY to reconsider – pointing out that the government has recently given firms extra time to complete delayed audits.
But Janet Dawson from EY said the firm had already allocated its staff to other jobs and couldn’t move them back.
She said EY had expected to be able to complete the audits before Christmas, but hadn’t received sufficient information on how council-owned properties had been evaluated.
The Council disagreed, arguing the information it has given should be enough.
But Ms Dawson said EY wouldn’t be able to complete the audits even so – due to more delays at the Royal Borough of Windsor and Maidenhead.
The neighbouring council manages the pension fund for several local authorities in Berkshire. But similar delays there mean EY hasn’t been able to get the assurance it needs from RBWM’s auditor.
EY will instead issue a ‘disclaimed opinion’ for both years – meaning it can’t say if it believes the council’s financial management is sound.
Fees to be paid by councils for external audits are set by the Public Sector Audit Appointments (PSAA) body.
Information from the PSAA suggests fees to Wokingham Borough Council for both years could come to a total of £186,269. However the final sum has not been agreed, and it’s not clear if this figure includes charges for additional work, or deductions for work left incomplete.
Wokingham Borough Council told the LDRS it does not yet know how much it will have to pay. The council also said it is waiting for the government to decide what a disclaimed audit will mean for councils.
A statement from EY said: “We do not comment on the organisations we audit. Our priority continues to be the delivery of high-quality audits.”
In November 2023, a report by The Guardian noted how 99% of English councils did not have their 2022-23 financial accounts signed off by the deadline.
A current government consultation noted that timely, high-quality financial reporting and audit of local bodies is a vital part of our democratic system.
It said: “Not only does it support good decision making by local bodies, by enabling them to plan effectively, make informed decisions and manage their services, it ensures transparency and accountability to local taxpayers.
“The backlog in the publication of audited accounts of local bodies in England has grown to an unacceptable level.
“The number of outstanding opinions peaked on September 30, 2023 at 918.
“As at 31 December 2023, the backlog of outstanding audit opinions stood at 771.”
