28 Oct 2023
The external auditor responsible for looking into SADC’s accounts has issued a damning progress report to councillors.
A recent meeting of the council’s audit and governance committee heard a string of concerns about the accounts for the year ending March 31 2021.
These included a £5.7 million overvaluation of the council’s land which indicates there may be a “material error” in the council’s land and building valuation, with large uplifts in net income used in valuations suggesting that the prior year net income had not been updated for some years and may have been incorrect, plus “material mistatements” which could require restatement of the 2019/20 and 2020/21 financial statements.
The auditor identified serious errors in the council’s reported cash position, for example, £1.4 million was omitted from the 2020/21 figures. An “unexplained” £0.7 million difference in a bank reconciliation was also highlighted.
The report stated: “Accuracy of the reported cash position is an essential control over completeness of income and expenditure and for the prevention of fraud.”
It was also recorded that the council was initially unable to provide a reconciliation of the £0.9m VAT recoverable balance to agree to HMRC submissions as most of the supporting information had
been “mislaid” by a previous member of staff and an adjusting return had to be subsequently submitted due to errors in the initial return.
But the auditor also admitted that the completion of the 2020/2021 audit was still far from complete as his firm currently did not have enough staff to finish the work.
Suzanne Jones, SADC strategic director for customer, business and corporate support, responded to the issues raised: “Our external auditor raised a few issues in a progress report to our audit and governance committee and these were discussed by councillors at last month’s meeting which was open to the public.
“Such auditor questions are a common occurrence in the rigorous process of finalising an audit and the issues relate to technical accountancy matters and the provision of supporting evidence.
“For example, the auditor has highlighted differences in some land and building valuations between that made by our current and our previous independent valuator. The implications of that have to be considered.
“We have responded to this and all of the other points raised by the auditor and these replies are available in the published progress report. We are continuing with this dialogue with the auditor as we both seek a final resolution to all of the points raised.”
The backlog of local authority audits was highlighted recently by the PSAA (Public Sector Audit Appointments) body, which revealed that as at the end of last month only five out of 467 local government bodies’ 2022/23 audit opinions have been given. This adds to the 456 that are outstanding from previous years.
PSAA’s chair Steve Freer said: “The scale of the backlog of local audit opinions is becoming more and more serious. It is now very clear that an extraordinary intervention of some sort is urgently required to put the system back on track. Hopefully, current work to develop a solution can be concluded quickly, enabling details of the planned solution to be announced and implemented as soon as possible.”
