Cost of delayed Northampton Borough Council audit rises by £200k

The borough council's accounts for 2016/17 have still yet to be signed off
The borough council's accounts for 2016/17 have still yet to be signed off

The cost of an audit of Northampton Borough Council’s accounts could lead to a bill more than FOUR times higher than originally expected due to a host of errors.

External auditors KPMG have still yet to sign off the authority’s statement of accounts from 2016/17, and the original £80,000 cost of the audit now stands at £280,000 due to the extra work as a result of the delays.

And the cost is likely to further escalate with the accounts not due to be signed off until January and with the cost of any investigation work if objections are raised as to the accuracy of the audit.

Members of the council’s audit committee were told the final bill could feasibly be as high as £400,000.

The delays in signing off the accounts stem back to an error where an ‘incorrect methodology’ was used by the council’s external valuers Bruton Knowles to estimate the value of council dwellings. KPMG says that by using an ‘incorrect’ social housing discount factor, the authority understated the value of its council dwellings by £121.7million.

KPMG added that the council had also failed to stick to several deadlines in providing documentation for the accounts, with some requested details not being sent until October 29. It is only now it finally has all those details that the statement of accounts can soon be finalised.

Director Andrew Cardoza said: “Whilst the audit team have been working evenings and weekends to pick up the remaining information as soon as it has come through, the significant further delays have had a knock-on effect to the completion of our work.”

Overall the authority is roughly 11 months behind schedule for submitting the 16/17 accounts - having first produced a draft last September - and for beginning work on the 17/18 accounts.

And although KPMG recognised there would likely be additional costs to the standard £80,000 fee - due to it being a ‘high risk’ audit - the additional costs far exceed what was expected.

Councillor Mary Markham, a member of the audit committee, said: “There’s no doubt this has been a big problem, and we need to do something about it. Otherwise, in the future, it’s only going to be as poor as it has been through this whole process.”

The authority had blamed ‘staff churn’ as a consistent problem throughout the process, with it likely to need to use further agency staff while LGSS Finance launches a recruitment campaign to woo permanent employees who can help with audits.

The independent chair of the council’s audit committee, Ian Orrell, elected for members of the committee to view the finalised accounts at another meeting, instead of signing them off behind closed doors with any later amendments from KPMG.

He said: “My preferred approach would be for us to wait until January and for them to be absolutely finished. My argument of where we are with the whole programme is that I would rather all members had the opportunity to see the accounts, and not leave it to myself and Stuart McGregor [chief finance officer] to sign it off behind closed doors.”

Councillor James Hill agreed, saying: “A few more weeks is not going to make much of a difference, and I would rather this was transparent.”