Northampton Borough Council faces £445k bill after another huge audit fee hike

The authority has been quoted a whopping £445,000 bill estimate by its new auditors Ernst & Young (E&Y) to sign off the accounts for the 2018/19 financial year.

It would represent a second costly audit in the space of three years, after the fee for the 2016/17 accounts amounted to more than £300,000 after massive delays.But the borough council appears to be disputing the figure quoted by their new external auditors, who took over from KPMG recently.

At a recent cabinet meeting, portfolio holder for finance Councillor Brandon Eldred said the additional costs were due to the firm ‘having to go into more detail’ over the accounts.

And speaking at a recent audit committee meeting, held virtually on Monday (June 22), the borough council’s chief finance officer Stuart McGregor said: “The increase in fee is something we are going to have to resolve – it feels high. We’re in discussions over that and we’re disappointed we can’t progress the audit faster.”

The borough council had estimated that overrun costs for 2018/19 would be around the £200,000 mark rather than anything in excess of £400,000.

But Steve Clarke, representing Ernst & Young, told the committee that the discussion over the fee was ‘not a straightforward one’. He added: “We have a period of time where we are familiarising ourselves with the council in the run-up to KPMG signing their accounts. That time in effect is on the clock. That is a matter of fact. We then have a period of best estimate to complete the work. We are as open and transparent as possible over those hours with the council.”

Councillor Danielle Stone, a member of the audit committee, said she felt ‘less than reassured’ over capacity issues at both LGSS – which delivers some financial services for the council – and E&Y themselves. Last year, prior to becoming the external auditors for Northampton Borough, E&Y had told other councils within Northamptonshire that they would have to delay their audits due to having ‘staff turnover challenges’.

Councillor Stone added: “We’re in such difficult times, facing rapid change and we have a whole backlog of stuff that we need to get to grips with. I feel concerned with the position we’re in.”

And Ian Orrell, the independent chairman of the audit committee, said they needed ‘greater clarity’ over the issue, adding: “The fee level, for whatever reason, is huge compared to what I would expect a council of our size to be paying.”

Mr McGregor said an update would be coming to the next meeting of the audit committee in July.