Reading Borough Council is predicted to have spent at least £1 million on accounting and audit fees because accounts were signed off late.
Ernst & Young has signed off the details for the 2019/20 financial year, two years later than they should have been.
Opposition councillors from the Green Party says this has a stark impact on the council’s finances.
Cllr Rob White (Green, Park), the leader of the opposition, said: “Labour councillors failed the people of Reading back in 2016 with a complete lack of good accounting standards and financial controls. The hangover from that persists to this day costing Reading residents millions of pounds.”
He felt the problems stemmed from previous cuts to the council’s finance team which his party opposed.
“Two years ago, the Local Democracy Reporting Service was reporting on Labour’s late accounts costing the Reading taxpayer over £1 million,” he continued.
“The 2019/20 accounts have only just been signed off. This is two years late. Who knows what the final cost will be now to the people of Reading? There will be additional fees from the external auditors and the additional cost of the council’s own officers trying to get this right.
“It’s only through their efforts that we might finally see accounts filed years late, and possibly not back on track for another two years.
“In the end the cost to Reading will likely be in the millions. At a time when we are being squeezed more than ever by the reckless mistakes of politicians this is extremely painful, and it’s not over yet.”
External audit fees can vary, with ‘unqualified’ denoting no issues with accounting, ‘qualified’ means some issues have been identified, and ‘adverse’, where the financial record is judged to be incorrect.
Cllr Josh Williams (Green, Park) the chair of the audit and governance committee, said the problems stretch back to 2017 when Ernst & Young delivered a qualified audit opinion.
“The cost associated with getting that mess right has been significant, and is twofold,” he said. “First, Council officers and our External Auditors need to correct the accounts, a mammoth job, taking years.
“Second, because there was no longer confidence in the accounts as presented, the external auditors then go through the next set of accounts with a fine-tooth comb.
“This extra level of granular detail will eventually give the council the confidence that the accounts are right, and can move forward, but it also costs.”
He said this would be above £1 million, which is money that could have been spent on Reading’s communities.
Reading is one of several councils who has seen delays to its audits: The Municipal Journal reporting in March that more than 370 were awaiting theirs.
Councillors have welcomed the ‘unqualified’ audit opinion, as a negative ‘adverse’ opinion can lead to auditors bringing the accounts under even greater scrutiny, resulting in an increase in fees.
Cllr Liz Terry (Labour, Coley), lead councillor for corporate services and resources, said: “This is a good achievement and I would like to thank the finance team for their dedication and hard work.
“The fact that these Accounts are unqualified will improve the speed of conducting audits in future years.
“This result demonstrates the huge amount of work undertaken by both finance staff and external auditors to review and enhance processes.”
