Auditors ‘seriously concerned’ at Peterborough council’s finances

Ernst and Young, the external auditors of Peterborough City Council, are “seriously concerned” about the local authority’s financial position.

Wednesday, 23rd June 2021, 3:36 pm

Speaking to members at an extraordinary meeting of the authority’s Audit Committee, Neil Harris, partner at Ernst and Young, said: “This report is the final conclusion that we have reached as external auditors on the council’s financial statements for the financial year 2019/20.

“It is also the conclusion we’ve reached on the adequacy of the council’s arrangements for value for money, and its use of resources, which is set by the Code of Practice from the National Audit Office.”

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Committee chair Cllr David Over (Conservative, Barnack) said: “Neil, over the last 25 years of audit reports we’ve had 23 of them showing a weakness in terms of financial statements... and yet, we’re still here.

“Compared to other councils how are we actually doing? Are we financially secure, or are we in deep, deep trouble?”

Mr Harris replied: “If you are asking me am I seriously concerned about your financial position, then yes, I am.

“As your key audit partner – and I’ve audited Peterborough City Council for a number of years now – my impression is of an organisation that takes very seriously your responsibilities in financial reporting and probity.

“You have been very open and transparent about all of your concerns and risks that the council faces.

“The report that you have before you from us has been made that easier to compile as a result of that transparency, because a council that isn’t accepting of some of its challenges is clearly more at risk of an auditor exorcising some of their statutory audit powers.

“I think it is important to state that in the context of your control environment for preparing accounts, the adequacy of system and processes on your core financial accounts is not where we are expressing any serious concerns.

“Where we are expressing serious concerns is on the council’s financial standing – which the council would recognise itself.

“If you were to ask me how that sits compared to other councils that I deal with, then you sit very high up in my portfolio of concerns right now.

“There are some very serious concerns that I have... but, I come back to the point that these have been very openly disclosed to me and, therefore, there are always options open to an external auditor in respect of actions they can take as part of their statutory auditing duties.

“Now, obviously, all of that depends on the steps that the council continues to take to address your financial challenges, the appropriate representations towards the Ministry of Housing, Communities and Local Government, what further mitigations you can take to address your budget gaps, and how openly and transparently you are reporting that position to the taxpayers of Peterborough.

“Should there be any further concerns on how I think you’re doing that, then I’ve probably got a duty as the external auditor to take further action – which would be either a statutory recommendation or a report in the public interest.

“I’m sure you’re aware of the situation in Croydon and other councils who’ve had that?

“We haven’t seen the need to do that here because of the way you’ve disclosed it and the actions you have been taking.

“But, am I concerned about your financial position? Yes, I am.”

Audit Committee members received the report from Ernst and Young and approved it as an external report for the financial year ended March 31, 2020.