Peterborough City Council makes official complaints about external auditors, saying their slowness could delay its improvement journey

Failure to complete a backlog of audits for Peterborough City Council (PCC) could delay it being taken out of improvement measures, its finance chief has warned.

Cecilie Booth, executive director of corporate services, was among the PCC staff and councillors who grilled external auditors Ernst & Young (EY) at a meeting this week, telling representatives of the company that its slowness to act could jeopardise PCC’s improvement journey.

A report on the council’s finance and governance is currently produced by an independent improvement panel every six months; this arrangement began when it requested exceptional financial support from the Government in 2021 and was due to end in December this year.

But the panel has been clear that it would like to see PCC’s auditing backlog cleared and that this is one of the ways in which it could assure the panel it no longer needs increased oversight.

Ms Booth also told EY that PCC has complained about their performance to Public Sector Audit Appointments (PSAA), which makes auditor appointments for councils, and to the Chartered Institute of Public Finance and Accountancy (CIPFA).

Cllr Mohammed Farooq (Peterborough First, Hargate and Hempsted) too expressed concern that the lack of up-to-date audits could jeopardise PCC’s financial position, even saying that there’s “hardly any difference between” it and Birmingham City Council which was, like PCC, subject to an improvement plan before it effectively declared bankruptcy.

EY’s representatives told PCC councillors and staff that a plan for the outstanding audits (2021/22, 2022/23 and 2023/24) would be in place by the end of the month, but that it’s waiting for new Government guidance on the requirements for addressing delayed audits before making it.

But Mike Langhorn, a co-opted PCC member, said that there’s “no need whatsoever” to wait for this and that doing so only makes it more and more likely that the audits will be written off rather than ever being fully completed.

“Unfortunately for you, you are part of a much broader system; as are we as the auditors,” an EY representative said in response, adding that it’s contracted to audit 180 other organisations and is “unable to look at one organisation in isolation”.

Mr Langhorn said that he felt the company was “hiding” behind its contract and that he’s “very disappointed” by EY’s quality of service.

Councils across the country are experiencing delays to audits of their finances, in part due to issues with capacity and fragmentation in the process.

The Government introduced measures to try to address the backlog of audit in December 2021 such as further funding, increased availability of training and guidance and longer deadlines.

But the issue returned to parliament in June this year with hundreds of councils still reporting a delay.

PCC is one of 88 per cent of councils which failed to receive audit opinions on their finances in time to publish accounts for 2021-22 within the already extended deadline, as reported to parliament this year.