Runnymede councillors slam auditors after spending near £35k for 'very little progress'

After years of “very little progress” Runnymede Borough councillors have slammed its external auditors after it spent nearly £35k amid a four-year delay. Councils legally must have their financial accounts externally inspected to give taxpayers and councillors assurance in the accuracy of their accounts and ability to deliver services across the borough.

In Runnymede, the external audit for 2019/2020 has not been signed off for four years and councillors said they are “sick and tired” of hearing the same report from auditors BDO. The delayed reports mean Runnymede will not meet the government’s new backstop deadline to publish historical audit accounts.

The government has introduced a new deadline for councils to publish audits of their finances up to and including the financial year 2022/23 by December 12 2024, to clear a backlog of unaudited accounts. The auditors have said the accounts are “substantially complete” although it does not have time to complete all the tests before the new deadline and it is looking into a loan used to by an investment property.

“While this is clearly no fault of the council,” said Councillor Sam Jenkins, Chair of the Audit and Scrutiny Committee meeting on November 28, “it is the council that will have to deal with the reputational consequences.” Not only could the lack of external audit lower the council’s reputation nationally, investors and lenders could have less confidence in the authority’s finances.

Cllr Jenkins added: “It is also extremely disappointing that despite the high fees that we pay for external audits, the quality of output we should expect as well as communication with our officers has been remarkably poor.”

Runnymede council has paid £34,754 (plus VAT) to BDO for auditing services for each of the years 2018/19, 2019/20 and 2020/21. Yet only the 2018/19 account has been closed.

“It’s absolutely appalling,” said Cllr John Furey, not mincing his words. The Conservative councillor questioned how BDO as a company has come back to the council and told them it has not done the work and “let it drag for years”. Cllr Furey said he wanted to see some compensation, arguing the company has not “performed” enough to warrant payment.

BDO, which has also worked for Woking and Surrey Health councils, is the largest auditor company in the UK with around 310 domestic clients.

Missing the deadline

Although BDO have said the council’s 2019/20 financial statements are “substantially complete”, the company claims it does not have time to complete all the tests on employee costs before the government deadline. This means BDO cannot issue a judgement that Runnymede’s financial year accounts are accurate and compliant.

The committee heard from a BDO representative that the global company is still working on the accounts regarding the council buying a commercial property in 2019/20. Runnymede borrowed from the Public Works Loans Board to acquire a £30m property outside the borough to generate income. The representative said BDO is seeking legal advice and considering the issue. The council has made no further commercial property acquisitions since March 2020.

BDO is still yet to complete three other financial audits from the years 2020/21- 2022/23 and is expected to “disclaim”, meaning the auditors lack evidence to make an opinion about the council’s financial accounts.

Escalating the issue

Cllr Jenkins called on the committee to “make it absolutely clear that not only is this not acceptable, it will no longer be tolerated”. The committee voted that the council will send a formal complaint to BDO, as well as voice its concerns about the company’s performance in a letter to the Public Sector Audit Appointments Board.

Runnymede will have to pay BDO for the proportion of work completed on the accounts, set by an external body. But a revised fee will be set for the uncompleted works from BDO, so the council does not have to pay the full price.

Officers advised members that swapping to another auditor mid-process would not be time-efficient and they were better waiting it out. New auditors, Grant Thornton, will take the reins on auditing the council’s accounts from 2023/24 onwards.

A BDO spokesperson said they do not comment on individual audits due to confidentiality.