The auditors who have been appointed to audit the London Borough of Hounslow’s accounts, Mazars, have expressed concern about the council’s accounts. The draft accounts have been published by the council already and are available to look at online here, but Mazars say the audited accounts will not be ready for publication by 31st July, the date on which they are supposed to be published, because they have identified ‘potentially material issues’ which they need longer to look at.
The accountancy firm told me: ‘As a result of identifying potentially material issues with the Council’s draft accounts, it has been determined that we will not be able to give our opinion on the Council’s accounts or our conclusion on the Council’s arrangements for securing economy, efficiency and effectiveness in its use of resources (VFM arrangements conclusion), by 31 July’.
What are the ‘potentially material issues’ they are concerned about?
Which ‘potentially material issues’ they’re talking about, I have yet to find out, but have asked Mazars to elaborate and have asked the council to respond, so watch this space.
Mazars were appointed by the Public Sector Audit Appointments (PSAA) to look at the financial years 2018/19 to 2022/23. Part of their job is to look at whether a council is providing Value For Money (VFM). Under the heading ‘Value for Money’ the auditors look at corporate governance issues, financial sustainability concerns and procurement and contract management issues.
At the council’s Cabinet meeting on 11 June, Cllr John Todd, Conservative councillor for Homefields ward in Chiswick, raised the subject of Lampton 360 – three limited companies which are wholly owned by the council which look after recycling, property development and green spaces, set up in 2016 and yet to make a profit. As he reported in his guest blog for W4, the Conservative Group of councillors wanted to place on record ‘the material corporate governance and transparency irregularities and omissions in the overall oversight and control of the financial activities of the Lampton group of companies’ identified in several reports prepared for that meeting. He noted a failure to provide sufficient financial data and information on performance. ‘Furthermore, the business plan for Lampton recycle 360 presents operating costs in excess of the council budget by £0.9m’ he said. The Lampton 360 companies aren’t required by Companies House to file their accounts until the end of December.
Local authorities are expected to publish their audited financial statements for 2018/19 by 31 July 2019. Last year 64 authorities out of 495 missed the deadline for publication of their 2017-18 accounts, but the publication of Hounslow’s accounts (audited last year by KPMG) was on time. Mazars say: ‘We anticipate completing the work necessary to give our opinion on the Council’s accounts and VFM arrangements conclusion in September 2019, although work is ongoing’. Cllr Ranjit Gill, a councillor for Turnham Green ward, is on the Audit and Governance Committee and is himself an auditor by profession. He tells me he is looking forward to scrutinising the audited accounts at the next committee meeting in September.