Meeting documents

The Section 151 officer opened the discussion by providing some background to the situation which had occurred. He stated that there had been no delay in the production of WDC`s accounts, which would be published in draft form tomorrow (31^st May) as per the deadline. This work had been completed by the Finance Team a day in advance of the required statutory deadline. The draft accounts would now be handed to Ernst Young (EY) for them to conclude their audit work by 31 July 2019.

WDC had been informed by (EY) that they would be unable to complete their audit work by 31^st July 2019, due to a lack of qualified resources and they would not be able to conclude the audit until the beginning of October 2019 thereby causing a delay to the publication of our audited accounts by approximately 3 months.

This would cause major issues for the Authority, bearing in mind the increased pressures, upheaval and excessive workloads brought about by the abolition of this Council as of 31 March 2020. Moreover the original and scheduled date of 31 July was preferable for WDC due to a number of reasons. Firstly staff annual leave requests had been authorised to take account of prescheduled auditing dates and the forthcoming school holidays, furthermore there was an increased likelihood of loss of staff due to the unitary reorganisation at this time. In addition, the original date would have been favourable in that the statement of accounts would have been produced and scrutinised at the July Audit Committee meeting, rather than the revised timeline of the 10 October 2019. The S151 officer also stated that the delay had the potential to cause WDC reputational damage through no fault of its own.

Janet Dawson (EY Lead Partner for Govt & Public Sector) was in attendance to address any questions from Members, and to communicate with its clients regarding EY`s challenges.

She commenced by outlining the current position, and the process by which EY had arrived there. Members were informed that the company assessed its workload prior to beginning its budgeting process. It then assessed the numbers of staff required from a team of 240. Unfortunately, they had not anticipated the rate of attrition since the Christmas period. The company was unable to recruit or to pull in sufficiently qualified numbers to lead on the work to be undertaken. The profession as a whole was under intense pressure, affecting colleagues and competitors alike. They had tried to draw in other staff through secondment programmes from abroad and their global network but many were delayed due to issues with visas and work permits. Furthermore to add to the complications, they had been affected by long term sickness at management grade level which had a direct effect on the local regional teams. EY were also looking to increase their graduate and apprentice intake for 19/20 and 20/21 as well as accessing staff who had left the industry.

In conclusion, she expressed with dismay that EY was unable to resource all the work that they were committed to undertaking. However she stated that it had been established that there would be no statutory or legal breach on their part if the audit was not concluded by 31 July, as it was the quality and standard of work which was far more significant. It was anticipated that in accordance with their recruitment plan it would take 18-24 months to rebuild a robust team to assist in the implementation of a smooth audit process which would meet the expected quality standard. The EY recruitment plan was to be shared with Public Sector Audit appointments (PSAA). This was the appointing body for the accountancy firms which undertook the external audit function for public sector bodies.  

A number of questions/comments from Members were raised. Had overtime for staff been considered? Had EY told PSAA regarding the situation prior to telling us? When was the anticipated date on which the accounts would be audited? The Member was informed that their staff were already offered overtime, and that PSSA had been informed first as they had already been in discussion with them on other matters. Furthermore he was informed that the audit process was to be completed in September on a date yet to be agreed by EY and the Section 151 officer.      

In response the s151 officer stated that he was extremely annoyed and frustrated with the situation which had left his staff feeling let down by events which had been caused by EY taking a commercial decision to loan its staff to the private sector arm, causing this authority to ultimately suffer. Members concurred, stating that we as an authority had to grapple with and to manage staff shortages on a regular basis but this did not change the fact that we were still expected to deliver our services. It was felt that EY had been negligent in not having considered its clients prior to taking its decisions.

Discussion then turned to the form of words that would feature in the required statutory notices which accompanied the published statement of accounts. It was felt that the notices should explain the delay clarifying that it was EY which had not delivered their end of the agreement.  EY commented that they would work with the S151 Officer and agree a form of words. EY stated that it was Wycombe`s responsibility to answer any questions from the public with regards to the accounts. The issue of compensation was also raised, as was the complaint to the PSAA regards the nature of the decision and the lack of consultation. Members briefly touched upon alternative auditors for the new authority pending 31 March 2020. Grant Thornton being up for consideration. It was felt that it would be beneficial to move to one auditor following unification of the 5 Councils, but this too would have practical implications.

A Member enquired regarding the 2019/20 accounts and how these would be processed. The S151 Officer responded that these would be monitored on an ongoing basis and that contract provisions could be varied. Members could request the PSAA consider using an alternative audit provider. The PSAA would then check the market capacity to establish if this was capable of being delivered. However there was work which would be associated with this process in terms of takin on a new provider. In the meantime, a meeting was to be scheduled with the Committee Chairmen, S151 Officers, EY and PSAA in order to seek some assurances regarding next year`s accounts.

The Cabinet Member (Finance & Resources) queried the basis upon which the accounts would be prepared, noting that the 2018/19 accounts were based on the Going Concern Principle. The meeting was informed that this principle would not apply for the forthcoming year.

Ms Dawson was also questioned with regards to the necessary conditions that were required to be met by Wycombe in order that EY could successfully complete the external audit within 3 weeks. She informed Members that EY worked to an audit plan which required access to the draft accounts, access to any supporting information and to relevant staff during that time. In response the S151 Officer re- emphasised that the process would be undertaken at a time of additional competing pressures due to the ongoing modernising Local Government work.    

At the close of the questions, the Chairman thanked Ms Dawson for attending.