Formal complaint lodged with auditors by Luton council over ongoing wait to sign off historic accounts

A formal complaint has been raised by Luton Borough Council with its external auditors Ernst and Young (EY), as historic accounts dating back six years are still to be signed off.

The company has a difference of opinion with the council over the development consent order (DCO) cost relating to the council’s airport company London Luton Airport Limited (LLAL).

It was expected the accounts for 2018/19 would be signed off last October, but several deadlines have passed without progress while further issues have been raised with the local authority by the auditing firm.

At a scrutiny finance review group meeting, Liberal Democrat Barnfield councillor David Franks said: “I understand a formal complaint has been sent to the senior partner at EY in respect of the firm signing off the 2018/19 accounts.

“I gather no sensible reply has been received. What action is available to the council if the company doesn’t respond?”

LBC’s director finance, revenues and benefits Dev Gopal explained: “There are two reports to the audit committee for March 18.

“The auditors are supposed to clear as much as possible, and for 2022/23 by September 2024. Then there’s another paper the auditors will be bringing, its annual audit and inspection letter. There’ll be the council response to that.

“We raised our complaint to EY. There’s an acknowledgement. The firm will be looking at that. I had a meeting with the public sector audit appointment (PSAA), which appoints auditors to councils in the UK, to explore what is our contractual right.

“The contract is with the PSAA and it has a contract with the auditors. I’ve had some information today, but I’ll have to reflect on that. The normal process is to raise the issue with EY first, which has been done. EY has informed the PSAA already. I can’t go into the details yet.

“There are other areas we can go. EY has said the company will consider that, and I don’t have any reason to think it won’t look into that complaint.”

Councillor Franks asked: “As a final step, if we don’t get sensible answers from EY, can we get the PSAA to stop paying the company?”

Mr Gopal replied: “They haven’t billed us. The way it works is we agree on the fees which are arranged as part of the audit appointment.

“The PSAA appoints the auditors. The details will be in the auditor’s letter coming later this month. Auditors normally bill quarterly or six months in advance.

“We’ve paid the normal charge for 2018/19 already. The firm will say in its annual audit inspection letter how much the potential increase is because of extra work, on top of what we’ve contracted for already.

“We need to decide whether we agree or challenge that part of the bill. That goes to the PSAA. If we’re not going to pay because the bill is too high, the PSAA will decide as the arbitrator.

“It decides whether that’s contractual. We’ve done that for 2016/17 and 2017/18 as well. We’re starting to look at 2023/24 with Grant Thornton.”