The magnitude of errors in Slough Borough Council’s accounts is “unprecedented” due to the lack of proper records and poor procedures, a statutory audit by Grant Thornton has found.
The review of Slough Borough Council’s 2018/19 audit accounts highlighted several “significant weaknesses” in the preparation of the accounts and the overall financial governance at the authority. The most serious issues found were related to inadequate processes and control over journals posted by the old finance team, inadequate record keeping of audit trails and a significant number of misstatements in the accounts.
It detailed that the “scale and size of the issues identified” meant that, despite Slough’s new finance team adjusting and correcting the 2018/19 accounts, Grant Thornton auditors were unable to assure themselves that the financial statements were free from material errors. Grant Thornton was therefore unable to provide an “unqualified opinion”.
“We consider the nature of these issues identified within the accounts to be persuasive, we therefore, anticipate our audit report opinion will be a disclaimer opinion. In our experience, a disclaimer of opinion is unprecedented.
“This reflects a standard of record keeping and accounting which is incompatible with the council’s responsibilities to exercise proper stewardship over public funds,” the report said.
A disclaimer audit opinion does not involve providing or expressing an opinion. Instead, it states that the auditors cannot form an audit opinion due to the absence of sufficient appropriate audit evidence. With this opinion, auditors withdraw any responsibility that comes with auditing the financial statements.
The statutory audit by Grant Thornton commenced in July 2019, when the council produced its first draft statement of 2018/19 accounts. In December 2021, commissioners were sent into Slough Borough Council to address the serious financial and management failures, which followed the issuance of a section 114 notice in July 2021.
The lack of proper records, the poor procedures and practices in place across the authority at that time have meant the auditors have no alternative other than to disclaim them.
‘Unprecedented’ opinion
In a separate statement, commissioners at Slough stated that “the extent of the errors and the magnitude of them” identified in Grant Thornton’s audit report is “unprecedented”.
“Whilst the current finance team have spent considerable time, effort and expertise to correct the figures and present the adjusted statements the committee has before them, the lack of proper records, the poor procedures and practices in place across the authority at that time have meant the auditors have no alternative other than to disclaim them.
“As far as the commissioners are aware, this rating has never been given to a local authority accounts before.”
The commissioners also highlighted that “it is almost certain” that given the issues, the same errors in the 2018/19 audit accounts will be found in the 2019/20 and 2020/21 accounts, as the new finance team were not in place until 2021/22.
We are not satisfied that, in all significant respects Slough Borough Council put in place proper arrangements for securing economy, efficiency and effectiveness in its use of resources for the year ended 31 March 2019.
Council ‘not delivered value for money’
The review by Grant Thornton also highlighted that the “significant issues” found in the council’s 2018/19 audit accounts has meant that Slough has not delivered value for money within these years.
“Because of the significance of the matters described below and later in our report, we are not satisfied that, in all significant respects Slough Borough Council put in place proper arrangements for securing economy, efficiency and effectiveness in its use of resources for the year ended 31 March 2019,” it said.
The report stated that this is due to inadequate arrangements in place to manage Slough’s Children’s Services Trust effectively, “significant weaknesses” in preparing 2017/18 and 2018/19 financial statements and the authority’s request for financial support from the government coupled with “unsustainably low” reserves.
“We therefore anticipate issuing an adverse qualified value for money conclusion,” the report added.
Grant Thornton’s external review is set to be discussed at a meeting of Slough Borough Council’s Audit and Corporate Governance Committee on 22 February.
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