Reading council is predicted to have spent ‘millions’ on accounting and external audit fees as accounts for the year before the pandemic were signed off late.

The council has recently announced that its accounts for the 2019/20 financial year, before the pandemic, have been signed off as accountancy firm Ernst & Young delivered its audit opinion.

But the impact of late accounting is stark according to councillors from the Green Party, the biggest opposition party in the town.

Councillor Rob White (Green, Park), the leader of the opposition said: “Labour councillors failed the people of Reading back in 2016 with a complete lack of good accounting standards, financial controls and the hangover from that persists to this day costing Reading residents millions of pounds.

“These problems stem from cuts to the council’s finance team which Green councillors opposed.

“Two years ago the Local Democracy Reporting Service was reporting on Labour’s late accounts costing the Reading tax payer over £1 million.

“The 2019/20 accounts have only just been signed off. This is two years late.

“Who knows what the final cost will be now to the people of Reading?

“There will be additional fees from the external auditors and the additional cost of the council’s own officers trying to get this right.

“It’s only through their efforts that we might finally see accounts filed years late, and possibly not back on track for another two years.

“In the end the cost to Reading will likely be in the millions.

“At a time when we are being squeezed more than ever by the reckless mistakes of politicians this is extremely painful, and its not over yet.”

External audit fees can vary depending on the ‘audit opinion’ an accountancy firm can give, which can vary from ‘unqualified’ – denoting no issues with accounting to ‘qualified’ – where some issues have been identified, and ‘adverse’ – where the financial record is judged to be incorrect.

According to cllr Josh Williams (Green, Park) the chair of the audit and governance committee the problems stretch back to 2017 when Ernst & Young delivered a qualified audit opinion.

Cllr Williams explained: “The cost associated with getting that mess right has been significant, and is twofold.

“First, Council officers and our External Auditors need to correct the accounts, a mammoth job, taking years.

“But second, because there was no longer confidence in the accounts as presented, the external auditors then go through the next set of accounts with a fine-tooth comb.

“This extra level of granular detail will eventually give the council the confidence that the accounts are right, and can move forward, but it also costs.

“So the impact is financial.

“The costs will eventually be way beyond £1 million, and the loss of that investment that could have been spent on communities in Reading.”

The council’s accounts for 2019/2020, the financial year prior to the pandemic, were given a unqualified -by accountancy firm Ernst & Young.

Audit opinions for accounts for many councils have been delayed as well, with The Municipal Journal reporting more than 370 councils were awaiting audit opinions in March this year.

Councillors have welcomed the ‘unqualified’ audit opinion, as a negative ‘adverse’ opinion can lead to auditors bringing the accounts under even greater scrutiny, resulting in an increase in fees.

Commenting on the recently issued 2019/20 audit opinion, Liz Terry (Labour, Coley) lead councillor for corporate services & resources said: “This is a good achievement and I would like to thank the finance team for their dedication and hard work.

“The fact that these Accounts are unqualified will improve the speed of conducting audits in future years.

“This result demonstrates the huge amount of work undertaken by both finance staff and external auditors to review and enhance processes.”