Northamptonshire County Council's new auditors flag unitary reorganisation spend as value for money risk

Ernst and Young say the money being spent on unitary preparations may not provide value for money.

By Sarah Ward
Monday, 17th February 2020, 1:07 pm
Updated Monday, 17th February 2020, 1:08 pm
Auditors will look at whether the unitary reorganisation spend is value for money.
Auditors will look at whether the unitary reorganisation spend is value for money.

Northamptonshire County Council’s new auditors say there is a risk the millions spent so far on unitary reorganisation may not be value for money.

The county council spent £500,000 in 2018/19 on work to prepare for shutting down its current operations and splitting its services into a new unitary council in the north and another in the west.

The reorganisation, which will also see the county’s seven district and borough councils abolished, is being done as a direct result of the financial failings of the council in 2018 and has been ordered by central government.

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A total of £43m is being spent collectively by the eight councils this financial year on the reorganisation, with senior finance officers predicting the move could generate annual savings of £85m as some of the work involves transforming current services.

Now national accountancy firm Ernst and Young, which has taken over the responsibility of auditing the authority’s 18/19 accounts from KPMG, says unitary reorganisation costs may not be good value for local taxpayers.

A report considered by the council’s audit committee on Thursday (Feb 13) said: “Although our risk assessment and work on the value for money (vfm) conclusion has only recently started, we have identified the following areas that may present a significant risk in relation to the vfm conclusion for the council and on which we are therefore planning to carry out more work: • financial planning in the medium term; • preparations for local government reorganisation; and • service performance, in particular children’s services.”

However Ernst and Young itself is not in the good books of the authority. After taking on a large scale contract to do the audits for a large number of councils this year it has not been able to meet deadlines because of staff shortages.

It did not send a representative to Thursday’s meeting and audit chair Bill Jessup said he was disappointed, with the committee deciding to write to the firm expressing their annoyance and also unhappiness at the proposed final reporting date for the 2018/19 audit in January next year.

The council is also not happy about the auditor saying there could be a ‘significant additional charge’ on this year’s £130,000 audit cost due to extra workload such as reviewing the council’s LOBO loans and PFI arrangements.

The council’s chief finance officer Barry Scarr said if the council and auditor could not agree on a fee then the Professional Standards Authority would need to mediate.

The 2018/19 audit has been late starting due to the very long time it took KPMG to audit the 2017/18 accounts in which the authority overspent its budget by £40m. They only signed off that audit in November last year.