West Northants won’t sign off first two years of audited accounts as dispute over former county council debts continue

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Former finance chief for county council revealed that the debt amounted to £953 million

West Northamptonshire Council (WNC) won’t sign off on its first two years of audited accounts after delays due to a continued dispute about how the former County Council’s debts should be shared.

Now, at the end of the authority’s third financial year, neither the West nor the North have published a single set of audited accounts since their inception.

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The final accounts of Northamptonshire County Council (NCC), which was scrapped in 2021, are at a stalemate as senior bosses from both councils fail to agree where the costs should go.

The Guildhall, Northampton, home to West Northamptonshire Council. (Image: Nadia Lincoln LDRS)The Guildhall, Northampton, home to West Northamptonshire Council. (Image: Nadia Lincoln LDRS)
The Guildhall, Northampton, home to West Northamptonshire Council. (Image: Nadia Lincoln LDRS)

In November last year, finance chief for North Northamptonshire Council (NNC) Janice Gotts revealed that the contended figure amounted to £953 million. She said the vast majority of the balances for the former county council had been agreed, but there was a significant area of disagreement.

Paul Harvey, from external auditor Grant Thornton, told the audit and governance committee that they plan to stop all work on the 2021/22 and 2022/23 accounts for West Northants and let them hit the government backstop which is set for September this year.

To clear the backlog of historical accounts and ‘reset’ the system, the Department for Levelling Up, Housing and Communities (DLUHC) has proposed putting a date in law, September 30, 2024, by which point local bodies would publish audited accounts for all outstanding years up to and including 2022/23.

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Grant Thornton will instead publish a disclaimer opinion on the unfinished accounts- where an auditor states that there’s not sufficient evidence to base an opinion on the financial statements. Mr Harvey said this would allow them to focus on the 2023/24 financial period instead and stop the delays from increasing further.

Martin Henry, the executive director of finance for the West, said that the council is in dialogue with the North to try and get the NCC balance sheets resolved as “quickly as possible”. The authorities are not currently in legal arbitration, which is when a formal body steps in to settle the dispute, despite indicating they were set to enter the process at the end of last year.

Mr Henry said the authority was “taking it very seriously”, but that resolving the dispute internally between the two councils without escalation would be the “best outcome for everybody”. When asked by a committee member about how long the process would take, he couldn’t put a definitive time frame on when they would reach a conclusion.

Grant Thornton also put their updated fees to the committee, which have been changed due to the backstop coming into effect for the incomplete audits. The original cost to the council for each year was £350,000, however the accounting firm will only charge £300,000 in total for both financial years.

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However, contract retendering has significantly increased costs to £754,000 for the 2023/24 financial year, not including any additional work needed on opening balances. Grant Thornton has been awarded the audit contract for the next four years until 2027/28.

The crisis in local government audits is being felt nationally. Local authorities are required by law to produce audited accounts by September every year, however only one per cent of councils published their 2022/23 audited accounts on time.

Responding to the government consultation on the local audit backstop, Cllr Pete Marland, Chair of the Local Government Association’s Economy and Resources Board, said: “We have been pressing the Government to set a firm timetable by which timely audits will be restored, so it is good that these proposals have been published.

“The need to come to a pragmatic solution to the backlog is urgent. However, this must not lead to reputational damage for councils as a result of a problem that is not of their making.

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“Ultimately, a long-term solution is needed to this crisis which will require a joint effort from a range of stakeholders including the Government, the audit firms, the regulators and the Chartered Institute of Public Finance and Accountancy (CIPFA).”