Audit fees were forecast to have doubled to £300,000 in May this year, reports Simon Allin, Local Democracy Reporter

*Civic centre finance chiefs admitted there had been a ‘retrograde step’*

Enfield Council continues to face mounting audit fees after work to close a three-year-old set of accounts suffered fresh setbacks.

The civic centre’s 2019/20 accounts have yet to be finalised after BDO – the firm appointed to audit the accounts – requested further information on pensions, property valuations and other details. A council finance chief admitted there had been “something of a retrograde step” on the audit.

A report presented to a meeting of the council’s general purposes committee on Thursday states that finalising the audit is “of critical importance” and notes that fees for the work “continue to accumulate”. In May this year, the audit fees were forecast to have doubled from the original estimate of £150,000. The report adds that there is a risk that the ongoing work means the sign-off of the 2020/21 accounts could be delayed.

Conservative opposition councillors have repeatedly raised concerns over delays to the accounts and warned of mounting costs to the council. In June, James Newman, the council’s director of corporate finance, indicated the authority would complain to BDO over the delays, claiming the 2019/20 audit had not been prioritised by the firm.

Speaking during Thursday’s meeting, James said field work for the 2019/20 accounts was still ongoing, adding: “I would say we have taken something of a retrograde step, as we have now gone back to some other areas that haven’t been raised until more recently where there were gaps in the auditor’s files.”

James said he did not expect the accounts to be closed during 2022.

David Eagles, a partner at BDO, updated the committee on some of the issues encountered by the auditor. He explained that the pension position for council-owned company Independence and Wellbeing Enfield had been incorrectly reflected as part of the local authority’s position instead of under a separate defined benefit scheme arrangement.

“The net position in respect of the council is not material,” he explained. “That’s about £7million against a materiality of about £20m. However, the gross position […] is more than material, so the asset position is £18m, the liability is about £28m. What we were trying to work through was a way of making an adjustment to the notes which would make them materially correct themselves without also having to adjust the rest of the accounts.”

David added that the auditor had “agreed a position” on the issue but there were several factors that remained to be resolved.

A further problem, he explained, was the use of comparatives for property valuations which the auditor did not believe were valid. David told the meeting: “In some cases the valuer has pulled in things which we, standing back at this point, think really should never have been brought in.”

Mike Rye, a Conservative committee member, noted there was “frustration” from councillors that the “[audit] process has been long”, adding that they felt it had been “in part BDO’s responsibility rather than the council’s”.

Cllr Rye said he was “encouraged” by David’s presentation and asked if he could confirm that the auditor was looking to close the 2019/20 accounts “in the early part of next year”. David said in response: “Absolutely yes.”

Despite recruiting more staff to help deal with the backlog of work, the committee report acknowledges that having three years of open accounts has led to “sizeable pressures” on the council’s finance team.

The committee also received an update on the accounts for the 2020/21 and 2021/22 financial years, after which members unanimously agreed to note the report.

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