Eastbourne council wants to sever ties with external auditor due to ‘very poor relationship’

Eastbourne Borough Council could ask to sever ties with its external auditors, as it prepares to sign back up with a national procurement scheme next year.
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On Wednesday (January 12), the council’s audit committee agreed to recommend the authority sign back up with a national scheme run by Public Sector Audit Appointments (PSAA) in April next year.

By joining the scheme, the council would agree for PSAA to appoint it a legally-required external auditor for the next five years.

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The recommendation, which will go to a full council vote, came with an important caveat, however; that the authority should ask PSAA to appoint any auditor other than Deloitte.

Eastbourne Borough Council offices, 1 Grove Road. SUS-210823-124855001Eastbourne Borough Council offices, 1 Grove Road. SUS-210823-124855001
Eastbourne Borough Council offices, 1 Grove Road. SUS-210823-124855001

Committee chairman Robin Maxted (Lib Dem) said: “It is a matter of independence. We are not in a position where we can choose our external auditor. 

“But I think it is absolutely right we contact the PSAA and say ‘we accept this, but we would like to choose who we don’t want’.

“It has caused no end of problems for [finance officers] and the council generally, because there has been very, very poor communication and a lack of support from the external auditors and that has resulted in other costs being put on the council to actually cope with this very poor relationship.” 

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The council has been fairly vocal in dissatisfaction with Deloitte, its current external auditor, for quite some time. This is largely because of the significant delays to the 2018/19 audit, which was only finally signed off in July last year .

Councillors have long been critical of Deloitte over the delay, saying the auditor had not dedicated enough resources to properly service the council.

Deloitte, for its part, said the delay had primarily been due uncertainty around a transaction involving the council-owned Investment Company Eastbourne (ICE) and a property in Leicester.

However, similar complaints about Deloitte have also been voiced by Lewes District Council, which shares a finance team with Eastbourne. 

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As a result of this dissatisfaction, both Lewes and Eastbourne had been looking at leaving the PSAA scheme and appointing their own auditors.

All councils are legally required to appoint an external auditor in some form, but can choose how it does so within certain parameters.

Broadly speaking, the PSAA scheme is intended to reduce the cost of this, as it negotiates contracts on behalf of a wide range of local authorities. As a trade off, the council cannot choose which auditor it gets assigned.

As an alternative, both Lewes and Eastbourne had looked into jointly appointing an auditor outside of the PSAA scheme. According to officers, the cost of doing so would be somewhere in the region of £150,000 to £200,000 per annum. 

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While the cost would be split across both councils, Eastbourne would be responsible for paying a larger share. In very rough terms, Eastbourne’s share would come to somewhere between £90,000 to £120,000 each year.

The councils would also have to set up their own audit panels to manage the appointments process, which would likely incur an additional cost.

The council currently pays somewhere in the region of £55,000 per annum through the PSAA scheme. However, this cost is expected to rise significantly this year and in future.

Even so, the audit committee unanimously supported an officer recommendation to sign back up with the PSAA scheme as it was considered “the most economic and efficient approach.”

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In doing so, however, officers said the council could ask that Deloitte not be appointed as the new auditor. Officers said there could be no guarantee that this request would be heeded, however.

A similar decision is set to be made by Lewes District Council’s audit committee on Monday (January 17).