SSDC gets the accounts wrong

The audit of accounts for the year to March 2020 has gone at a snail’s pace for our councils. Not their fault, just the challenge of trying to get things done remotely. However not every problem has been caused by COVID 19.

South Somerset District Council (SSDC) has faced lots of questions during the past year over the treatment of SSDC Opium Power. SSDC have consistently said they control the company. However they have also claimed that they do not need to include the company in a set of group accounts in 2018/19. These statements are inconsistent. It is a view that we have questioned and so have others who have greater expertise in accounts than we do.

At the crux of the issue is this. If you control a company, you have to “consolidate it” into your accounts. If you don’t control it, you don’t.

Now even SSDC have to accept that they were wrong. Auditors, Grant Thornton have said the accounts were wrong in 2018/19 and must be amended to show that SSDC Opium is a subsidiary of SSDC. Group accounts have had to be prepared.

SSDC told us “It was always our intention to include group accounts for 2019/20 as the spend and progress on the projects became material, regardless of whether the company was considered a subsidiary, joint venture or associate.”

As a result two things have had to happen:

  • The accounts prepared for 2018/19 are now wrong. Group accounts were not prepared to include SSDC Opium as a subsidiary.
  • An audit will have to be undertaken of SSDC Opium. It is not clear why, given that SSDC claim they always intended to produce group accounts for 2019/20, they did not arrange for SSDC Opium to be audited. All subsidiary accounts have to be audited.

Of course these mistakes have caused extra work for the auditors. They have also caused a lot of extra work for SSDC staff. And this will cost the taxpayer. At the December meeting of the Audit Committee, Grant Thornton’s lead for the SSDC audit explained that extra work had to be done and there was an ongoing discussion about the extra fees that Grant Thornton would need to charge.

However whilst noting that SSDC’s errors have cost taxpayers, Grant Thornton should not get off the hook. After all they audited the 2018/19 accounts. They failed to spot that SSDC Opium had not been treated properly at the time. Perhaps they should have noticed?

One comment

  • As a taxpayer I’m disgusted, as a person involved in accountancy I’m even more disgusted. Both have let us down. I hope someone Independant will be overseeing the charges for this extra work

Leave a Reply