Cost of council audit in Bedford could rise by “only” £45,000 because hourly rate is ‘not enough’

Every year all councils, including in Bedford, have to pay audit companies to make sure that their financial affairs are in order and avoiding risks to public money.

Monday’s meeting of the borough council’s audit committee heard that the auditors, EY, are proposing a £45,000 increase in their fees for auditing the 2019-20 accounts, taking them to about £134,000.

The council’s budget this year is £132 million.

“It is only £45,000 in the context of the council’s overall spend,” said Debbie Hanson, of EY. The company has spent more than 2,000 hours to complete a quality audit at a cost of £134,931.

She said the level of work is higher now than it was five years ago.

“We are struggling for recruitment to public sector assurance work,” she added. “Once they are trained they go off to work in industry. It is a fundamental issue for public sector audits.”

She added that in the audit of the council’s pension fund which had similar issues, fees taken from the £2.3 billion pot of investments are set to rise from £18,325 to £55,000.

She said the current rate paid to professionals auditing the pension was less than that paid to tradesmen and was not enough to sustain.

But Cllr Henry Vann (Lib Dem, De Parys) the council’s elected head of town centres and planning, said he would “never put only in front of £45,000,” although he accepted the points being made.

He said that local government, which has borne the brunt of austerity, was going to find “ourselves making harder and harder decisions”.

“I would never put ‘only’ in front of £45,000 because we are going to be making decisions on every item of spending.”

And committee chairman Cllr Mohammed Nawaz (Lab, Kempston Central and East), said the increase from £85,000 to £134,000 is a “kind of a huge jump.

“In the coming days and years we are going to be facing a tough time.”

Andy Watkins, the council’s chief finance officer, said he had no doubt that the council needs more audit, but they want to constrain costs.

He added: “We’ve got to think about it not in terms of we can’t afford an increase.”

Cllr David Sawyer (Lib Dem, De Parys), who has a son who works for EY, called for a reduction in regulations which mean that the council’s accounts stretch to 171 pages.

“We need to cut this down to something that is manageable and sensible,” he said.

And Cllr Ben Foley (Lib Dem, Castle) questioned the need for the highest quality audit. “We do not actually need to be competing for the highest quality audit teams.”

He also objected to the “smuggling in” of an element that justifies higher pay.

But Cllr Charles Royden (Lib Dem, Brickhill) the deputy mayor and executive member for environment, highways and transport, said that the decision on fees was not in the council’s hands.

They are decided by an organisation called Public Sector Audit Appointments.