The dialogue with the auditor

Here is the reply received from Mazars:

Thank you for your email of 14 September 2010.

The first point I should make is that our audit opinion on the accounts for the year ended 31 March 2010 was issued on 2 August 2010 and the audit is now closed. Consequently, I have no powers to consider any matters relating to that audit year. However, to be helpful to you, I would make the following brief comments on the matters you have raised (your numbering).

Point 1: I believe that the document you are referring to is an income and expenditure account included within the Council’s Annual Report - not the Annual Return which constitutes the ‘statutory accounts’ that were subject to audit. We were informed by the Council that it intended to redact certain information in its Annual Report. I understand that this decision was in response to a ruling by an employment tribunal judge that an amount of compensation paid to a former clerk of the Town Council was subject to a confidentiality agreement and that the Council was seeking to ensure it was able to comply with this ruling. It is not the role of the external auditor to provide formal advice to the Council on any action it takes and we did not do so in this instance.

Point 5: This is covered by response to Point 1.

Point 7: It is for the Council to determine what information is made available to members of the public who choose to exercise their rights under s15 of the Audit Commission Act 1998. Issues relating to the exercise of electors’ rights are a matter between the Council and those wishing to inspect the accounts. If someone has a concern that they are not given access to information that they consider they were entitled to see, their recourse is to complain to the Council and, ultimately, to make a challenge through the Courts.

Point 8: This is not a matter for us to comment on, other than to confirm that no matters were raised with us by members of the public in relation to our audit of the accounts.

Following paragraphs: I have no further comment to make on the inspection process. From my review, I am satisfied that the Council provided us with all of the information required to enable us to undertake our audit and to issue our audit opinion. The compensation payment to the former clerk was in relation to their employment (i.e. ceasing to hold office) and, as such, I am satisfied that it was appropriate to include this payment within the staff costs heading.

Thank you for raising these matters with me. As I stated at the outset, I have given these comments in order to be helpful;. However, given that the accounts for the year ended 31 March 2010 are now closed, it would not be appropriate for me to comment further.

A thorough response, but I felt that there were a couple of points that needed clarifying.

Thank you for your thorough and informative reply. It is indeed helpful, which has not been the case with the Council, who have been obstructive.

Thank you for the reassurances about the correct posting of settlements. It just seemed counter-intuitive to me based on the descriptive wording for box four on the return which is in present tense only.

Your comments on the queries made by Council and your entirely appropriate responses are noted. However, you express the view that the confidentiality agreement was based on a tribunal judge ruling. I believe this to be incorrect, because as far as I am aware, no financial ruling had been made, the agreement was made "out of court" before the award proceedings took place which is the obvious time to apply such a ruling (which would be highly unusual in any case). On this basis, I believe that Mazars either jumped to conclusions or were misled. I will look further into this with the Tribunals Service.

You will have noted that there were gaps in the sequence of questions. The other questions (which I omitted for clarity) were seeking clarification about the origin of the confidentiality agreement, which the Council has declined to answer (or more accurately, provided an evasive answer to). This is ongoing.

Now none of the above needs to particularly concern yourselves as external auditors, as it isn't really audit related, as you say. However the matter of the pre-inspection report process surely must do, especially if procedural irregularities are subsequently discovered. If it is not yourselves then the responsibility must lie with the Audit Commission, it shouldn't be up to concerned citizens to pursue local authorities through the courts.

I perfectly understand the idea about withholding access to specific items of financial transactions where appropriate but it is the actual Pre Audit annual return form that the Council have admitted (through gritted teeth) would have been redacted, i.e. box 7 closing balance. It is unequivocal that this would have been unlawful and I find it odd that you would play down such a matter. During the inspection window, the Annual report had not even been published so it would be dis-ingenious of the Council to claim that they had misunderstood the question. If the method of redaction had been to leave those boxes blank at inspection, then by filling them in after the inspection window that would have been altering the return which is also unlawful without permission of yourselves.

One other (comparatively minor) point I would like to draw to your attention- The annual return notice of conclusion that was displayed recently was incomplete: it did not have box f completed, "Date of announcement". As the external auditor, I would expect Mazars to point out the necessity to fill in statutory forms correctly in subsequent years

Anyway, thank you once again for your co-operation. If my understanding of ACA1998 S14 and SI 2003/533-2006/564 is wanting in any of the above, feel free to correct me.

However, he was not prepared to be drawn.

Dear Mr Grey



I acknowledge receipt of your email.



I refer you to the response I gave in my previous email. I consider the matter to be closed and do not intend to enter into any further correspondence.



Yours sincerely