£5.4 Million ‘Material Misstatement’ Delays Council Audit Sign Off

Published on: 9 Aug, 2018
Updated on: 10 Aug, 2018

Cllr Richard Billington

Guildford Borough Council’s (GBC) Corporate Governance and Standards Committee, signed off on the Auditors report for the year ending March 31, 2018, following a delay caused by discovery of a “material misstatement”.

The sign off was given at a meeting on Tuesday (August 7, 2018), chaired by Cllr Richard Billington (Con, Tillingbourne).

An earlier meeting of the committee had been unable to sign off the report after the auditors, Grant Thornton, found a misstatement which affected “primary financial statements”, but not the overall financial position of the council.

The misstatement related to the council incorrectly classifying the Onslow Park and Ride Site as an asset on the books, worth £5.365 million. But Claire Morris, director of financial services, pointed out that the line on which the Onslow Park & Ride initially appeared in the accounts for 2017-18 would, in fact, be correct in 2018-19 because of a change in external accounting standards.

Some committee members had appeared surprised that Onslow Park & Ride could count as an asset worth over £5 million and it was explained that the site should not have been considered an asset, the error had occurred due to a “complex accounting issue”.

On further probing it became clear the site is of little or no financial value to the council. It is leased from the freeholders the University of Surrey, so cannot be sold by GBC, and the passenger revenues from bus journeys are given to the bus operators to provide the Park & Ride service.

The issue was classified by Grant Thornton as “high priority” and it was recommended that “…management ensure that the classification of leases are monitored on an ongoing basis and that the classification and subsequent financial reporting treatment is consistent with the underlying nature of the transaction”.

Council officers explained to the committee that they would go back to the valuers for an explanation.

Previous complaints raised about the low usage of the parking facility were not raised during the meeting.

The GBC webcast of the meeting can be viewed here.

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