Eastbourne council’s accounts remain unaudited – weeks after the official deadline date.
Deloitte, which examines the council’s finances, says it was unable to meet the deadline of July 31 2019 because of what it calls a “significant risk” in respect of accounting and value for money arrangements in respect of a council owned company called Investment Company Eastbourne Limited, known as ICE, which was set up to enter into a deal with a private company in respect of a property in Leicester.
According to council accounts, ICE acts as the principal guarantor of a £48 million refinancing loan to a private company with the council being the ultimate guarantor. ICE is also providing a rental guarantee in respect of shortfalls of rental income, again with the council being the ultimate guarantor.
In return for providing this guarantee, ICE has received an initial guarantee fee and will receive an annual guarantee fee. The timing and amount of any payments arising from both the loan guarantee and the rental guarantee are uncertain, as they could result from a number of default or income shortfall events. The draft accounts state that as at March 31 2019 there were no conditions or events which would trigger any liability.
In a letter to the council in July, a Deloitte spokesperson said, “The completion of the audit will be delayed. We have identified a “significant risk” in respect of accounting and value for money arrangements in respect of ICE.”
A council spokesperson said, “In Eastbourne we have protected frontline services from government funding cuts by developing new commercial income streams. Our commercial activities are delivered under company arrangements, one of these is the company mentioned, and it has generated significant financial returns for the council.
“The work involved in producing the accounts for the new company has caused a delay, in part because of a delay in the supply of information from a third party.
“The audit work on the council’s core accounts is complete. The full audit is taking longer than usual this year but we hope the accounts will be signed off within the next two months.”