News / New light shed on accounting impasse
A MAJOR stumbling block to Shetland Islands Council clearing its accounts with the outside auditors may have been removed, it emerged on Monday.
For the past four years local government finance watchdog Audit Scotland has qualified the SIC’s accounts because they are not grouped with those of the Shetland Charitable Trust.
The auditors have warned the accounts are likely to be qualified for a fifth time this year for the same reason.
This persistent qualification is one reason why the Accounts Commission is holding a public inquiry into the council at the end of this month, which will also examine events surrounding the employment of former chief executive David Clark.
Audit Scotland insist that the activities of the council and the trust are inextricably intertwined and that in effect the trust is subsidising the council, a position the SIC has always refuted.
However one major reason the accounts have not been grouped has been that the charitable trust, 21 of whose 23 trustees are also councillors, fears that this would threaten its charitable status.
At Monday’s meeting of the SIC’s audit and scrutiny committee, external audit manager Carol Hislop said the charity regulator OSCR had informed her that this fear was ungrounded.
Councillor Jonathan Wills won the support of his colleagues when he told Ms Hislop that he believed Audit Scotland did not understand the true nature of the relationship between the council and the trust.
“I think it’s ridiculous to demand the council should group its accounts with an organisation that it happens to do business with. This is partnership working and is what the government is telling us to do,” Dr Wills said.
“I think that once the true facts are known and Audit Scotland understands the true nature of the relationship between the council and the trust they will see that we are not receiving any special favours.”
In a letter to SIC finance chief Graham Johnston, Audit Scotland said that it had “evidence” that the council would fill the gap in providing services currently delivered by Shetland Arts, Shetland Amenity Trust and Shetland Recreational Trust if the charitable trust ever got into difficulty.
Mr Johnston and the council’s assistant chief executive Willie Shannon have been given the job of resolving the argument with the auditors.
There is an opinion that lifting the qualification of accounts could improve the SIC’s image with the Scottish government that might prove useful in other areas, such as obtaining government finance for social housing, where Shetland has lost out in the past year.
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