News / SIC appeases auditors by grouping accounts
SHETLAND Islands Council has caved into pressure from its external auditors and grouped its accounts with those of the £200 million Shetland Charitable Trust.
The move has split opinion amongst councillors who disagree whether it could jeopardise the two organisations’ long term financial security.
For the past six years Audit Scotland has qualified the council’s accounts for its failure to group them with those of the trust, after trustees refused to hand over the financial information.
However the SIC’s new head of finance James Gray has used publicly available records of the the trust’s finances so they can be, at least partially, grouped together.
The move marks a clear U-turn in management practice at the SIC and comes shortly before the return of interim chief executive Alistair Buchan to Orkney Islands Council.
Trust vice chairman Jonathan Wills is convinced the decision is “damaging” to both organisations, and pointed out there was no legal obligation to group the accounts.
“They are independent organisations and this puts the council’s funds and the trust’s funds at risk, because it will allow the government to regard the trust as a subsidiary of the council,” Wills said.
However SIC leader Gary Robinson insisted the council had received assurances from its legal and financial advisors that there was no such risk.
“All the indications that we have had is that these kinds of fears are unfounded. This will go some way to satisfying the auditor. It may still be that they qualify the accounts, but it will not be a full qualification.
“This has been council policy for a number of years now, and I’m confident this is the right way forward.”
Robinson added that he looked forward to The Accounts Commission’s response to the move, which he called “an important part of our improvement plan to address the ongoing financial challenges facing the council”.
What has always stood in the way of the grouping of accounts has been the refusal of the trust to hand over the financial information it requires.
To get around that the finance section has trawled the internet to find what public information is available, much of which relates to the previous year’s accounts.
Wills said the fact the trust had not been informed of the decision was a “discourtesy”.
Many councillors were also unaware of the move, which is recorded in the council’s draft accounts for 2011/12 and does not require approval from members.
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