SHETLAND Islands Council is to check whether it is being subsidised by Shetland Charitable Trust, in order to satisfy finance watchdog Audit Scotland that its accounts are in order.
Shetland is the only Scottish council to have its accounts qualified by the auditors, who want to see the council and the trust’s accounts grouped together.
After qualifying the accounts for four years running, the Controller of Audit is investigating the way the authority is run, with auditors interviewing staff and councillors and attending meetings.
This week audit manager Carol Hislop told the council’s audit and scrutiny committee: “Our main concern is that Shetland Charitable Trust is subsidising services being provided by the SIC.”
Her comments were described as “a revelation” by SIC finance chief Graham Johnston, who said he would be seeking further clarification from Audit Scotland.
Councillor Caroline Miller said: “This is the first time I have heard that the reason for the problems with the accounts isn’t because of the make up of the charitable trust.”
Members had previously believed that their domination of the trust, with 21 of the 23 trustees, was the main bone of contention with the auditors.
Mrs Miller called for a report to be presented to the full council as soon as possible outlining what services the council bought in from the trust and what the market price for these would be.
The charitable trust, which handles about £200 million of public money for the Shetland community, has been looking at reform for the past few years to satisfy concerns from the charity regulator OSCR about its independence from the SIC.
Ms Hislop said that even if the trust had no councillors on its board, the council’s accounts would still have been qualified.
She said she had recently held constructive talks with the trust’s chairman, councillor Bill Manson, but did not believe those discussions would change Audit Scotland’s view of the accounts.
“There has to be more work done on that for us to say that SCT is not subsidising the statutory services of the council,” she said.
Last year’s Audit Scotland report on Shetland Islands Council raised concerns about the charitable trust’s structure and its relationship with the council.
It highlighted several examples over the past few years where the two bodies have coordinated their actions to help each other out, including the sale and lease of inter island ferries, the sale and lease of Sullom Voe oil terminal land, the sale of Shetland Towage, and the transfer of Islesburgh Trust and Shetland Welfare Trust.
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