Council / New auditor keen to take ‘independent view’ on SIC reserves
SHETLAND Islands Council’s new external auditor is keen to take what it says will be a “fresh look” at the local authority’s reserves.
Audit Scotland’s Brian Howarth said at a meeting on Monday that he wants to examine elements like the size of reserves, the rate of use and the value.
The organisation has taken on the council’s external audit role until 2026/27, replacing Deloitte in the job which provides scrutiny of the local authority’s accounts.
The issue of reserves – the money Shetland Islands Council holds which is put into investments to gain income – has been a constant topic of discussion in the chamber over the years.
At the end of 2022 they were valued at nearly £380 million, but the council has had to dip into this “unsustainably” – as well as “sustainably” – every year to balance the books.
However, their value can fall and rise depending on the global financial markets.
The budget for 2023/24 includes an unsustainable draw of £4.8 million.
Some have called it a “rainy day fund” which should be dipped into more, but many others in the chamber warn against taking more unsustainable draws.
“I think it’s easy to fall into a pattern that it’s an issue, and I just want to step aside from that and take an independent view on whether that is how it’s been presented over a number of years,” Howarth said.
He said it is about taking a new look rather assuming a position from previous auditors.
Meanwhile Shetland Central councillor Moraig Lyall raised concern over the cost of auditing the Zetland Educational Trust.
The charity provides funding for projects that enhance education benefit of people in Shetland, and the council is its governing body.
The cost of auditing the trust has risen from £400 in 2021/22 to £3,000 for 2022/23.
Audit Scotland said this has purely been due to the cost of the job, with Howarth saying increasing the fee was the most “transparent way” of dealing with the issue.
Lyall said it seems an “ever increasing proportion” of the operation of the trust is going to be “swallowed up” in administering it.
She suggested that it may benefit from a restructuring the future due to the small amount of money involved in the trust. In the year ending 31 March 2022 bursaries totalling £2,600 were given out, and grants worth a combined £13,853.
The fee of Shetland Islands Council’s audit fee in 2021/22 was £216,916 compared to £252,590 in 2022/23.
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