Northumberland councillors will discuss the first report from the authority’s new auditors next week following its public fallout with the previous team.

At last November’s meeting of Northumberland County Council’s audit committee, the breakdown in the relationship between the authority and its then auditors, Ernst and Young (EY), became apparent.

A lengthy debate on the EY audit results report for 2018-19, which had been delayed after ‘whistle-blowing’ allegations were investigated, ended in the company’s partner Stephen Reid announcing that they were resigning from their role.

However, the council had already been intending to remove EY as its auditors, while chief executive Daljit Lally said that a request was made for another partner within the company to be appointed in place of Mr Reid as far back as October 2017.

EY’s report concluded that the external auditors ‘did not find evidence to support the allegations regarding a lack of independence and integrity of senior management, bullying or the inappropriate use of funds for political purposes’.

But it added that ‘in our view, there are management and cultural challenges facing the council that need to be urgently addressed’, going on to refer to a ‘a highly politically charged environment’ and to suggest that ‘historical issues are still at the forefront of management’s mind’.

Among the other concerns raised, which resulted in an adverse value for money conclusion, were the turnover of section 151 officers and ‘the maintenance of a sound system of internal control’.

However, the committee also received a four-page rebuttal from Mrs Lally, which, as well as addressing the issues mentioned above, describes some parts of EY’s report as ‘factually inaccurate’ despite requests to make corrections.

Her response concluded: ‘As the ‘client’ for this report, I am unable to agree or support its conclusions which I consider to be in part disproportionate and without basis.’

At the Wednesday, May 27, meeting of the audit committee, which will be held remotely and streamed on the council’s YouTube channel, members will receive an audit progress report from Mazars, who were appointed earlier this year through Public Sector Audit Appointments.

Due to the impact of coronavirus, new regulations came into force on April 30, which extend the deadlines for local authorities to publish their accounts for the 2019-20 financial year.

Draft accounts must be published by the end of August – although they can be put out earlier, before the audited final statement of accounts appears by November 30.

The update report states: ‘Our work has not progressed as smoothly as planned due to coronavirus issues, however, there are no significant matters arising from our work completed to date that we are required to report to you at this stage.’