Auditors identify Sefton Council’s £32 million Bootle Strand purchase as “significant risk”
Sefton Council’s external auditors Ernst & Young have identified the controversial £32 million purchase of the Bootle Strand Shopping Centre as a “significant risk” in their Audit Planning Report released this week.
In a report to the Council’s Audit & Governance Committee held on Wednesday, the audit firm refers to “the purchase of a Luxembourg-registered company” during the last year as well as “the complex nature of this exercise”. Accordingly they identified the transaction as one of just two areas classified as being at the highest ranking of “significant risk” in their audit strategy.
Last year Labour-controlled Sefton Council came in for nationwide criticism for its decision to acquire the Bootle property via the purchase of the shares in a Luxembourg-based company, rather than of the property direct. It is understood that this avoided £1.6 million in stamp duty.
Birkdale councillor Simon Shaw, Lib Dem spokesperson on the Audit & Governance Committee has welcomed the fact that Sefton Council’s auditors will be examining the reporting of this transaction in detail.
“Over recent months Lib Dem councillors have highlighted a number of concerns about this whole affair ranging from the massive fees paid to outside advisors as well as Labour’s persistent secrecy over the matter.”
“So I’m delighted that the Council’s external auditors have identified this as a priority area as part of their annual audit for 2017/18.”
Accounting for in year acquisition
Significant risk
New risk
The Council acquired a strategic asset in year. The transaction involved the purchase of a Luxembourg-registered company (LuxCo), which in bringing the asset on to the balance sheet, as at 31 March 2018, the Council took action to wind up the operations of the LuxCo. Due to the complex nature of this exercise we will consider the financial reporting of this transaction as part of our financial statements audit.
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