A member of the public has challenged the council’s £30m investment in Redwood Bank, made in October 2017. Auditors must now reply to the challenge, delaying approval of the accounts.
The objection is thought to be based on the ‘timing of a change’ to the company’s ‘articles of association’ – the rules by which the company must be run, as agreed by shareholders and directors.
The complaint argues that these rules were changed without the council’s approval after it invested in the bank, putting the council’s finances at risk.
But the council said the changes to the articles of association were made prior to any investment.
Richard Buttrey, who made the complaint, also expressed concern that the council paid too much for the investment in the bank.
Warrington owns a 33% stake in Redwood Bank, which it claims will help local businesses and generate income.
In its statement of accounts for 2017-18 the council said auditors Grant Thornton “cannot formally conclude” the audit process until they have considered the objection, as required by the Local Audit and Accountability Act 2014.
A council spokesperson said: “Objections to local authority accounts are not uncommon and enable a layer of public scrutiny.
“This process means, however, that a guaranteed date for the accounts to be signed off can’t be given.”
Redwood Bank did not wish to comment due “commercial sensitivities” but offered a response to concerns about the articles of association.
“Even though the council were not shareholders at the time the articles were validly adopted, the council was fully aware of the proposed changes,” the bank said.
“The relationship and agreement with our shareholders has not changed and we remain committed to demonstrating a sustainable return on investment for all of our shareholders.”
Once the auditor has responded to the initial objection, the objector has a set period of time in which to respond.
The council its investment in Redwood Bank was subject to a “comprehensive business case and risk assessment”.
The delay in signing off Warrington’s accounts follows a delay with Lancashire County Council’s accounts. This was due to accounting issues related to a LOBO loan that it holds.
