CASH-strapped and cuts slashed  Herefordshire Council has to pay a six figure sum  to show it offers value for money.

The invoice for £164,803 covers the cost of an outside audit of the council’s finances over 2014/15.

Another £6,420 covers related grant certificate costs taking the total to £171,223 as included in the council’s 2014/15 budget.

This week, the council’s audit and governance committee is due to debate the amount to be paid to Grant Thornton UK LLP for work on financial statements, accounts and value for money conclusions as detailed in the council’s annual audit fee letter.

Grant Thornton was appointed as the council’s external auditor by the  Audit Commission, which also set the fee.

The requirement to supply accounts for audit that have appropriate working papers means the council and its “arm’s length” contractor Hoople must meet all deadlines outlined in the accounts timetable closure process.

Grant Thornton will require management and accounting staff from both the council and Hoople to be available to help locate information and provide explanations so that the account are audited to the expected standard.

Oversight of the Hoople contract is the responsibility of the council’s chief finance officer.

Three bills of £41,201 in September and December this year and March next year followed by a £41,200 bill in June next year make up the main audit fee.

The £6,420 grant certification fee is due in December next year.

Work on the audit is underway in March next year to end in September with the council receiving its annual audit letter in October.

The main audit fee is the same as last year while the grant certificate cost has come down from £8,420 in 2013/14.

In April, as reported by the Hereford Times, cabinet backed the contract for the council’s internal audit services – previously held by KPMG -  going to the South West Audit Partnership (SWAP).

Internal audit is essentially a backroom function for the council, assessing the effectiveness and efficiency of operations, the reliability of financial and management reporting, compliance with laws and regulations and the safeguarding of assets.

The cost of the council’s contract with SWAP is expected to be around £225k a year.

External audit is a separate function.

In 2011,  the government confirmed its preference for transferring audits for local public bodies as carried out by the audit commission to the private sector.

A year later, the commission confirmed that five year contracts for audit work had been awarded to four private firms with Grant Thornton appointed to Herefordshire Council.