Fears raised on social media over Enfield Council’s finances have been called a “misunderstanding” – despite a report warning of a deficit and “significant risks”.

A report by the council’s external auditor, BDO, says there is “a risk that the council may not be financially sustainable in the medium term”.

It says the council is forecasting an £8.9 million deficit in 2019-20, which is a “deterioration in financial performance compared to the original forecast of breakeven”.

The report flags up eight “significant risks” to the council, including the 10,000-home Meridian Water regeneration scheme, alongside two “normal risks”.

But at a meeting of the audit and risk management committee on Thursday (January 16), councillors were told fears over the council’s finances raised by people commenting on the report in a Facebook group were based on a misunderstanding.

Fay Hammond, the council’s executive director of resources, said: “On social media, there have been inaccurate or misleading reports around our financial position. I don’t think people who have read it understand the report properly.

“What they’ve done is misinterpreted your [the auditor’s] comments to say we are in a financially difficult position.

“In fact, if you look at the report last year, you say there, although we’ve got significant challenges, we understand what our financial position is, and actually we are robust.

“I wanted to make it absolutely clear that we are in a financially sustainable and robust position, and the council is effectively financially managed.”

David Eagles, audit partner at BDO, said: “This is a risk assessment. It is not a conclusion about where we think you are. It is just saying the areas we need to look at.”

He added: “I think we had a similar issue, a misunderstanding, in previous years, which is really unfortunate.”

Ms Hammond said the “service overspend is £8.9 million”, but the council’s quarter two report says there are “underspends in corporate and contingency”, so its actual deficit is £5.9 million.

Cllr Charith Gunwardena (Labour, Southgate) pointed out the report says the council may not be financially viable over the medium term.

He said: “That is still quite worrying. That is important for us to understand a bit more, if there are those risks, and then we go on to say over the next five years there is a savings gap of £66 million we need to make.”

Mr Eagles said: “What we are looking at is that you and every other council have to work your way through every year with savings plans and efficiencies to continue to mitigate those risks. What we are looking at is ‘do your plans stack up?’”

Cllr Dinah Barry (Labour, Winchmore Hill) said she felt “alarmed” when she read the report and called for clarification for members of the public.

She said: “To be told it is not an accurate interpretation – it is not an interpretation; it is written down in black and white”.

Cllr Tim Leaver (Labour, Palmers Green) said: “This is a document produced by our auditors. It identifies the risks, and anything that has been in the public domain on social media has been taken utterly out of context.

“This is about David telling us where he is on the plan. It is absolutely right, because we have had problems previously with the audit and the pressures the Government put on us.

“I think the more fundamental question we should be asking is, ‘is this plan deliverable and will we get the audit on time?’ That is what we should be asking – not pulling it apart because people have misinterpreted it.”

BDO’s audit planning report for the year ending March 2020 is available here: https://governance.enfield.gov.uk/documents/s79516/LBE%20external%20audit%20plan%201920%20-%2016%20Jan%202020.pdf