Tuesday 23 April 2024
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Nottingham

Council escapes penalty after paying charity invoices over a year late

Nottingham City Council has escaped a penalty for filing invoices up to 14 months late from a charity it runs.

The Labour-run council is the sole trustee of the Bridge Estate charity, which was set up to maintain Trent Bridge through the letting of around 100 properties across Nottingham.

Invoices must be paid within 30 days, however an audit of the charity’s accounts found some of the payments due from the council to the charity were up to 14 months late.

Rogers Spencer, the auditor of the charity’s accounts, said in a letter: “Whilst reviewing purchase invoices we identified that payments for some invoices from Nottingham City Council were significantly late, with one being paid 14 months late.

“The reason given for this was ‘internal resources have caused problems raising and paying invoices – Bridge Estate and Nottingham City Council inter-transactions have been given a low priority as we know we will pay
each other’.

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“All Nottingham City Council invoices should be paid within 30 days. It is recommended that procedures around payment are reviewed to ensure that invoices are settled on a timely basis.”

In some instances, the auditor was also unable to use lease agreements to
verify the rent received from properties let out by the charity.

However the letter adds it has not identified any material weaknesses in internal control during the audit.

According to the council, the deadlines were missed due to resources in its finance department.

The issue was discussed during a Trusts and Charities Committee meeting on Monday, March 25.

Cllr Andrew Rule, of the Nottingham Independents and Independent Group, said: “The late filing of the annual returns, do we have a penalty for filing it late?”

A council officer said: “I informed the Charity Commission towards the end of January and they didn’t raise any concerns and there is no penalty.”

He added he is confident deadlines will be met in the future, having secured more resources in finance.

The issue comes after concerns over how money from the charity was being used were raised in a report from accounting firm Ernst and Young (EY) in February.

 

EY’s report said that when surplus money is made by the charity, it may be transferred to the council’s own account.

However money transferred to the council did not appear to correlate with the generated surplus.

For example, in 2021/22 a total of £1m was transferred, but it was said this was £519,584 more than the surplus made in the year.

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EY said the transfer of endowment funds appears to have contributed, which is property held by a charity, such as cash and land, that must be kept in a fund rather than spent.

In its report EY had noted “the restrictions around these endowments would need to be explored to understand whether these are compliant or not.”

The council has since clarified the endowment fund did not contribute to grant payment to the council.

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