The leader of the opposition party at Nottingham City Council says he is “disturbed” by the authority’s reluctance to make public a damning report into its finances.
A review carried out by accounting firm Ernst and Young (EY) Global concluded controls on how money is managed at the authority are “not fit for purpose”.
But so far the council has only published its own summary of the feedback, named the ‘Financial Controls Assessment’ and said the original EY report cannot be made public.
Kevin Clarke, leader of the Nottingham Independent Party, does not sit on the Audit Committee but attended a meeting of the group on June 30.
Annabel Scholes, interim director of finance, told councillors: “You have to accept it will take longer than 12 months to resolve this.”
Cllr Clarke said he was “quite shocked” after the meeting, where councillors had the chance to question finance directors on the report.
He said he thought the council was “concealing” the report and raised concerns “due to a legacy of what’s happened in the past”.
He said: “I can’t believe the lack of transparency. This [report] is something that should be shared with everybody, especially councillors. It beggars belief really.
“As far as I’m concerned, no councillors have seen the full report. I’ve been a councillor for four years and I haven’t known that before.
“I’ve had one or two Labour members come to me and ask if I’ve seen it.
“Members of the public are wondering why they’re pushing it under the carpet and hiding things.
“Is there something to hide, this is what we want to know. They need to come out and show the full report.”
He said it “disturbed” him that in his view the council had not given a clear enough reason for not sharing the report.
He added: “This is another vital report and they don’t want people to see it.”
But a city council spokesperson said: “The Audit Committee report goes into significant detail about the assessment the council commissioned from EY of financial controls, and is explicit and transparent about the serious concerns identified and the actions being taken to address them”, a city council spokesperson said.
They added: “We are not able to provide any more information on the assessment as this may impact on further activity that still needs to be undertaken.”
The report, which was originally due to be complete by February, checked historical accounting practices to check for any potential manipulation of accounts.
It follows the uncovering in 2021 of huge misspending in the council’s Housing Revenue Account.
EY concluded that for the period 2019 to 2022, there are a number of “very serious concerns identified”.
Ross Brown, Corporate Director of Finance & Resources, said during the meeting: “I would emphasise that the findings relate to the three-year period and is not inclusive of the previous financial year.
“Although, it is quite reasonable to say many of the challenges and concerns that existed in that period will by default have carried forward.
“We are very much focused on looking forward. We’ve got a credible plan and we have commissioned additional work over and above the existing Financial Improvement Plan.
“We recognise and accept the findings and the seriousness of them. We are very much focused on the actions we need to take to address this as urgently as possible.”
The report reveals concerns over ineffective systems including the inability to find documents and a culture which is “not focused on compliance” – but no fraudulent transactions have been found.
Nottingham City Council said it has “responded quickly” and commissioned an initial three-month remediation plan to address the control weaknesses.
EY examined six ring-fenced areas: the dedicated Schools Grant, the Better Care Fund, licensing income, parking, traffic regulation and bus lane enforcement income, the Transforming Cities Grant and Selective Licensing.
But Annabel Scholes, interim director of finance, said: “As difficult as this might be to hear, it doesn’t just relate to the six areas reviewed. Fundamentally it identified system weaknesses that needed to be addressed across the council.
“The findings gave us enough concern to respond quickly.
“Fundamentally an individual was able to move finances from one area to another without the oversight of a separate person.
“That is a basic control that you ideally would’ve put in place.
“You have to accept it will take longer than 12 months to resolve this.
“The finance improvement plan already takes you to March 2024 and I expect it to go beyond that.
“You are looking now at needing to invest further in IT systems.”
She added that there has been “positive feedback” that the financial improvement plan has already “turned some of these control weaknesses around”.
Chair of the committee Cllr Sam Gardiner (Lab) said there are plans to establish a working group for the audit committee to ‘review itself’.
He said: “The audit committee recognises the seriousness of this.
“We need to hold ourselves to account in addressing some of the shortcomings.
“We welcome the report and we are pleased that action is already being undertaken.”
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