An auditor says problems checking Nottingham City Council’s accounts will continue due to a significant number of errors and a history of delays.
Annual financial accounts of public organisations, such as councils, are reviewed by auditors to ensure everything is in order.
Assessments had been done by the Audit Commission, the independent public body that oversaw local audits, until it was abolished by the Government in 2015.
Work has since been outsourced to private firms; however, due to a lack of space in the private sector, a backlog has built up.
The backlog in completed audits has become so severe that the National Audit Office (NAO) said in November last year it was impossible to accurately sign off the Government’s public spending figures because of unreliable financial data from councils, police, and fire authorities.
To address and “reset” the system, the Government set a legal deadline of 13 December for outstanding accounts up to 2022/23, even if an auditor fails to complete them and provide assurances that everything is in check.
Accounts for 2023/24 have also been set a deadline to be finalised by February 2025.
Nottingham City Council’s yearly accounts are being checked by auditor Grant Thornton.
In November last year, the firm said the authority’s accounts from 2019/20 up to 2022/23 would be signed off with a disclaimer that they are incomplete and that it could not provide assurances as a result.
Andrew Smith, key audit partner, said they will not be able to fully review the council’s 2023/24 accounts by the deadline of February this year.
“It will not be possible for us to undertake sufficient work to support an audit opinion by the statutory deadline,” he said in a letter published before an Audit Committee meeting on Friday (14 February).
“We have been unable to regain assurance, and it has not been possible for us to undertake sufficient work to give a full opinion.”
Documents say this is largely due to the auditor not getting assurances around the council’s opening balances in its accounts, and the firm has therefore been “unable to form an opinion on financial statements.”
In a conclusion for the audit of the 2023/24 accounts, Mr Smith said a number of significant weaknesses had been found.
These included inconsistencies in budget information and forecasting, which undermined the accuracy with which the authority was able to identify financial pressures, and the fact that the council’s internal audit team was understaffed.
In its report for the year ending March 2020, Grant Thornton said it was unable to establish whether officers had overridden controls, leading to a breach in the use of money from the Housing Revenue Account (HRA) ring-fence in 2019/20 and prior years.
Money from the HRA, intended for council housing and tenants, was wrongly transferred to the council’s General Fund—for use on other services—over a series of years beginning in 2014.
The cost to make it right is estimated at around £51m with inflation.
Grant Thornton said it was further unable to see whether other similar instances of both non-compliance with laws and regulations or override of controls could have occurred.
This was largely because there was not enough evidence on the council’s operating spending due to a large number of errors in its accounts.
These problems mean the auditor has found it difficult to review more recent accounts, and the firm said they will remain “pervasive going forward.”
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