Consultants to aid financial improvement will cost Nottingham City Council £175,000

Loxley House in Station Street, where Nottingham City Council
Loxley House in Station Street, where Nottingham City Council is based
By Joe Locker, Local Democracy Reporter

Almost £200,000 is being spent on a consultancy firm to help Nottingham City Council deliver more financial improvements.

Ernst and Young Global Limited (EY) will help the council’s finance team solve problems in its accounts and finances.

The consultancy firm’s assistance over 12 weeks will come at a cost of £175,000, plus any expenses.

Council delegated decision documents, which detail decisions made outside of meetings, say: “The focus of the commission is to map the financial control environment and implement solutions to identified gaps, working closely with the existing [Nottingham City Council] finance team.

“This commission with EY is to deliver a 12 week focused controls remediation response working alongside NCC’s Financial Improvement Plan resources, which is capped at £175,000 [excluding VAT].”

Alongside Deloitte, KPMG and PricewaterhouseCoopers, EY is considered one of the ‘Big Four’ accounting firms.

EY is currently conducting a review into the council’s historical accounting practices, to check for any potential manipulation of accounts.

The report on its findings is expected at the end of June, after delays.

The review focused on the management of ring-fenced grants, which must only be used for certain purposes.

It comes after serious accounting issues were uncovered in the council’s ring-fenced Housing Revenue Account (HRA), money from which must only be used for the council’s social housing and improvements for tenants.

This money had been improperly transferred to the council’s general fund, which finances other services, over a series of years beginning in 2014.

The cost of the wrongful spending and transactions now totals up to £51m.

EY is not the only consultancy firm to have been employed by the council, and millions of pounds have been spent on their use ever since the Government-appointed Improvement and Assurances Board (IAB) was put in place to oversee rapid change.

More than £1m has been spent on another of the ‘Big Four’ firms, PricewaterhouseCoopers (PwC), to help it draw up its financial improvement plan.

The delivery of the financial improvement plan is one of a series of demands the council must meet by strict deadlines.

The council cannot borrow any money at present as agreed by the IAB.

However the Government has allowed it to borrow £20m purely to fund external consultants and other improvement activities.

The council’s own assets have been used as security against the sum.

The EY consultants and their expenses will be funded using some of the £2.4m set aside within the council’s Financial Resilience Reserve, documents add.

Speaking previously to the Local Democracy Reporting Service of the use of consultancy firms, council leader, Cllr David Mellen (Lab), said : “Where this work is specialised or we don’t have the necessary capacity within the council, we need to bring in external expertise.

“Often this work is for shorter periods only so it makes more economic sense to have people working on these specific projects with temporary contracts rather than as permanent staff so they can drive and direct the required changes which will leave us a better, more efficient council.”

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