By Joe Locker, Local Democracy Reporter
A report that concluded there were “serious concerns” over the way Nottingham City Council manages its finances is to be checked over by a separate auditing firm.
Accounting firm Ernst and Young (EY) was tasked with reviewing the council’s finances following the uncovering of significant misspending in the council’s Housing Revenue Account in 2021.
Millions of pounds intended for council housing and tenants had been wrongly and unlawfully transferred to the authority’s general fund over a series of years.
EY’s findings, which have not been fully revealed to the public, detailed “very serious concerns” over how money is managed.
A separate auditing firm, Grant Thornton, which has been looking at the council’s accounts from 2019 through to 2023, will now check EY’s findings as part of its ongoing work.
Andrew Smith, key audit partner for Grant Thornton, said: “We need to re-perform some of the work to make sure we can rely on their findings.”
However, EY is yet to give Grant Thornton access to its working papers.
The news proved a cause for concern for councillors during an Audit Committee meeting on Friday, September 29.
Cllr Michael Edwards (Lab) said: “Do they not get how important that is to us?”
“As part of that we have requested access to their working papers,” Mr Smith added.
“That request was made some time ago, probably around the time of the last Audit Committee, we are still waiting to see those working papers from EY.”
Councillors were informed EY said it was happy to provide the papers, and the issue would be followed up.
Meanwhile a series of critical fixes, which must be put in place as part of remedial work following the EY report, are expected to be put in place over the course of the next week.
While EY said it found no evidence of fraud, it had identified a work culture not focused on properly following accounting rules.
It also said it was concerned over the authority’s “inability to find documents”, as well as a high risk of managers overriding established financial controls unintentionally or “for reasons including expediency, efficiency or self-interest”.
In total 39 quick fixes, or ‘controls’, had been drawn up to fix these issues.
Around 38 per cent had been fully implemented before September, with a further 62 per cent implemented throughout September.
By the end of the first week of October all controls, or 100 per cent, should have been implemented.
Director of finance at the council, Shabana Kausar, added: “Within the next week or so they should have all been rolled out.”
The 39 controls will help the council strengthen its financial leadership, design a robust system of internal financial controls and embed professional accounting practice.
They will help the council put in place the basics, but is expected more improvements will be needed.
