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Full expert opinion on council’s finances should finally be possible in a year

By Lauren Monaghan, Junior Local Democracy Reporter

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A Nottingham City Council finance boss says the authority’s books should  finally be ready to be cross-checked and properly backed by independent experts again in 2026 following a series of hold-ups.

Nottingham City Council’s audit committee met today (February 14) to discuss the state of the council’s troubled finances.

The committee also looks at how accurately the council is managing money and recording spending.

Yearly financial accounts of public organisations, such as councils, are reviewed by auditors to ensure their finances are in order- the council’s yearly accounts are being checked by specialist finance firm Grant Thornton.

 

In November last year, Grant Thornton said the city council’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 on them as a result.

In today’s meeting, auditors said the same for the 2023/24 accounts, adding there is not enough time to complete a full audit by the February deadline.

Documents say this is largely due to the auditor not getting assurances around the council’s opening balances in its accounts.

The committee read the weaknesses identified by auditors for the 2023/24 accounts, which included inconsistencies in budget information and forecasting, undermining the accuracy with which the council was able to accurately identify financial pressures.

Auditors also said the council’s own internal audit team was understaffed.

But Stuart Fair, Interim Corporate Director of Finance and Resources told the Local Democracy Reporting Service following the meeting a full audit should be able to be completed by this time next year.

This is due to the accounts from 2019/20 up until 2023/24, all being approved and signed off- with a disclaimer- within the last three months- with 2023/24 being approved in today’s meeting.

Mr Fair said: “The technical team have done a fantastic job catching up.

“For [2024/25] we should have a set of accounts with Grant Thornton by the end of June 2024 just as normal.

“Hopefully Grant Thornton will be able to do a full audit. For this meeting next year they’ll be able to provide a more accurate opinion [of the council’s financial accounts].”

Chair of the committee, Councillor Adele Williams (Lab), asked auditors during the meeting: “You’ve said that [other] councils are facing disclaimed opinions [saying they cannot be full assured or checked; – how many [councils] is it?”

Andrew Smith, Key Audit Partner, replied: “I couldn’t give you an accurate figure, I could give you a ballpark figure, you’re probably looking at 40 per cent.”

Cllr Williams said: “The national position, it is recognised it is in serious need of an overhaul.

“We’re looking at a historical position and I’m really glad we’re going to be moving into a more standard position with the reports coming to audit when they should be.”

In Grant Thornton’s report for 2019/20, the firm said it could not establish whether officers had overridden controls which led to a breach in use of money from the council’s Housing Revenue Account (HRA) ring-fence in 2019/20 and the years prior.

Money from the HRA, which is used on the council’s own housing, was wrongly transferred to the pot the authority uses for other services over a series of years beginning in 2014.

With inflation, the cost to rectify this is estimated at around £51 million.

Speaking in the meeting, Cllr Linda Woodings (Lab) said: “Since that matter was found out there has been substantial governance over every single piece of expenditure recharged to the HRA- this council did not sit back and do nothing about that.

“I hope that when you come to audit this year’s accounts you’ll be able to track that back so you can receive assurance on that.

“Our commercial oversight board- almost for the entirety of last year every single spending or accounting transaction went through that process. I hope we’ll be able to demonstrate that for the 24/25 budget.”

After the Audit Commission was abolished by the Government in 2015, auditing was outsourced to private firms but a backlog has built up due to lack of space.

This backlog in completed audits has become so severe the National Audit Office said in November last year it was impossible to sign off the Government’s public spending figures accurately- due to unreliable financial data from councils, police and fire authorities.

On September 30, 2024, parliament approved the Accounts and Audit (Amendment) regulations 2024 to help clear the backlog, giving finalised accounts for 2023/24 a deadline of February 28, 2025.