By Joe Locker, Local Democracy Reporter
The leader of Nottingham City Council says he is confident limited details about a confidential report into how the authority handles its finances were not given to the public with a “rose tint”.
Accounting and auditing firm Ernst and Young (EY) recently reviewed the council’s historical accounting practices to check for any potential manipulation of accounts, but the final report has not been made available to the public.
During a full council meeting on July 10, leader Cllr David Mellen (Lab) said he too has not seen the full report, but stated councillors had been effectively briefed by officers.
In a 10-page summary of EY’s findings, the council says it was concluded that, in the period from 2019 to 2022, no fraudulent transactions had been found.
However, the firm said the council’s controls over how money is managed are “not fit for purpose”.
There were also concerns over ineffective systems, including the inability to find historical documents.
Upon the council’s refusal to publish the full report, Cllr Kevin Clarke, the leader of the Nottingham Independents and Independent Group, criticised the lack of transparency and branded it “disturbing”.
During Full Council he questioned the council leader and said: “Could the leader of the council confirm whether he has had access to the full, un-redacted version of the Ernst and Young report on management override of controls commissioned by the section 151 Officer?”
Responding Cllr Mellen (Lab) said: “I have not seen the full report prepared by Ernst and Young.
“I am confident that Ernst and Young’s findings have been fully explained to councillors through the comprehensive briefings developed and delivered by the section 151 officer, which has been presented to myself and colleagues in a clear, open and transparent way that has enabled us to understand the content and implications of the report.
“I’ve asked that all my portfolio holders raise the issue of the controls environment in the areas for which they are responsible at their regular meetings with directors, so elected members properly understand the challenges experienced in departments and ensure recommendations and improvements are being made.
“As the chamber will be aware the recent audit committee report did not underplay the seriousness of the issues found.
“Indeed it confirmed over the three years reviewed there have been numerous incidents of control breaches, leading to the assessment that Nottingham City Council is operating with a considerably weakened control environment which is not fit for purpose.”
EY’s review focused on six ring-fenced pots of money, including 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.
This followed the 2021 uncovering of a series of misspends in the council’s Housing Revenue Account.
The Housing Revenue Account holds council house tenants’ rent money and is intended for use on social housing only.
Then-section 151 officer Clive Heaphy, who has since left and been replaced by Ross Brown to oversee good accounting practice, discovered millions of pounds had been transferred to the council’s general fund, which funds other services, over a series of years.
It is now known the cost of the misspending totals £51m.
Cllr Mellen added: “I’ve had detailed briefings from the section 151 officer he has assured me that work is under way to address the issues raised by the report.
“He has not at all given it to us with some kind of rose tint on it.
“I would not want to underplay the problem but I do believe it is something we can address and put right through various measures.”
