By Joe Locker, Local Democracy Reporter
The director of finance at Nottingham City Council says the authority should have around 37 improvements in place by September after an auditor found its financial management was “not fit for purpose”.
Accounting firm Ernst and Young (EY) had been asked to review the authority’s finances and in June it concluded it had “very serious concerns” over how money is handled and controlled.
The review, which has not been made public, came after it was found millions of pounds meant for council housing and tenants had been unlawfully transferred from the Housing Revenue Account to the council’s general fund.
The Labour-run council has since commissioned EY again for a three-month plan to fix the financial control weaknesses as part of a broader financial improvement plan.
During an Audit Committee meeting on July 28, Shabana Kausar, who started working as the council’s director of finance in June, said 37 improvements were expected to be implemented by September.
“A good amount of progress has been made,” she said.
“The project started on June 12 and is very much on track.”
Weekly project checkpoint meetings are being held with EY to provide
progress updates and make decisions at relevant milestones, the council says.
The 37 improvements, or ‘controls’, will help the council strengthen its financial leadership, design a robust system of internal financial controls and embed professional accounting practice.
So far 31 have been agreed but not implemented, one has been implemented and five are yet to be designed.
Ms Kausar described them as “quick fixes” which need to be done immediately to keep the Government-appointed Improvement and Assurances Board happy.
The five improvements which are yet to be drawn up are expected to be finished over the next couple of weeks.
Independent councillor Andrew Rule questioned if the improved controls would be assessed to see if they were working.
He said: “Within the remediation period, is there anything built in to it to gauge the effectiveness of the controls once they have been implemented?
“I’m conscious in 12 weeks it will be the beginning of September and that is when we are saying we hope to have everything implemented, but is there anything to make sure what is being implemented is actually being effective?”
Ms Kausar added: “As some of them are being implemented earlier we will have the time to see the effect of them, but some of them have got a bit of a longer time to get them implemented.
“We will be monitoring it and I am hoping, and I can’t guarantee it until I’ve had this conversation with EY, is to have some kind of a health check on these things.
“That is my ask to them that, at the end of it, we will have some sort of monitoring and reporting tool.”
Cllr Rule then questioned if it was therefore likely EY’s contract may have to be extended to do this.
Councillors were told any extension will be judged on how successful the improvements have been once the controls have been implemented.
At the beginning of July the authority said it was anticipating a £26m budget gap over the coming 2023/24 financial year due to internal and external pressures.
It is predicting this gap will widen to £50.9m in the 2024/25 financial year and £58.7m over the next four years.
During the meeting councillors were told officers are “fairly assured” the anticipated budget gaps are accurate.
However Ms Kausar added: “What we know is it might vary by a couple of million.
“We are making it on a best estimate of where we think we are going to be.”
