'This is not rocket science' say auditors in verdict on Nothamptonshire County Council's £35m overspent accounts

Auditors will decide whether a public interest report into the financial failings should be undertaken.
Auditors will decide whether a public interest report into the financial failings should be undertaken.

After a very long wait the auditors have delivered their verdict on Northamptonshire County Council’s financial annus horribilus and say a ‘lack of robust planning, project delivery and governance’ led to the £35m overspend.

KPMG auditors delivered the findings in its draft audit of the 2017/18 accounts to Northamptonshire councillors on the audit committee yesterday (Jul 30), 12 months after it was expected.

Delays by finance staff in giving information to auditors, investigations into expenditure and the financial meltdown of the authority all led to the delay and the final audit still has to be signed off.

The verdict from KPMG is that the council overspent by £35m after a series of accounted spends made by the authority were not allowable.

Auditors ruled out £16.9m of spending under the flexible use of capital receipts system as it was not transformative; £2.8m used by the council from developers’ (section 38 funds) was also ruled out and £7.9m of money was wrongly used from the public health grant.

But there were little surprises at the meeting held at One Angel Square in Northampton as much of the information has already been put into the public domain during the past year by senior officers and the two government appointed commissioners running the authority.

Chief auditor Andrew Cardoza said the ‘negative fund balance was quite unique in local government and not something we did lightly.”

His colleague Daniel Hayward pointed to a lack of expertise and also a culture where staff were not held accountable for their actions. He said a key message was that the majority of planned cost savings in 2017/18 in every department of the authority were not delivered.

He said: “This is not rocket science. This is about getting the basics right. The failure to achieve the agreed arrangements comes from just not doing the basics right. People have not been held accountable historically and then have continued to fail to do the basics right.”

The auditors have delivered an adverse value for money rating and also given a long list of recommendations to make sure the council has the right financial processes and controls in place in the future.

These include putting together professional business cases for projects, making sure its contracts register is accurate and up to date, having a robust audit trail for exit packages to staff and has appropriate controls in place regarding grant funding spend.

Chair of the audit committee Bill Jessup said it was encouraging that senior leaders running the council now had given a detailed response to each recommendation but Mr Cardoza said that accountable officers and time limitations should be attached to each recommendation. He gave the authority a warning that the audit recommendations should be delivered before the council moves to unitary governance in 2021.

At the meeting the high turnover of senior staff at the county authority was repeatedly pointed to. The authority has had five chief finance officers in a short space of time. It also had four chief executives or interim chief executives within the same period.

The audit ended up costing the council £693,000 , compared to a £235,000 cost the year before. The cost could rise even further because of disagreements over the value of council headquarters One Angel Square. Auditors say the building is worth £37m but the council disagrees with the valuation and discussions are ongoing.

The audit has been approved by the committee subject to delegated councillors on the audit committee signing off the final decision about the One Angel Square valuation.

Labour councillor Mick Scrimshaw said it was clear there had been a catalogue of errors and what was important now is how the authority moves forward. This year it has said it has balanced its books, with a £4.5m underspend, although these finances are yet to be audited.

When the 2017/18 accounts are finalised chief auditor Andrew Cardoza will decide whether to issue a public interest report. He said he will discuss whether this is necessary with his firm’s legal advisers and as it comes with an additional cost, and will weigh up whether it is in the best thing to do considering the current financial problems at the council.

Public interest reports are relatively rare. The last one in Northamptonshire was in 2013 when KPMG issued one into Corby Council’s management of its headquarter at the Corby Cube.