Nottingham City Council takes further action after £15.8 million funding error

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Nottingham City Council has taken further action following its recent announcement that it had identified a serious issue involving £15.8 million of funds from the housing revenue account (HRA) being wrongly used for general fund purposes for all council services.

In line with local government law, the council’s section 151 officer and monitoring officer have issued legal notices which confirm that the allocation of HRA funds to its general fund was unlawful.

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The use of funds in this way is a breach of local government financial law and requires council statutory officers to issue both a Section 114 Notice and a Section 5 Notice – a formal acknowledgement that it has acted unlawfully, in this case specifically in relation to housing services.

Coun David Mellen (Lab), council leader, said: "Despite having the council’s budget and accounts externally audited every year by independent experts, it was the council’s most senior finance officer who rightly alerted me to the accounting irregularity with the HRA and I supported seeking external advice from the Chartered Institute of Public Finance and Accountancy (CIPFA) to review the issue.

The city council acted quickly to correct the errorThe city council acted quickly to correct the error
The city council acted quickly to correct the error

“Having reported their recommendations to me last week, I am committed to acting without delay to ensure that the money is accounted for correctly.

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"This will not directly affect the council’s revenue budget for day-to-day services but will put further pressure on our general fund reserves and steps are now being taken to immediately refund the HRA by the full amount.”