Nottingham Council refuses to publish report detailing ‘very serious’ financial concerns

The review, carried out by accounting firm Ernst & Young Global concluded controls on how money is managed at the authority are “not fit for purpose”.

So far, the authority has only published its own summary of the feedback, named the Financial Controls Assessment and said the original EY report cannot be made public.

The report, which was originally due to be complete by February, checked historical accounting practices to check for any potential manipulation of accounts.

A council spokesman said: “The audit committee report goes into significant detail about the assessment the council commissioned from EY of financial controls, and is explicit and transparent about the serious concerns identified and the actions being taken to address them.

“We are not able to provide any more information on the assessment as this may impact on further activity that still needs to be undertaken.”

However, the opposition Nottingham Independents and Independent Group said while the Labour-led council’s document provides a ‘useful summary’, the full report should be made available to the audit committee “at the earliest opportunity”.

They said: “In the wake of the financial mismanagement of the city’s finances by Labour, this is essential so partners and more importantly council taxpayers have the confidence the council has finally moved on from Labour’s past failings.”

The investigation has come after huge mis-spending in the council’s Housing Revenue Account, involving the wrongful use of the funds from council tenants’ rent, was uncovered in 2021.

The report reveals concerns over ineffective systems, including the inability to find documents and a culture “not focused on compliance”, although no fraudulent transactions have been found.

The council said it has “responded quickly” and commissioned an initial three-month remediation plan to address the control weaknesses.

A 12-week remediation project has been commissioned which will include weekly review meetings to ensure improvements are made quickly.

Councillors are due to discuss the report at the audit committee today, Friday.

EY examined six ring-fenced areas: 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.

EY rated the overall risk as ‘high’ in the six areas examined, but they stated that there was ‘no suggestion of any fraudulent transactions’.

But they concluded that for the period 2019 to 2022, there are a number of ‘very serious concerns identified’.

The report said: “EY observed a weak control environment, ineffective systems, associated management information and a culture which is not focused upon compliance.

“The findings of the financial controls assessment underpin a conclusion that NCC is operating with a considerably weakened control environment which is not fit for purpose in allowing a local authority to enact effective financial stewardship.”

But they acknowledged the scale of change required with the council’s finances will take “a number of years to fully implement”.

Ross Brown, council corporate director of finance and resources, said the authority was “committed to reviewing all our financial processes as part of our wider improvement journey”.

He said: “We have already taken action to address the findings of the assessment but further work is needed.

“An initial three-month strategy is already in place which will work alongside our wider Financial Improvement Plan.”