A DAMNING report has concluded serious errors found in Slough Borough Council’s poor record keeping that led to its financial crisis are unprecedented.
External auditors Grant Thornton, who were appointed to examine the cash-strapped council, has released its updated report into the authority’s now-infamous 2018/19 accounts which it previously refused to sign off.
According to the report, auditors had to contend with inadequate record keeping, inadequate audit trails, poor working papers, missing information, material erroneous accounting of transactions, and serious errors found in previous years.
Slough Borough Council hired a new finance team and refiled its 2018/19 accounts in July 2022 as its team attempted to re-create records.
However, the report said auditors still found it “extremely difficult” in auditing the accounts as the issues identified were of a “quantum and scale rarely seen”.
The records were so poor that Grant Thornton issued a ‘disclaimer of opinion,’ which is unprecedented in local government. This is issued when an auditor could not obtain sufficient or appropriate financial statements to draw their conclusion or support their opinion on the accounts.
Grant Thornton’s report reads: “The scale and size of the issues identified consequently mean we are unable to assure ourselves that the financial statements are free from material errors and are fairly stated for us to provide an unqualified opinion.
“This reflects a standard of record keeping and accounting which is incompatible with the council’s responsibilities to exercise proper stewardship over public funds,” the report continues.
Government-appointed commissioners, who are overseeing the council’s recovery, said the extent of the errors and the magnitude of them is “unprecedented”.
They wrote: “It is almost certain that given the issues, the same errors will be found in the 2019/20 and 2020/21 accounts, as the new team was not in place until 2021/22, and proper practices were not introduced until they arrived.”
To help fill a historic blackhole in the 2018/19 budget, the council requested permission from the government to use £61.7m of capital money from asset sales, also known as a capitalisation direction.
After a review of the accounts, Grant Thornton believes the £61.7m request should be increased to £78m. In total, the council has requested a £307m capitalisation to help reduce its £760m borrowing debt, which will be mainly funded by selling up to £600m of its assets.
READ MORE: Slough's 2018/19 accounts sent to be re-inspected
Key changes were made to the accounts in terms of their impact on the council’s usable and unusable balances at March 31, 2019. In total, these adjustments have reduced usable reserves by nearly £7.5m and unusable reserves by £166m since the financial statements were initially prepared in June 2019.
This represents a 43 per cent reduction in the council’s net worth at March 31, 2019, and the accounts as they currently stand present a much more realistic assessment of its financial position at that time and reflect the additional government support, the report adds.
Despite some of the information remaining incomplete or outstanding, even with the top financial fixers at the helm, the 2018/19 accounts are recommended to be approved by the council and signed off by Grant Thornton – with possible minor amendments to be made later on.
READ MORE: Slough Council's 2018/19 accounts could damage reputation
Slough Borough Council has said it fully accepts the audit report setting out serious errors discovered but anticipates the later accounts to be of better quality.
It needs the 2018/19 and the following accounts to be signed off in order to give the government confidence in its financial position to allow them to use capital money from asset sales to reduce its debt.
Cllr Rob Anderson (Lab: Britwell & Northborough), lead member for financial oversight, said: “We accept and fully support the audit response; this confirms many of the things we have discovered and I know from my meetings with them over the last year that Grant Thornton have done a very thorough job.
“We now need to continue to work towards financial recovery, furthering the significant progress which has already been made.”
Local councils are subjected to annual external financial audits to keep a track record of how much the authority is spending.
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