The Royal Borough of Windsor and Maidenhead faces an ‘extremely challenging situation’ due to funding cuts and failures to properly manage finances, a major accountancy firm has said.

Auditors at Grant Thornton were appointed to inspect finances and accounts at the Royal Borough of Windsor and Maidenhead last year.

Now a letter to councillors says the firm has found ‘serious concerns’ about how council funds were managed in previous years – putting its finances at risk.

The Royal Borough of Windsor and Maidenhead applied to the government for ‘exceptional financial support’ in May after finding holes in its finances.

Council finance chiefs say previous staff hadn’t conducted a balance sheet reconciliation for three years. This involves matching spending records with the money in the council’s accounts.

Council leader Simon Werner has said this meant staff found ‘a number of massive historical discrepancies’ meaning that reserves were far lower than thought.

Grant Thornton says the failure to have carried out reconciliations ‘fundamentally undermines the integrity’ of the council’s financial records. It said this has the potential to make the council’s financial position even worse.

The council’s reliance on cash from the sale of Maidenhead Golf Course is also a ‘significant risk,’ auditors have said.

Royal Borough of Windsor and Maidenhead hopes to get £200 million from selling the golf course to developer Cala Homes, which plans to build a major new estate there.

The council has made borrowing decisions on the basis that it expects to be able to repay debts using the money from the sale.

But Grant Thornton says the possibility of getting less from the sale if fewer homes are built on the site poses ‘a significant risk to the Council’s future financial sustainability as aconsequence of its high level of debt’.

The letter comes after the council announced that it faces an overspend on its budget for the 2023-24 financial year by £10.3 million pounds. It had to take £6.7 million from its general reserve – the pot of cash it uses to cover extra costs – to help balance the budget.

It also expects to overspend again this year by just over £6 million – driven mostly by rising demand and costs of providing adult social care.

Grant Thornton said this overspend is at risk of being repeated each year as the money the council allocates to it isn’t enough to cover costs – and hasn’t been able to show it can make enough savings elsewhere.

The auditor notes that ‘the historic impact of eight years of council tax cuts and freezes’ by previous Conservative leaders have ‘significantly eroded the council’s income’. It says this means the council has fewer staff available to ensure the council is run properly.

The letter is set to be presented to the council’s audit and governance committee on Monday September 9.