Auditors have criticised weaknesses in governance arrangements around a council’s £65m purchase of an office block in its area.
Accounting firm EY says that it is considering issuing a qualified opinion on the value for money in the council’s accounts due to shortcomings surrounding Cherwell District Council’s £5.6m purchase of the Crown House building of Banbury town centre.
It said that it was concerned that members were not provided with sufficient and appropriate information to make an informed decision on the acquisition.
EY’s report said: “In relation to the council’s acquisition of Crown House, we have identified a number of weaknesses in relation to its governance processes.
“We consider that these weaknesses are sufficiently significant to warrant a qualification of our value for money conclusion.”
It said that it was unclear what instructions were given by the council to experts who reviewed the financial model underpinning the investment “and to date the council have been unable to locate those instructions”.
It added that the basis for choosing the inputs into the financial model used by the authority to assess the investment were also unclear.
The acquisition of the site was not undertaken on the basis of a market assessment as was asserted to members in July 2017, EY said.
“Consequently, based on the information currently available to us, the cost of acquiring the site, and the costs to complete the development could result in a forecast deficit which exceeds our level of materiality,” the report concluded.
In response to the criticism, the council has instructed legal counsel to review the decision and the actions needed to rectify the identified governance weaknesses.
The council has also amended its annual governance statement to reflect the weaknesses.
