Auditors say that the quality and transparency of financial reporting at Northamptonshire County Council has prevented effective decision making.
In its interim audit report for the 2017–18 financial year, KPMG says that finance reports to the council’s cabinet are a barrier to proper financial governance.
The report follows intense scrutiny of the council’s financial problems which led to the issuing of a section 114 notice earlier in the year followed by the appointment of commissioners by central government to run the council.
KPMG said: “We reviewed the authority’s financial reports submitted to cabinet in 2017–18.
“We note that the reports are unclear and lack details, including in the accompanying appendices.”
In particular, it said, the council reports a forecast outturn variance of nil, despite this being the position after accounting for one-off measures.
This, it said, clouds the authority’s underlying performance.
“The full position can only be ascertained by piecing detailed outturns of individual directorates; even so, the inconsistency in reporting within each individual directorates makes this a very difficult exercise,” the report said.
KPMG said the budget report does not provide members with a clear view of the variances and overspends within each directorate.
“The narrative is often vague and written in dense management speak; the style does not promote clarity of reporting. This style of reporting is consistent across all directorates,” its report concluded.
The auditors criticised the authority for describing slippages in its savings plans as “budget delivery pressures”, language they said was “vague and does not truly reflect the issue”.
The report went on to criticise inconsistencies within budget books submitted by budget holders to the finance business partner teams.
These books, it said, allow the authority to keep track of expenditure and challenge overspends and underspends as necessary.
KPMG said: “In some cases it was clear that variances to the budget have been investigated as the budget books contained comments to support this.
“These variances were reported in the quarterly finance reports. In other cases there was very little detail in the budget books to support large variances, and in some cases these variances were not reported in the quarterly finance reports.”
Commenting on the report, a Northamptonshire County Council spokesman said that KPMG’s reports, in addition to the findings of the government’s Best Value inspection, “have helped to inform our improvement programme to address previously-highlighted issues with the council’s financial management and governance.
“Among the improvements already implemented, a new review process for expenditure has been introduced and all spend above £1,000 must now be approved by the chief executive approval panel to ensure that the expenditure is necessary, delivers best value for money and helps to achieve the council’s objectives.
“The government-appointed commissioners are now working with us to continue to improve our finance and governance processes to ensure they are as robust and transparent as possible.”
