External auditor issues council with s24 notice over statement of accounts delay

Auditor Grant Thornton has issued a Section 24 notice to Bromsgrove District Council over its failure to produce a statement of accounts for 2020-21 on time.

The council said the delay resulted from “the ramifications of Covid” and an unusually high staff turnover during the implementation of a new finance system, which the council was the first in the country to use.

Full council is due to discuss Grant Thornton’s recommendations on 7 December after they are considered by the audit committee this month.

A notice under Section 24 of the Local Audit and Accountability Act 2014 can be issued where an auditor decides written recommendations to a council are needed.

Grant Thornton’s report said Bromsgrove had “historically had difficulties producing information to support the financial statements” and had cited an ageing ledger system as the cause.

In 2019 it implemented a new system from Technology One to integrate finance, human resources, payroll and the supply chain in one system.

Since then “there have been significant challenges particularly in respect of the cash receipting model”, Grant Thornton said.

It found the system had “been posting cash transactions to suspense accounts, receipts in transit and inter-company balances”.

Bromsgrove was working with the supplier on a solution but meanwhile “bank and control, accounts have not been routinely undertaken”.

Auditors said the lack of routine reconciliations “represents a serious failure in the council’s financial governance”.

The council had also suffered “the loss of the majority of staff involved in implementation of the new financial ledger system”.

Leader Karen May said: “Of course we are disappointed in the auditor’s decision especially because of all the hard work we have put in over the last year when we first started working with them.

“But we understand and have been honest and upfront with not only the auditors but council colleagues and residents as we discussed our position particularly the growing pains with the new finance system, at numerous public meetings.

“And this is not about the sustainability of the council as I am now more confident than ever that this authority will build on this experience and, as always use our taxpayers’ monies to benefit everyone as we build an even better Bromsgrove.”

Mark Smulian