Nottingham City Council's financial management 'not fit for purpose'

Nottingham City Council's financial management is "not fit for purpose", its auditors have said.

Accountants Ernst and Young were asked to review the authority's books after it was found millions of pounds meant for housing and tenants had been unlawfully transferred to its general fund.

The firm has now produced a report raising "very serious concerns".

The council insisted its top priority is addressing the issues highlighted.

Ernst and Young was asked to check historical accounting practices for any potential manipulation of accounts between 2019 and 2022, the Local Democracy Reporting Service said.

In a report, initially expected in February but then delayed, the firm said it found no evidence of fraud but had identified a work culture which is not focused on properly following accounting rules.

It also said it was concerned about the council's "inability to find documents" and it had found there had been a high risk of managers overriding established financial controls unintentionally or "for reasons including expediency, efficiency or self-interest".

Ernst and Young's full report has not been disclosed but a summary of it has been published ahead the council's audit committee meeting on Friday.

The review focused on council's spending on schools and care, its licensing, parking, traffic regulation and bus lane enforcement income, as well as its use of government Transforming Cities funds, and its scheme requiring some private properties to be licenced.

The report stated Ernst and Young "observed a weak control environment, ineffective systems, associated management information and a culture which is not focused upon compliance".

It added: "The findings of the financial controls assessment underpin a conclusion that the council is operating with a considerably weakened control environment which is not fit for purpose in allowing a Local Authority to enact effective financial stewardship."

Ernst and Young said the council had "a culture where compliance is not valued nor seen as a priority".

The auditors said scale of change required with the city council's finances "will take a number of years to fully implement".

The Labour-run council said it had commissioned an initial three-month remediation plan to address the control weaknesses as part of longer term financial improvement plan.

Deputy council leader and portfolio folder for finance and human resources, Audra Wynter, said: "It's right that as part of our improvement journey we are unflinching in our efforts to identify any issues in our finance and governance arrangements.

"We can reassure residents and partner organisations that we are working to address the underlying issues as a top priority."

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