Nottingham City Council refuses to publish unlawful spending report

A council has refused to publish a report that found its financial management "not fit for purpose".

Accountants Ernst and Young were asked to review Nottingham City Council's books after millions of pounds meant for housing and tenants was unlawfully transferred to its general fund.

It raised "very serious concerns".

However the authority said it would only release its own summary as the findings "may impact on further activity".

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.

It follows the uncovering in 2021 of huge misspending in the council's Housing Revenue Account, involving the wrongful use of the funds from council tenants' rent, estimated to cost up to £51m.

So far the authority has only published its own summary of the feedback, named the Financial Controls Assessment, and said the original Ernst and Young report cannot be made public.

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

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

"The Audit Committee report goes into significant detail about the assessment the council commissioned from Ernst and Young of financial controls, and is explicit and transparent about the serious concerns identified and the actions being taken to address them", a city council spokesperson said.

"We are not able to provide any more information on the assessment as this may impact on further activity that still needs to be undertaken."

The Nottingham Independents and Independent Group said while the council's document provides a "useful summary", the full report should be made available to the Audit Committee "at the earliest opportunity".

The report acknowledged that the scale of change required with the city council's finances "would take a number of years to fully implement".

Corporate director of finance and resources, Ross Brown, said the authority had "already taken action to address the findings of the assessment but further work was needed".

Councillors will discuss the report at a committee on Friday.

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