Grant Thornton, the council’s auditors, have made written recommendations under a section 24 notice ‘due to inadequate arrangements relating to issues with financial systems’.
A report from Grant Thornton which details the recommendations says the council has ‘historically had difficulties producing information to support the financial statements audits resulting in external audit recommendations and late approval of audited accounts.’
It goes on to state: “For the 2019/20 financial year, the draft financial statements were not published by the statutory deadline of August 31, 2020, instead being published on September 18 2020.
“The date for publication of audited financial statements of November 30, 2020, was also missed, with the audit opinion not issued until eleven months after this date on October 5, 2021.”
One of the reasons for the issues faced in previous audits was an outdated financial ledger system but in February 2021 this was replaced with a new updated system.
The council said the reason for the delay includes a high turnover of staff during the implementation of the new finance system – which the authority was the first in the country to use to log income.
Grant Thornton’s report states that issues resulted in “workarounds continuing to be used rather than the software supplier’s system fixes being tested and implemented”.
“The council continue to resolve significant issues with the system some 20 months after the implementation date,” added the report.
“This has led to key elements of financial governance not being completed which increase the risk of incorrect, irregular, or fraudulent transactions or events occurring.
“It also means the council has now fallen significantly behind in respect of key statutory financial reporting deadlines.”
The auditors have recommended that the issues with the financial system are resolved, and the draft financial statements are to be produced.
Councillor for Rubery North, Peter McDonald said “it’s no surprise the council has issued with a section 24 notice”.
He added: “With the cost-of-living crisis hitting residents hard it’s absolutely disgraceful that taxpayer’s money should be used for the benefit of staff agencies and not the residents of Bromsgrove.
“The auditors have clearly demonstrated the financial incompetence of the council.”
The council’s portfolio-holder for finance Cllr Geoff Denaro said: “Like all local authorities each year we face reductions in our grants from central government and increased and differing demands for our services, especially in the Covid period.
“This coupled with the raft of challenges we faced last year meant there was no way we could meet the financial deadlines.
“However, I want to reassure residents that we are back on track and our new team and software means that we are stronger than ever to weather future financial storms.”
Council leader Karen May said she is disappointed with the auditor’s decision.
She added: “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.”
Grant Thornton’s report is set to be discussed by the council’s Audit and Governance Committee on November 9 then at full council on December 7.