03:50PM, Monday 10 May 2021
New council HQ, Observatory House, Windsor Road, Slough
Two damning reports have raised concerns about Slough Borough Council's financial sustainability and its ability to prepare 'reliable financial statements'.
Auditor Grant Thornton UK LLP has laid out four recommendations after finding the council had insufficient capacity and skills within the finance department, inadequate preparation of financial statements, inadequate general and earmarked revenue reserves and inadequate governance, monitoring and controls over outside groups and companies.
The report, which is due to be discussed at an extraordinary meeting of the audit and corporate governance committee on Tuesday, May 18, found the council had a number of internal control deficiencies.
The report, released on Sunday, May 9, criticised the council's lack of reserves and said it should take 'urgent action' to develop a clear, sustainable, financial plan to replenish these.
Its reserves went from £30.9m in 2012/12 to £4.380m in 2018/19, placing it as one of the lowest levels of all local authorities nationally, the report adds.
"There is no evidence that the council has properly understood the risks involved in running down reserves which are ultimately largely earmarked to support its revenue position," it said.
The report also recommended the council review its monitoring arrangements for its group relationships.
The council is one of two members of a limited liability partnership trading as Slough Urban Renewal Partnership.
The council also has two wholly owned housing subsidiaries (Herschel Homes Limited and James Elliman Homes Limited). Although Herschel Homes has remained a dormant company, operations with SUR LLP and James Elliman have continued to grow.
The auditors found James Elliman Homes Limited did not operate its own financial systems and records but instead they were processed within Slough Borough Council's systems. The report says this represented a risk and there should be a 'clear separation' of financial transactions.
It also criticised council officers being appointed as company directors of SUR.
It adds: "It's difficult for the council to challenge the commercial operations of the company and ensure that this operates in the best interests for the council when its officers fulfil a dual role and an integral part of the company's decision making and operations."
The reports come as the council is working on closing a budget gap of £16 million in the current financial year (2021,22) and £18 million in 2022/23 of a total addressable finances of around £400million.
In February the council requested exceptional financial report from the Government and also requested approval to sell off some of its assets to plug £10 million pounds.
In response to the report Slough council has announced 'fundamental changes' to its financial management.
Chief executive Josie Wragg said: "We are undertaking a massive transformation journey within the council, one which we knew would expose, and bring to the fore, areas which needed improvement, so we could better serve the residents of our town.
“This journey, alongside work on the accounts for 2018/19 and related matters, has brought the fragility of our financial systems front and centre and we are taking robust action to bring about wholescale and sustainable improvements in the service.”
Council leader James Swindlehurst said the reports were 'disappointing but not surprising'.
He said the council would be 'boosting its levels of reserves' and changing the governance of its group companies and putting in place a training and development programme for finance staff.
"Budget gaps are a fact of life in any local authority and have been for many years, especially in Slough where our funding from has been greatly reduced and has consistently failed to keep pace with the needs of our residents.
“However, as a leadership, as members along with officers, we are putting plans in place to meet the gaps in our budget and we will continue to prioritise funding to frontline services, vital to our residents.”
Billy Presbury, 21, of Moray Drive, and Kai Warwick, 19, of Whiteford Road, targeted a trio of teenage boys in Farnham Park on June 1, 2019.