31 October 2021
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Last Tuesday was my second meeting of the Finance and Policy Committee and things didn’t bode well.
The meeting had been deferred for a week so the papers could be sent out early and members of the Committee could have time to consider them.
However, despite the extra week, the papers came out no earlier, some papers were missing and others didn’t provide the information required.
And the papers did not address the concerns I have been putting to Council for months i.e. that HPC is not complying with its Financial Regulations.
To begin with, HPC is failing to verify its bank reconciliations. Sounds boring – but it matters.
This means that a councillor, appointed by Council, is required, once every three months, to examine the items in HPC’s bank statements. The councillor has to check the payments have been authorised and go to the right people – and that the figures all add up. That councillor then has to report to Council and explain any discrepancies.
National guidance says “where fraud has been discovered having gone undetected for some time, it is usually because matters have been taken on trust and accounting records not properly examined, particularly actual bank statements.”
This is exactly what happened to HPC about 10 years ago. The verification was not done and this allowed the then Clerk to defraud the Council of over £28,000.
The papers for the F&P meeting suggested that the Committee should merely note the present arrangements i.e. carry on breaching HPC’s Financial Regulations.
Not good.
The Council is also not complying with its Regulations because it does not compare its actual expenditure and income against its planned expenditure and income.
Yes – I know this is boring too. However, this matters too.
We are now halfway through the financial year so Council should know:-
- How much income it planned to receive in the first two quarters – and how much income it actually got;
- How much expenditure it planned to spend in the first two quarters – and how much it actually spent;
- If there were any material variances between what was planned and what actually happened, and if so, what were the reasons; and
- HPC’s financial position.
None of the papers provided this information. In fact much of the financial monitoring information provided simply didn’t make sense. Which means Council has no idea of is financial position.
As Council has no idea if things are going as planned, it has no idea whether it needs to take corrective action. Council has no idea whether it should be cutting back or pushing forward with work – and if so, in what areas. Council has no idea if it is getting value for money for residents. Is it, for example, overspending on overheads and underspending on things which are of benefit to the community?
As Council doesn’t have a good grasp of its current financial position, it will have difficulty setting a budget for future years with any confidence. It will also have difficulty accounting for any precept it might set. The precept determines your taxes.
Again, none of the papers provided for the meeting suggested that the financial monitoring information required by HPC’s Financial Regulations would (or should) be provided in future i.e. Council should just carry on breaching its Financial Regulations.
I also had concerns as to whether HPC was following the procedures in the Financial Regulations for authorising spend and authorising payments. I have raised this before as well.
So before the meeting I put these concerns (and others) in writing once again.
And I got a very positive response.
The order of the agenda was changed by the Chairman, Cllr Kearey to give priority to tackling HPC’s non-compliance with its Financial Regulations and to providing the financial information Council needs. Proposals will be put to the next Full Council meeting.
We also agreed plans for preparing a strategy for HPC which will help in setting budgets for the next three years.
A big thank you to Cllr Kearey and to the deputy Clerk who stepped in at the last minute to cover the meeting and helped draft the proposals and plans.
Tomorrow I have a meeting with HPC’s new internal auditors – IAC Audit and Consultancy Ltd. I will let you know how it goes.