Thursday, September 17, 2015

News: Rotherham Council fails second external audit

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Rotherham Council has failed another external audit for not making proper arrangements to secure economy, efficiency and effectiveness in its use of resources.

The government's Audit Commission, which oversees spending by local government, closed in March 2015 and instead local councils are using external auditors from the private sector to assess their abilities in areas such as meeting legal requirements, financial statements, value for money and financial resilience.

The auditors need to be satisfied as to whether there have been effective arrangements to secure economy, efficiency and effectiveness in the use of resources. External auditors at KPMG concluded that in 2014/15, this had not been the case in Rotherham, as it did for 2013/14.

Rotherham Council employs nearly 7,000 staff and spends nearly £900m per year.

Triggered by a report into child sexual exploitation in Rotherham that described how vulnerable children have been repeatedly failed by the Council, the February 2015 Casey report highlighted significant governance weaknesses. Specifically it reported that the authority was not fit of purpose and failing in its legal obligation to secure continuous improvement in the way in which it exercises its functions.

As part of a subsequent intervention package announced by Eric Pickles, Secretary of State for Communities and Local Government, commissioners have been appointed who now provide new leadership, taking over the roles of the "wholly dysfunctional" cabinet, which promptly resigned when the report was published.

A report to the council's audit committee stated: "Bearing in mind that the Commissioners were appointed in late February 2015 and there was only one month before the end of the financial year it was not anticipated that sufficient progress would be made in improving the Council's Governance arrangements within that timeframe."

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KPMG picked out specific risks to value for money including governance arrangements, overall budget pressures (the authority estimates that it will need to find £41m of savings over the next three years) and the financial impact of claims against the Council in relation to child sexual exploitation. The auditors have also been keeping a watching brief on the costs to the Council due to its involvement in the failed Digital Region project.

A report signed by Council leader, Chris Read and Stella Manzie CBE, commissioner and managing director at Rotherham Council, said: "Improvement plans have been put in place and some early progress is being made. However, the scale of the challenge is substantial and there are still major challenges ahead. We have established ambitious plans with the aim of achieving rapid, effective and sustainable improvements. We have put in place arrangements for monitoring and reporting progress to the relevant Government Departments, Council, Public and other stakeholders."

KPMG recognised that the Commissioners have developed a robust Improvement Plan and are in the process of implementing a series of initiatives to strengthen the corporate governance arrangements in line with the Improvement Plan which "will be fundamental in re-establishing the essential component parts of an effective, modern local authority."

The progress made over the last six months, and that anticipated over the remainder of 2015/16, will be considered by the auditor in next year's external audit.

Rotherham Council website

Images: RMBC

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