Pendle Borough Council has been heavily criticised by financial auditors in a recent inspection of the Council's bookeeping and financial management.
In the report, due to be discussed at the upcoming Accounts & Audit Committee on January 28, 2025, auditors Grant Thornton said it had found "significant weaknesses" in the Council's "governance" and "financial sustainability".
New audit regulations (Accounts and Audit (Amendment) Regulations 2024) brought in by the Labour government requires all Councils to provide accounts up to the year 22/23 by December 2024, and accounts for 23/24 to be produced by February 2025. However, the auditors say the Council has not produced the accounts for 23/24 in sufficient time for them to be audited.
The report identified a number of significant weaknesses including:
- The Council has identified gaps between income and expenditure, but has not identified where savings are to be made to bridge these gaps.
- The Council's budget gap is £1m per year, and reserves would be extinguished by 2027 if savings are not found.
- Council members do not understand the governance and decision-making processes.
- Council members' behaviour falls short of the standards set for themselves.
- Council members who are also Directors of Council joint-ventures (i.e. PEARL), do not always declare conflict of interests.
- Legal agreements between the Council and joint-venture companies (i.e. PEARL) are not up-to-date.
- Lack of clarity regarding Council members' involvement and roles at joint-venture companies (i.e. PEARL).
- Governance of planning applications is inconsistent. Area Committees have granted planning permission against the Council's policies, leading to delays, appeals and avoidable costs.
- The Council has not produced the 23/24 accounts in time for them to be audited.
- The Council has identified weaknesses in information governance, meaning the confidentiality, integrity and availability of personal identifiable data that the Council processes is not secure.
- Urgently prepare and agree short and medium term plans to close the budget gap.
- Commission a facilitator to work with Councillors to complete the change from a Committee system to the Leader and Executive model
- The Council should commission the delivery of a mandatory development programme for all members, covering roles and responsibilities, accountability and effective leadership behaviour, within the Executive and Leader model.
- Commission independent legal advice on its relationships with and governance of its joint venture companies, PEARL, PEARL 2, PEARL Brierfield Mill and PEARL Together, to ensure that all aspects of the governance of the companies are sufficiently robust and compliant with the law relating to local government and companies. The Council should then implement any recommended changes to governance arrangements in relation to the companies.
- Commission a focussed independent legal report on the consistency, costs and efficiency of its planning process and the potential future impacts of continuing with the current arrangements.
- Urgently implement the actions identified by Internal Audit to address fundamental weaknesses identified in the Council’s information governance processes to maintain the confidentiality, integrity and availability of personal identifiable data that the Council processes and holds.
- Review the work required from key financial staff and provide more resources to ensure outstanding accounts, budgets and audits are completed as a priority.
