Outside investigators find missing pensions left £ 1million hole in Tandridge District Council budget
A ‘forensic‘ review of a major error that left a nearly £ 1million hole in the budget of a cash-strapped council found cost lines there had been removed within days before it is approved by the advisers.
The mistake had the effect of falsely balancing Tandridge District Council’s £ 11million budget and went undetected for over a year.
Outside Grant Thornton investigators were called in this summer to find out what was wrong and presented their findings at last month’s Strategy and Resources Committee meeting.
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At a meeting of the audit and review committee on September 30, an action plan to adjust controls on future budget preparation was discussed.
It included the recommendation that the board should “ensure that the finance team includes sufficient skills and capabilities to undertake key calculations, including the calculation of trade rates.”
The removal of pension cost lines, which occurred in February 2020, left a £ 920,000 hole in the council’s budget – something Tom Foster, associate director of Grant Thornton said has an impact “potentially important “on the financial resilience of the board.
Councilor Kevin Bourne had disputed the numbers, reporting an accounting error with company rates on February 3, 2020, ten days before the budget was approved by the full council. When corrected, that meant the budget exceeded £ 700,000, the investigation found.
But by February 13, an additional £ 920,000 in pension costs had been cut. The then acting CFO said this was due to the cost reduction described in a letter from the Surrey Pension Fund.
He effectively put the budget in the dark and was again challenged by Cllr Bourne.
“We have reviewed the letter … and consider, along with other evidence, that this letter does not justify reducing the costs of the pension line,” said Mr. Foster. It did not contain any numbers, he said.
There were “weaknesses in the control environment” which allowed the error to occur and go unnoticed, he added.
In a long and sometimes very busy debate at the September 14 meeting, current board chair Catherine Sayer said the timing of the pensions letter was “fortuitous” and “very strange” and had sounded the alarm for her, as well as for Cllr Bourne, at the time.
Some advisers raised their hands and said they should have noticed the irregularities as well, while others argued that they are not accountants and could not be expected. notice mistakes made by trained council officials.
Councilor Nicholas White said the error should not happen again and requested that the councilors be trained.
Current council finance director Anna D’Alessandro said training for councilors was on the agenda.
“We have to move forward, we have to look to the future and we have to look in a much more important and urgent way on how we are going to close the 2022/2023 budget, which is what we are all working hard on,” she declared.
She said it was too early to say what impact sorting the budget might have on the services the council provides to residents.
The committee agreed to act on the 15 recommendations made by Grant Thornton and to refer the issue of advisor training to board officers for consideration.
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