POOR practices identified in a review of a council’s 2012-13 accounts are continuing to expose it to serious financial risks, a new report has warned.
Auditors Veritau highlighted serious concerns over how spending at Keighley Town Council is authorised and over failures to obtain quotes for payments over £1,500.
The internal audit report identified transactions that were not authorised in advance and inadequate audit trails.
Similar concerns were raised in a damning external audit report into the 2012-13 accounts and critics say the latest review proved the problems had not been properly addressed and it was time for resignations.
The Veritau report says spending is “routinely authorised retrospectively” which prevented the council from halting potentially inappropriate expenditure.
It highlighted concerns over the use of purchase cards after an instance where the council paid a transaction on a card which should have been cancelled when an officer retired.
A review of card purchases since April “suggested there were a number of transactions that did not necessitate the use of the charge card” and some purchases had been made “using a name other than the designated card holder.”
The report said the council did not appear to have an effective check of telephone use before bills are paid.
Between April and September this year, the council had to pay £81.17 for just 13 calls to a directory inquiries service - each call costing over £6.20.
“In our view such expenditure could be avoided,” the report states. “We have not seen such expenditure being questioned prior to payment.”
Concerns about declarations of interests by officers were also raised - echoing the critical report on the 2012-13 accounts.
Auditors told the council to ensure interests are regularly and routinely declared “and considered as necessary”.
“We noted an occasion where payment had been authorised by an individual who is a close relative of the person paid.”
Auditors said: “Relevant arrangements need to be introduced to ensure those interests of officers are regularly and routinely declared and the impact of those interests on the internal control environment considered, with appropriate safeguards put in place, as necessary.”
The report notes that the council payroll “represents a relatively large amount of expenditure for the Town Council; approximately £15,000 to £18,000 per month” but did not highlight any major concerns.
It questioned a decision to pay a casual employee to attend college, saying such support should be fully considered in line with council policies.
Questions were also asked about cash payments to a person employed on council business this year.
These payments “were not made in accordance with the correct payroll procedures and therefore PAYE/National Insurance may not have been accounted for correctly,” it said.
“Instead, the ‘employee’ was being paid in cash by an individual who was having monies reimbursed to himself by the Council through expenses. Payments from October 1 2014 will now be made via the Council’s payroll procedures as the individual has been placed on a zero hour contract.
The report added: “The employment status of individuals undertaking work or providing services to the Council should always be properly established. Cash payments of this type should never be made.”
Concerns were also raised about cashing up procedures for the cafe and bar tills in the civic centre.
Controls were “not effective” as takings were not being stored separately for each day.
“Daily cashing up sheets were not being used. Therefore there are currently no records to the till readings or the action taken to investigate those differences. Cashing up is not taking place on a daily basis or after each event in the bar.”
Auditors urged the council to develop a detailed business plan for the cafe and bar as information is not sufficient to assess profitability.
The council was also told to identify risks as procedures are “ineffective and expose the council to potentially serious financial, legal and reputational risks”.
The report concluded with a warning to the council’s responsible financial officer, saying two types of transactions will need to be eliminated before financial statements go to council.
Firstly, transactions that do not relate to council business. Two items - since reimbursed and totalling £200 - had been paid by the council.
Secondly, internal transactions between council departments which “incorrectly inflate the income and expenditure of specific council operations”.
Auditors said it was not clear how widespread these practices were.
Council critic Elizabeth Mitchell, who helped to expose the wrongdoing, said the Veritau report made “depressing reading” because it appeared that little had changed.
She restated her call for those responsible to resign.
MP Kris Hopkins previously called the spending “reckless”. Police are investigating.