City accounts shambles hits audit

The authority was unable to accurately report the value of its assets, and was found to be slow in providing information required by auditors.

A series of errors and omissions prevented the commission from concluding its assessment of the accounts, and the delay means the council will now face a higher bill for the audit.

An Interim Governance Report, by district auditor Mark Kirkham, said: "Matters highlighted in this report indicate that the council's arrangements for producing its final accounts are not adequate."

Mr Kirkham said the council's accounting had failed to meet the standards he expected.

"It's altogether a statement of accounts that really should be more reliable," he said. "Officers have been working to try and provide me with some information that's going to help me give an opinion on the accounts.

"I expect far higher standards of a council of the status and magnitude of Hull Council. The statement of accounts should be a fair reflection of income and expenditure, but its officers haven't been able to provide me with the information to come to that conclusion. The information isn't good enough."

Mr Kirkham said it was "highly unusual" to be unable to properly assess the accounts but said the irregularities would not affect the council's budget or spending.

He said: "The asset valuations don't have an impact on the funding of the local authority.

"If they find an asset's value goes up or down there won't be an impact on council tax or the budget because that's the way local authority accounts work; they are designed to prevent that sort of impact on council tax."

But he added: "It (the council) needs to make a clear statement of the assets it holds and the local authority has not been able to include the information to do that to my satisfaction."

The opposition Labour Group claimed the Liberal Democrats had lost control of finances.

Coun Phil Webster, a member of the council's audit committee and portfolio holder for finance under the authority's last Labour administration, said: "I am absolutely dumbfounded that they have let it get this far.

"It's not just this financial report, they have lost control of the current finances. What makes me even more worried is it's the leader who is responsible for the finances, and I'm disappointed he's let it get to this state. We are going to have to make massive savings and this is before the comprehensive spending review.

"I don't think they are fit to govern any more."

Coun Webster blamed a lack of corporate leadership earlier this year. "At one point this year the only corporate director we had at Hull City Council was the chief executive; we had no other senior officers," he said.

The report has also angered a pressure group which analyses public spending.

Andrew Allison of The TaxPayers' Alliance, said: "Taxpayers have a right to know the true value of assets the council holds. These glaring irregularities shown up by the district auditor makes me wonder what other mistakes are being made.

"Although this will not affect council tax bills, if the council wanted to sell some assets to help in a financial shortfall, it would not get the price it thought it would.

"The council should put procedures in place to ensure this never happens again."

A spokeswoman for the council said: "This was an interim report – there were technical accounting matters which we are dealing with and the final report is due out next month."

Main points of commission study

The audit highlighted important weaknesses in the control of fixed assets which need addressing "urgently".

An area of major concern is that assets to the value of 184m have not been valued in the past five years as required– which could be undervalued by 21m.

There was a valuation error of 4.4m on school buildings and land and "little progress" on previous recommendations made by the commission.

A risk assessment failed to pick up these issues, and did not comply with the council's risk management strategy.

There were "many delays" in obtaining evidence or getting a response to queries increasing the cost of the audit and arrangements for final accounts are "not adequate".

It recommends an urgent review to ensure the accuracy of financial reporting of fixed assets and a review of risk management arrangements.