The approval of the loan of up to £12 million by the Cabinet of Northampton Borough Council was based on limited information, the audit report has concluded.
The internal audit report carried out by Price Waterhouse Cooper says a business case was not made available to the Cabinet.
The report states that a number of conditions made by the Cabinet in approving the loan but auditors had been “unable to confirm that these were complied with fully, addressing all concerns”.
“For these we have been unable to confirm that decisions taken were in line with the delegated authority. There were loan agreements established to formalise the provision of finance and drawdowns of the finance were made in line with the relevant terms and conditions and established procedures requiring approval from officers.
“The information reviewed demonstrates that there was a lack of formal processes implemented and adhered to regarding risk management, project management, management information and performance management.
“Whilst there is evidence to show the Council has challenged some areas and professional advice has been sought, the fact that the council has taken months to identify and collate a series of thousands of emails to evidence the adequacy of the actions undertaken highlights that the arrangements were informal and did not follow a strict procedural process.
“Where issues have been identified the volume of evidence available makes it very difficult to demonstrate that all issues were adequately resolved,” the report stated.
The auditors said they had attempted to “reconstruct the thought process for the decision made and for subsequent monitoring”. “Our view is that the council failed to demonstrate this in its data room. This was made extremely difficult because of a lack of an approved business case, appropriate independent advice and documented risk management and
governance processes. These documents need to be at the same time concise and comprehensive. We found the documentation we were presented with to be neither.
“The significant time invested by the Council in retrospectively collating information and evidence to demonstrate adequate governance, risk and performance management indicates that this was not undertaken in a formal, process driven manner at the time of inception.
“The fact that there are thousands of emails and sources of evidence to demonstrate the actions undertaken is confusing and fails to demonstrate adequately ownership and control of the situation.
“It is apparent that the overriding focus on the Sixfields redevelopment was on the operational aspects and subsequent governance arrangements failed to identify and address adequately the loan agreement,” the report added.