Northamptonshire County Council may not have balanced its books last year according to its auditors and could be facing a legal wrangle.
After months of financial uncertainty, the authority announced earlier this month that it had balanced its budget by taking £12.7 million from general reserves, a move which left it very little funds in the bank.
However NCC’s auditor KPMG has now said that it’s own financial analysis has shown that the Tory-run authority may have instead had a £58.9 million overspend.
By law all councils must balance their books and no authority in the country has ever failed to do so.
KPMG’s lead auditor Andrew Cardoza, whose team have spent the past few months trawling through NCC accounts and data, told the council’s audit committee yesterday (Thursday) that some of the capital receipts used by the council to balance its budget may not have been allowable.
He said: “There is a possibility that the council’s budget did not balance.
“Until we have completed our work I can’t say yes or no.”
The council’s chief finance officer Mark McLaughlin, who came into post in December and was responsible for issuing the 114 notice that imposed strict spending controls, said the council had very little funds available to it when it attempted to balance its budget at the end of the financial year.
He said: “The current level of reserves is microscopic and there is nothing to play with.
“Do we have a negative fund balance?
“It is a possibility and the implications are unknown.
“We would need to take legal advice.”
KPMG will make its final audit report next month which will determine whether or not NCC is in a legal financial position.
In a tense meeting Mr Cardoza levelled a number of criticisms towards officers and councillors.
He told the committee: “There is a non-compliance culture at Northamptonshire County Council and that is something that you have to address.”
He also said that the ‘new generation’ model that saw services such as adult care moved out into separate community interest companies would have been a distraction for management at a time when there were ‘more pressing matters to deal with’.
The next generation model championed by former chief executive Paul Blantern has now been discredited although the authority is in the process of trialling a community interest company for its children’s services.
Along with all local authorities Northamptonshire County Council has had to make huge savings over the past few years due to big cuts from central government.
For the past week the authority has been run by two government appointed commissioners who will report back quarterly to the Secretary of State for local government James Brokenshire.