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Overspend council lacked knowledge of finances

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The country’s cash-strapped smallest unitary received its first financial report of 2016-17 only in January this year, a situation its own interim service director for resources has called “simply unacceptable”.

Andy Brown, who took the job at Council of the Isles of Scilly late last year, said the authority faced “a structural deficit for 2017-18” which needed to be mitigated with planned £500,000 savings now and a further £800,000 in the medium term.

His report to the council last week noted it had a £4.7m annual budget and a forecast overspend of £494,000.

In a letter to auditor Grant Thornton, which had issued a highly critical report on the council’s finances, Mr Brown said his budget monitoring report to the finance, audit and scrutiny committee on 10 January was the first overarching financial monitor for the whole council for the financial year 2016-17.

“This is simply unacceptable,” he said. “The previous method of budget monitoring used by the council is also inefficient and ineffective for financial control, focusing on remaining ‘cash’ budget as opposed to true commitment accounting and year end variance reporting.”

Grant Thornton said it had found a string of errors in information supplied by the council including financial statements “of poor quality” and “difficulty in obtaining supporting working papers as evidence for balances”.

The firm took the rare step of giving an adverse view on the council’s ability to provide value for money and has issued a formal request to it to improve systems and processes “so that similar issues do not occur next year.”

Council vice-chair Steve Sims (Ind) said the authority had run at a deficit of about £400,000 for about four years and “it has hit us now”.

Isles of Scilly serves some 2,100 people with 21 non-party councillors. It has some unusual powers, including over fire services, water supply and sea fisheries.

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