• Home
  • About
  • Subscribe
  • LATIF
  • Conferences
  • Dashboard
  • Edit My Profile
  • Log In
  • Logout
  • Register
  • Edit this post

Room 151

  • 151 BRIEF

    What's New?

  • Homes England agrees strategic partnership with two authorities

    June 29, 2022

  • Soaring inflation and pay pressures to add £3.6bn to council budgets

    June 28, 2022

  • Underfunded social care reforms could ‘exacerbate workforce pressures’

    June 27, 2022

  • Nottingham City Council leader labels proposed intervention as “disappointing”

    June 27, 2022

  • Government preparing to intervene in Nottingham City Council

    June 23, 2022

  • Low earners at Surrey County Council receive 7.85% pay increase

    June 23, 2022

  • Treasury
  • Technical
  • Funding
  • Resources
  • LGPS
  • Development
  • 151 News
  • Blogs
    • David Green
    • Agent 151
    • Dan Bates
    • Richard Harbord
    • Stephen Sheen
    • James Bevan
    • Steve Bishop
    • Cllr John Clancy
    • David Crum
    • Graham Liddell
    • Ian O’Donnell
    • Jackie Shute
  • Interviews
  • Briefs

Reading council leader survives vote over auditor’s governance concerns

0
  • by Colin Marrs
  • in 151 News · Technical
  • — 6 Apr, 2017

EY’s auditor’s report.

A council leader has survived an attempt to remove her from a key financial oversight committee, claiming external auditors “misunderstood” guidance aimed at ensuring impartial scrutiny.

Jo Lovelock, leader of Reading Borough Council, last week faced a motion calling on her to step down from the authority’s audit & governance committee, on which she is deputy chair.

In January, the council’s auditor Ernst & Young, cited Chartered Institute for Public Finance and Accountancy (CIPFA) guidance in recommending that the composition of the committee be reviewed.

The report said: “We identified that both the leader and the deputy leader are members of the audit and governance committee.

“Guidance issued by CIPFA indicates that leadership of the council should not be represented on the committee. We recommend that the composition of the committee is reviewed.”

Last week, Liberal Democrat councillor Ricky Duveen put a motion before the council calling on lead councillors, including Lovelock, to step down.

The wording of the motion said: “This council recognises that having lead councillors sitting on the committee, part of whose job is to scrutinise their own work and decisions, will not be seen by the citizens of Reading as either unbiased or independent in its role of auditing and scrutinising the work of the council.” The motion was voted down.

Jo Lovelock, reading Council. Photo: reading Council.

However, during a debate on the motion, Lovelock said: “I do think it is important to recognise the difference between this council, which operates a committee system and has done for about four years now, and the old system of scrutiny and cabinet.

“I am very happy to have a conversation with the auditors when I have time, and there are other things that are more urgent, but I do want to have that conversation with them because I think they fundamentally misunderstand the way in which we are running this council.”

Other councillors on the committee read aloud from sections of CIPFA’s Audit Committees: Practical Guidance for Local Authorities and Police, 2013, claiming the text supported the leader’s view that the guidance does not apply to the council’s governance arrangements.

Tony Page, Lovelock’s deputy, who also sits on the audit & governance committee, told the meeting: “We will be taking this up with the auditors. I don’t have any problem discussing in the public.

“We will discuss this with CIPFA. We believe the guidance needs updating on the basis that more and more authorities have moved to a committee system or are looking at doing that.”

Under the Localism Act 2011, principal authorities were allowed to return to decision-making by committees, the historic method of local government administration before the cabinet system was introduced.

However, CIPFA chief executive Rob Whiteman appeared to contradict the leadership’s interpretation of the guidance.

He told Room151: “To carry out its duties fully, in an independent and non-political manner, an audit committee must be free to challenge or hold to account the executive on matters of governance, risk and control. CIPFA’s guidance on the issue is clear that ‘the leader of the cabinet or administration or the elected mayor should not be a member of the audit committee’.

“In exceptional cases where an executive member sits on the committee, there should be other compensating arrangements in place to ensure independence, for example a majority of independent members or an independent chair. The executive member should not chair the committee.”

He said that the guidance covers all types of governance structure, adding that the text is currently undergoing a review.

“But on this matter of audit committee membership, the concept of impartiality will undoubtedly remain a prerequisite,” he added.

Councillor Duveen told Room151: “By continuing to sit on the committee, the leader is scrutinising her own policies.”

Ernst & Young’s report also issued an “adverse value for money” conclusion, saying: “We are not satisfied that the council has put in place proper arrangements to secure economy, efficiency and effectiveness in its use of resources for the year ended 31 March 2016.”

The audit found that “the financial and performance information used by the council is not always accurate and reliable and therefore did not help informed decision making”.

In addition, financial reporting “did not identify the amount of the financial pressures that the council faces in 2016/17 and in particular the overspends in children’s services.”

Ernst & Young declined to comment on the case when contacted by Room151.

Get the Room151 Newsletter

Share

You may also like...

  • ‘Extreme’ Prudential Code will impact reserves, warns Mike Jensen 9th Mar, 2022
  • Does local government need a new red flag system to signal looming financial crisis? 23rd Jun, 2021
  • Liability benchmark ‘should not be mandatory’ 29th Apr, 2022
  • Room151 launches survey on IFRS 9 override and MRP impact 9th May, 2022

Leave a Reply Cancel reply

You must be logged in to post a comment.

  • 151 BRIEFS – WHAT’s NEW?

    • Underfunded social care reforms could ‘exacerbate workforce pressures’
    • Nottingham City Council leader labels proposed intervention as “disappointing”
    • Government preparing to intervene in Nottingham City Council
    • Low earners at Surrey County Council receive 7.85% pay increase
    • UK Infrastructure Bank launches plan to deploy £22bn of investment
  • Room151’s LGPS Roundtables

    Biodiversity
    Valuations & Risk
    LGPS Women

  • Room151’s LGPS Roundtables

    Biodiversity
    LGPS Women
    Valuations & Risk
  • Latest tweets

    Room151 1 day ago

    Gove at LGA: councils to receive two-year financial settlement: Michael Gove has announced that councils will receive a two-year financial settlement from next year to provide authorities with “financial certainty” and allow them to plan ahead. The… dlvr.it/ST0kSV pic.twitter.com/wxL3UM4sGO

    Room151 1 day ago

    LGPS valuations: the digital journey: Rob Bilton explains how technology is helping to deliver one of the most complex data exercises in the world of public sector pensions. The 2022 valuations for LGPS funds in[...] dlvr.it/ST0kMq pic.twitter.com/VxjSPC2Uvo

    Room151 5 days ago

    Conrad Hall: ‘more sophisticated’ regulation needed for local government: The chair of the CIPFA/LASAAC Code Board has questioned the sophistication of financial regulation in local government and the continuing focus of the Department for Levelling Up,… dlvr.it/SSnPBV pic.twitter.com/G5d7JCWF8c

    Room151 1 week ago

    Slough Council approves plans to restructure finance department: Slough Borough Council has approved plans to restructure its finance department to enhance capacity and capability and to address a “significant weakness” in the function. The local… dlvr.it/SSf8DG pic.twitter.com/l5lmyHmkBg

    Room151 1 week ago

    Job Alert: Various Finance Roles: lnkd.in/eRKRvhJb pic.twitter.com/KkBrjXxAYD

    Room151 1 week ago

    MRP on capital loans: a step in the right direction: David Green says the latest government proposals on Minimum Revenue Provision should be welcomed by local authorities. There are still some unintended consequences, but the suggested approach for… dlvr.it/SSZ7JK pic.twitter.com/M1W9qVgYWN

  • Register to become a Room151 user

  • Previous story Liverpool council innovates with funding deal for Everton FC stadium
  • Next story Jonathan Bunt: Project finance skills are the foundation of running development schemes

© Copyright 2022 Room 151. Typegrid Theme by WPBandit.

0 shares