To receive a verbal report from the Director of Finance and Investment.
Shaer Halewood, Director of Finance and Investment (S151), provided the Audit and Risk Management Committee with a verbal update highlighting the reasons for the implementation of a Council review of spending and the compliance and scrutiny of current expenditure in line with existing policy and procedures.
The Director of Finance and Investment informed that a directive on spending had been imposed on 15 November, via a memo to the Corporate Management Team (CMT) and budget holders. They in turn, would be reviewing the departmental spend, to decide what was critical and vital to the running of their services.
Members were apprised of the need for essential spending in Adult and Children’s Care Services, and other areas of the Council Budget that would be exempted from the review i.e. payroll, contracted works, benefits, and committed capital spend.
Members were also informed about the process of monitoring whereby all Purchase Orders (POs) were to be reviewed and every POs issued after the spending freeze were to be analysed. If a PO had not been agreed, staff who submitted them would be questioned.
The Director of Finance and Investment further informed that as part of the review process, investigation was underway with regard to items that had been invoiced to the Council without a PO. As of the previous Friday (15 November 2019) 236 such POs had been reviewed and it had been identified that many of the purchases related to items on the exemption list, some were essential spend and some related to school expenditure. The Director had queried over 100 items with the individual service areas and questioned whether the spend was vital or critical to the service. She informed that responses had been requested by today the date of this meeting. Following additional review of the matter, Members were informed that there would be further discussions with budget managers, and further escalation to the Senior Management Team (SMT) would be the next stage if non-compliance continued.
The Chair expressed concern about the range of non-compliance to other policies, stating that it was the role of the Audit and Risk management Committee to support the Director of Finance and Investment and the Chief Executive to reinforce this point. He added that if a particular Service Area or Directorate be identified, he as Chair would be happy to invite them to explain why they circumvent the rules.
The Director of Finance and Investment informed that at present 15 POs had been identified as clearly being retrospectively issued, and she had written to managers identifying that contravention has occurred, and matter should be escalated through management action if it continued.
Members questioned the Director of Finance and Investment, and commented on past spending freezes, and were assured that the Director and the Chief Executive were now tackling this matter personally.
Additional discussion took place on the subject of cultural change, reduction in spending powers and authorisations – alongside the requirement for regular reporting of non-compliance to SLT.
The Director of Finance also informed that a review of credit cards – to be used for extreme emergencies – had been undertaken, and as a result most had been recalled. Only 2 cards would be in place in the future.
In summary, the Chair expressed the view of the Committee that the Council needed to move away from what had become cyclical ‘spending freezes’ towards a need to ensure proper practice was being followed.
Resolved – That the verbal report be noted.