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Missing pensions left £1m hole in Tandridge council budget

Missing pensions

The error had the effect of falsely balancing the council’s £11 million budget, and went undetected for over a year

An examination of a major blunder which has left a hole of nearly £1m in cash-strapped Tandridge District Council’s budget has found cost lines were deleted from it days before it was to be approved by councillors.

The error had the effect of falsely balancing the council’s £11 million budget, and went undetected for over a year.

External investigators from Grant Thornton were called in this summer to find out what went wrong, and presented their findings to last month’s meeting of the strategy and resources committee.

At an audit and scrutiny committee meeting on September 30, an action plan to address controls over the future preparation of the budget was discussed.

It included the recommendation that the council should ensure the finance team includes sufficient skills and capacity to undertake key calculations, including calculation of business rates.

The removal of pensions cost lines, which happened in February 2020, has left a £920,000 hole in the council’s budget, something Tom Foster, associate director at Grant Thornton said has a “potentially significant” impact on the council’s financial resilience.

Councillor Kevin Bourne had challenged the numbers, flagging an accounting error with business rates on February 3, 2020, ten days before the budget was due to be approved at full council. When corrected, it meant the budget was more than £700,000 out, the probe found.

But by February 13, a further £920,000 of pensions costs had been removed. The then interim chief finance officer said this was due to reduced costs outlined in a letter from Surrey Pension Fund. It effectively put the budget back in the black and was again questioned by Cllr Bourne.

We have reviewed the letter and consider, in conjunction with other evidence, this letter does not provide justification for the reduction in pension line costs, said Mr Foster. It contained no figures. There were “weaknesses in the control environment” which allowed the error to happen, and go undetected.

Councillor Nicholas White said the mistake should not be allowed to happen again, and called for councillors to be trained.

The council’s current chief finance officer, Anna D’Alessandro, said councillor training was on the agenda.

We need to move forward, we need to look forward and we need to look very much more importantly and urgently at how we are going to close the 2022/2023 budget, which we are all working hard to do, she said.

She said it was too early to say what the impact of sorting the budget could have on the services the council delivers to residents.

Important:

This article is for information purposes only.

Please remember that financial investments may rise or fall and past performance does not guarantee future performance in respect of income or capital growth; you may not get back the amount you invested.

There is no obligation to purchase anything but, if you decide to do so, you are strongly advised to consult a professional adviser before making any investment decisions.