Warning of risk to public money as council controls become 'strained' as budgets fall

Recurring weaknesses in local authority processes to safeguard public money “are becoming apparent among councils and the consequences could be serious”, a new Accounts Commission report has warned.

The report, ‘Safeguarding public money: are you getting it right?’ also warns that standards of internal controls in Scotland’s local authorities may be becoming “strained” as councils face decreasing budgets and increased demand for services, especially in the health and social care sector, with mistakes and fraud highlighted as areas for concern.

The commission is calling on councillors to “seek assurances” from officers “that a rigorous system of internal controls is in place”, and states that auditors are raising concerns particularly in “information processing, reviews, and separating council employees' duties in order to prevent fraud”.

The report, which is aimed at assisting councillors and council staff to improve services, does highlight examples of systems and processes working well at councils, but says the risks of failure could include the loss of “significant” amounts of council money, impacts on council services and “reputational damage” to councils.   

Graham Sharp, chair of the Accounts Commission, said: “Robust management and scrutiny of the finances at Scotland's councils is more important now than ever before.

“Councils face complex and challenging financial pressures, and rising demand for services.

“At the same time, budgets are tightening and there is significant uncertainty from factors such as the UK's withdrawal from the EU.

"There are many examples that the systems for managing finances in Scotland's councils are working effectively.

“However, councillors are ultimately responsible for scrutinising a council's use of public money, and they should seek assurances from council officers that rigorous systems and processes are in place to safeguard finances."

COSLA president Councillor Alison Evison said: "Today’s report from the Accounts Commission is a timely reminder of the many and varied pressures on local government. 

“However, it is also worth noting that to date councils have carried out their scrutiny duties well, despite also facing increasing demands and reducing resources.

“Scotland’s councillors appreciate their role and duty in safeguarding public money and take it seriously.

“Our colleagues at the Improvement Service support councils with this through the Continuous Professional Development Framework for Elected Members and bespoke support to develop councillors’ scrutiny skills.

“COSLA and our colleagues in the Improvement Service will continue to support our member councils look at ways to strengthen our joint work in this vital area even further."