KPMG has made public its concerns about the way in which its audit client Corby borough council is managing three capital regeneration projects, saying the local authority's actions demonstrate poor corporate and financial governance.
The firm has issued a public interest report which it says highlights flaws in the council's handling of construction projects which include new civic offices, estate developments, improvements to a sports complex and the sale of land in the St James area of the town. Work on these has totalled £67m over the last six years.
KPMG says the council sold the land at St James in 2010 for £3.8m. During this period it has had limited usable revenue reserves over its designated minimum balance of £800,000 and its external borrowing increased from nil to a high point of £47m in 2011/12, although this has since reduced to £36m.
In its report, KPMG describes the council's arrangements for managing the projects as 'ambiguous and ill defined', and says there was insufficient member oversight at critical periods of the schemes.
It says financial and project management of the schemes was poor, while on the face of it the land at St James was sold for considerably less than best consideration without getting the requisite statutory approval to do so.
KPMG's audit director Neil Bellamy said: 'We found that decision making arrangements were unclear, and that there were significant failings in the design and operation of the council's governance arrangements. Together these led to the council making decisions when it was not fully aware of the financial impact they would have, exposing it to unnecessary and significant financial risk, and which led to a likely breach of its statutory obligations. In our view these placed it in a weaker position from which to address the current financial challenges it faces.'
The report makes 18 recommendations for the council to consider covering governance, statutory obligations, council policy and procedure, financial and project management, use of professional advice and actions of senior officers. It will be considered at a public meeting of the council next month.
