Insufficient capacity affecting dealing with legal issues at Royal Borough, external auditors say

External auditors at the Royal Borough of Windsor and Maidenhead have voiced "significant concerns" over the council's governance arrangements in light of delayed financial statements, alongside concerns about debt associated with a wholly-owned property company.

Writing in an initial letter detailing the auditor's findings ahead of a full report, Grant Thornton also said staffing issues have resulted in "insufficient capacity" at the royal borough for dealing with legal and procurement issues.

The council currently faces significant challenges to its financial sustainability, which saw the council request exceptional financial support from the government in May of this year.

Grant Thornton's letter was sent to the council's chief executive, Stephen Evans, in July but publicly discussed in an Audit and Governance Committee meeting earlier this month.

Alongside budgetary difficulties, the council's 2021/22 and 2022/23 financial statements also remain unaudited.

As of May 2024, the council's 2023/24 financial statement had also not been produced or presented for audit.

Commenting on the backlog, Grant Thornton said: "The inability of the Council to produce complete, accurate and timely financial statements and subsequently complete the audit raises significant concerns over the governance arrangements at the Council and undermines the ability of decision makers to have confidence that decisions are being taken based on a true financial position."

Elsewhere, the letter highlighted concerns about the governance, efficiency and effectiveness of one of the council's wholly-owned property companies.

The company provides services to the council, which include carrying out valuations, asset management, acquisitions, and disposals. It is currently subject to an external review.

It also plays a critical role in bringing forward the development of a golf course owned by the council, which represents a potential future capital receipt originally estimated at £200m.

Commenting on the company, the letter said: "The council's borrowing decisions in recent years have been taken in the context of realizing this capital receipt and the possibility of achieving a lower value because of suggestions that a lower density of development should be pursued represents a significant risk to the Council's future financial sustainability as a consequence of its high level of debt."

Grant Thornton warned that, while it had not completed its 2023/24 value for money review, the concerns listed in the letter would "result in our reporting a number of significant weaknesses in arrangements".

It added: "We recognise that the council is aware of its situation and is in discussions with Government about EFS which, if secured, would help to address the financial risks that it faces. "We also acknowledge that action is being taken across all the areas set out above and that external support is being utilised as part of this process."

"Specifically. the council has proactively sought independent advice and support from CIPFA. The council is also considering utilizing consultants to assist with the underlying rising costs in adult social care that would involve significant up-front costs but ultimately will generate significant revenue savings.

"Once again this will put further pressure on the already depleted levels of reserves and balances."

Commenting on the letter in an Audit Committee, the council’s executive director of resources, Elizabeth Griffiths, said she was pleased with the progress being made in the finance team despite the lack of capacity in the team.

She noted that officers had been producing a monthly budget monitoring report, which was considered by Cabinet and the Corporate Overview and Scrutiny Panel, alongside completing the work on historical reconciliations.

In addition, the finance team had been restructured with assistance from CIPFA and a new Assistant Director of Finance had recently been appointed.

Griffiths also highlighted an ongoing review into the structure of the property company that Grant Thornton raised concerns over.

She said a report is being drafted to address the points made and provide a response.

Adam Carey