EXCLUSIVE: Town Hall finance chiefs tell Whitehall they will run out of cash by the end of September, and meanwhile the council fails to fulfil its legal accounting obligations. By STEVEN DOWNES
The council has failed to make its latest draft accounts available for public scrutiny, as is required by law. And according to senior sources at Fisher’s Folly, it may not have its accounts ready for examination even by the end of the month.
Meanwhile, the council’s cashflow crisis continues to worsen. According to some who have had sight of the council’s appeal for help sent to the Ministry of Housing, Communities and Local Government last month, Town Hall finance chiefs predict that Croydon will run out of money by the end of September.
Before the covid-19 lockdown, Croydon Council had amassed debts of more than £1.5billion, while holding a reserve of just £10million. In the first few weeks of the pandemic, the council says it spent £62million – money it does not have.
In May, Croydon’s cash-strapped council was forced to call in independent auditors and financial advisers from other local authorities as it wrestled with the mounting costs of dealing with coronavirus while most of its income sources, including Council Tax, were shut off.
In “normal” years, local authorities in England conduct a formal auditing process in May, and under government transparency rules, Town Halls have to open their books to the public for a brief period in June. This year, with good reason, that was postponed.
But under clause 6.3 of the Accounts and Audit (Coronavirus) (Amendment) Regulations 2020 (click here to read an explanatory note on the regulations), councils were instructed to make their draft accounts for 2019-2020 available to the public for the first 10 working days of September.
In Croydon, this has failed to happen.
This could prove to be Jo Negrini’s farewell “gift” to Croydon.
Negrini, as the then council chief executive, received a letter from the MHCLG in April, outlining quite clearly how the council and its accountants would be granted extra time to produce their accounts, but insisting that they should be available for public examination by September 1, at the latest.
“The publication date for final, audited, accounts will move from 31 July… to 30 November 2020 for all local authority bodies,” the letter from Whitehall said.
“To give local authorities more flexibility, the requirement for the public inspection period to include the first 10 working days of June… has been removed. Instead, local authorities must commence the public inspection period on or before the first working day of September 2020. This means that draft accounts must be approved by 31 August 2020 at the latest.” Those are our italics, for emphasis.
The letter also stated: “Authorities must publish the dates of their public inspection period, and given the removal of the common inspection period and extension of the overall deadlines for this year, it is recommended that all authorities provide public notice on their websites when the public inspection period would usually commence, explaining why they are departing from normal practice for 2019/20 accounts.”
In Croydon, again, this has failed to happen.
A senior source in Fisher’s Folly told Inside Croydon, “Croydon Council are currently finalising the 2019-2020 accounts and working closely with our external auditors, Grant Thornton.
“We know that we have not met the deadlines laid down in the regulations.
“Grant Thornton have been working with council officers and are aware that there will be a delay in publishing the accounts. Once these accounts are completed they will be available on the Council’s website for public inspection.”
No explanation for the additional, and unlawful, delay was offered.
One interested observer, keen for the opportunity to pore over the figures for the financial year that ended at the end of March 2020, said, “Bearing in mind the financial year ended just as covid was starting, it should be an interesting set of numbers.
“I imagine the council finance officials are having some heavy conversations with the auditors about ‘going concern’ and ‘post-balance sheet events’.”
And a Katharine Street source said, “There won’t be any penalty for failure to meet the deadline other than, perhaps, some embarrassment.”
But it might all be about to get even more embarrassing: Brick by Brick, the council’s wholly-owned financial black hole, is late publishing its own annual accounts, which in previous years have been released by August.
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