Statement from South Somerset District Council regarding External Auditor’s Annual Report for 2020/21
Each year, South Somerset District Council is subject to an external audit to ensure it has the appropriate arrangements in place to secure value for money for its residents.
The Council works with Grant Thornton which carries out research and evidence gathering to support the Council’s position in respect of:
- Ensuring financial sustainability,
- Managing governance arrangements,
- Securing economy, efficiency, and effectiveness in its use of resources
In its audit of the Council’s accounts for 2020/21, no risks of significant weakness were identified in the Council’s financial sustainability or improving economy, efficiency and effectiveness, with some recommendations for improvement made.
However, some significant weaknesses were identified in our governance processes.
These refer to:
- A settlement agreement that the Council made with a senior employee upon leaving
- Ensuring there is sufficient staffing capacity to support the final accounts process
- Ensuring a clear plan to address and mitigate risks associated with investing in commercial property (the report adds that governance arrangements in relation to our Commercial Strategy are sound)
In the case of the settlement agreement, Grant Thornton has made a statutory recommendation which the Council is required to discuss and respond to publicly.
In its report, Grant Thornton notes that during 2020/21, the Council entered into a settlement agreement with a senior officer. This resulted in the officer leaving the employment of the authority with a substantial settlement payment.
It notes: “From our enquiries of management, we have concerns that there was a lack of due process, insufficient records were maintained to evidence how the agreement was reached and that the agreement does not reflect value for money.”
The report also notes that approval of the sign off of the agreement did not follow Financial Regulation requirements or the Council’s Constitution. The Council did not obtain legal advice and the Monitoring Officer and S151 Officer were also not aware of the agreement.
Grant Thornton has made the following recommendations that when making settlement agreements with, or payments to employees, the Council should:
- Comply with Financial Regulations, Standing Orders and the Constitution
- Ensure that appropriate consultation takes place with the statutory officers
- Ensure that approval for the agreement is obtained from appropriate elected Members
- Maintain appropriate and sufficient evidence for the decision making process
- Assure itself of the legality of the transaction including seeking legal advice
- Clearly demonstrate value for money has been achieved
The report will be considered by the council’s Audit Committee next week before going before a meeting of Full Council.
Chief Executive Jane Portman said: “It is our duty to ensure that we deliver value for money for South Somerset. We accept and regret that the management controls that were in place did not operate as they should have done on this occasion.
“The controls have been reviewed by management and a revised procedure that takes these findings into account will be recommended to our next meeting of Council.
“We are recommending that our members endorse and support all of recommendations included in the report in all areas where weaknesses were identified.
“This matter has been taken extremely seriously and it has been investigated to the fullest possible extent to ensure we can move forward with confidence that such an incident cannot occur again.
“We remain absolutely committed to delivering the best possible future by providing value for money and investment in South Somerset through the remaining lifetime of South Somerset District Council and as we look to 2023 and the creation of the new Somerset Council.”