AN internal auditor has found “significant weaknesses” in Porlock Parish Council’s finances, including VAT errors, cash accounting, risk management and budget monitoring, an external auditor’s report revealed this week.

After carrying out a “limited assurance review” of the council’s finances, external auditors PKF Littlejohn drew attention to the fact that the authority’s internal auditors had highlighted several areas of “lack of internal control” and added: “The authority must ensure that action is taken to address any remaining areas of weakness in a timely manner.”

Before the publication of the auditor’s report, a notice on the parish council’s website read: “We have identified significant errors within the final report, acknowledged by the external auditors. 

“The parish council’s responsible financial officer is in discussion with PKF Littlejohn to clarify matters as a matter of urgency.” 

In its report, PKF Littlejohn said it had been called in to conduct a limited assurance review on the council’s annual governance and accountability return. This was not a full statutory audit - the government had determined that a lower level of assurance than that provided by a full statutory audit was appropriate for those local public bodies with the lowest levels of spending. 

“This authority is responsible for ensuring that its financial management is adequate and effective and that it has a sound system of internal control.”

PKF Littlejohn said that in their annual report the internal auditors “had drawn attention to significant weaknesses in relation to budget monitoring, VAT errors, lack of evidence of scrutiny of bank reconciliations, lack of minutes on website, cash accounting, risk management, accounting for and approval of payments and recording of use of grant funding accounting records.”

The auditors said that the council had answered “No” to governance assertions in respect of this lack of internal control. “The authority must ensure that action is taken to address any remaining areas of weakness in a timely manner. 

It added: “We received challenge correspondence in relation to the 2021/22 annual governance statement which we considered before completing our work.” 

The external auditor added that it first issued a limited assurance review on the council’s governance and accountability return last September but was unable to certify completion of the review until now.

This was because the council failed to approve the return in time to publish it before  July 2022, the date required by the Accounts and Audit Regulations, and did not disclose this. 

The auditor added: “The return was not accurately completed before submission for review. Please ensure that amendments are corrected in the prior year comparatives when completing next year’s return.

“Information has come to our attention that the authority failed to bank charity collections and pay donations to the relevant charities on a timely basis. This money was subsequently banked during 2022/23. 

“We note that the authority did not comply with the Accounts and Audit Regulations 2015 as it failed to make proper provision during the year 2022/23 for the exercise of public rights, since the period for the exercise of public rights did not include the first 10 working days of July. 

“As a result, the authority must ensure that it makes proper provision for the exercise of public rights during 2023/24.”

This week the council told the Free Press: “The explanatory notes to the external audit for 2021/22, as published, were compiled by councillors who have since resigned.

“The Responsible Finance Officer has produced a Financial Review (published on the council website under the Full Council 14th December 2022 meeting heading on the Minutes & Information page https://porlockparishcouncil.files.wordpress.com/2022/12/rfo-financial-review-2022.pdf )to address any areas of non-compliance and deficiencies in the record keeping.

“Since December 2022, the newly elected councillors, including the temporary volunteer clerk, and our locum RFO, have been working extremely hard to implement all the recommendations.

“These actions, which we intend to take by the end of this financial year 31st March 2023, will address any remaining areas of weakness in a timely manner as required by the external auditor.”