Northumberland County Council has updated its audit arrangements in the wake of the ‘clear failings’ at two of its arm’s-length organisations.
Both Arch, the development company, and Active Northumberland, which manages leisure services, have been the subject of reviews which have raised a number of concerns about the way they have been run, sparking a series of negative headlines.
Specific objectives in relation to the two organisations have been added to the local authority’s strategic audit plan for this financial year, which wasn’t the case in 2017/18.
In the case of Arch, the objective is to ‘provide the council with an opinion on the soundness of arrangements in place to administer the Arch group of companies’, while for Active, it is to review ‘whether the county council’s expectations under the management agreement are being met’.
Last week’s audit committee meeting heard that the two are treated differently; a boundary review was carried out to determine whether or not Arch and Active Northumberland’s financial statements should be consolidated with the council’s accounts.
The conclusion was that Arch’s should, as it is a wholly-owned subsidiary of the council, but that Active’s shouldn’t, as the local authority ‘does not have significant influence or control’ over what is a charitable trust with its own board that decides how services are delivered.
One of the committee members questioned this, pointing out that the council has provided funds to Active to plug a shortfall in its finances, but Coun Nick Oliver, the cabinet member for corporate resources, said: “It’s not a blank chequebook, it’s not a open-ended guarantee.”
Councillors also considered a draft version of the annual governance statement for 2017/18, which will be submitted with the accounts, in which the council’s level of compliance with seven principles has been graded either outstanding, good, requires improvement or inadequate.
One of the principles – behaving with integrity, demonstrating strong commitment to ethical values and respecting the rule of law – was rated as requiring improvement, mentioning the ‘clear failings’ at Arch and Active Northumberland.
Coun Gordon Castle questioned whether the rating shouldn’t be inadequate given all that has happened in relation to the two organisations. The committee chairman, Coun Georgina Hill, added: “Inadequate is an understatement.”
Ben O'Connell , Local Democracy Reporting Service