The leadership and culture at Woking Borough Council, when the key decisions were made that lead to its financial meltdown, will be put under the microscope by auditors.
Independent auditors Grant Thornton LLP has released details of the forensic examination into the council’s debt, in a letter to the borough council’s chief executive Julie Fisher.
It says it will also look into whether the financial control environment led “to increased risks of fraud” and if the council set an unbalanced budget for any of the financial periods since its doomed investment strategy was introduced.
The auditors were brought in to examine how Woking Borough Council ended up in a deficit of £1.2billion and £2.4bn in debt.
Their work "will need to focus on previous audit periods to make… findings, conclusions, and recommendations”.
In the letter, the auditors said they would also establish a “clear timeline of the key decisions relating to the council’s investment strategy”, including decisions on its financing, and responsibilities for the decisions and actions taken.
They will also explore the council’s “governance arrangements” and “processes in place for making effective decisions” as well as the “effectiveness of the scrutiny of these decisions.
This, they said, would include whether there was appropriate assessment and management of risk, and how much regard was given to regulations at that time.
The letter, dated July 5, said they would also examine how business cases were developed and approved, as well as the investment structures adopted.
The review will cover Woking Borough Council’s 15 wholly-owned companies and eight joint ventures, including ThamesWey group of companies, Brookwood Cemetery Limited and Victoria Square Woking Limited.
Grant Thornton expects to begin reporting back its findings by August, with deep dives also going into the council’s financial planning assumptions and decisions – including debt repayment and any decisions towards Minimum Revenue Provision policy.
Governance arrangements and how these would be monitored and reported on will also come under the microscope.
Responding to the start of the value-for-money review into the council’s governance arrangements, council’s chief executive Julie Fisher said: “It is important we understand the decisions and actions of the past that have significantly contributed to the financial challenges we face today.
“Our incoming auditor, Grant Thornton UK LLP, has agreed to conduct a value-for-money review into governance arrangements that relate to our historic investment strategy, which relates to their responsibilities for the 2023/24 audit year.
“The review will consider the council’s governance arrangements and processes in place for making effective decisions in relation to investments made in the past. It will review how risks were assessed and managed and how decisions were scrutinised at the time those decisions were made.
“Senior council officers are already supporting Grant Thornton with their investigative work. It is intended that former officers and former councillors will be contacted for their input into the review.
“The outcomes from the review will be shared to enable the council to learn lessons from the past and the decisions and actions that have contributed to the challenges we now face.”
Cllr Ann-Marie Barker, leader of Woking Borough Council, said: “I know residents have been concerned to understand how Woking reached this financial situation and am pleased to be able to share details of how the value-for-money review will be conducted.”