Action plan in place to improve financial systems

By on 29/01/2010 in News

Birmingham City Council continues to offer people a good standard of service, both in terms of the quality and range of services, the Audit Commission will tell the Cabinet on Monday (1 February 2010).

The Annual Audit Letter judges that overall the council performs 'adequately', whilst providing challenges to the city council to improve some of its financial systems, based on observed weaknesses in the condition of the council's asset register; the production of its accounts; and certain internal financial controls.

None of the judgement will affect the 'bottom line' of the council's accounts, Director of Resources, Paul Dransfield, reassured today. Accepting that improvements needed to be continuous the council confirmed it will strengthen internal controls on the back of the Audit Commission's observations, and already has an action plan firmly in place to improve performance.

He also said that though it was imperative to address all the areas identified for improvement, it was also important not to ignore those areas of good practice highlighted by the auditor, such as the council's strategic response to the economic downturn.

As one of the first councils to develop a long-term approach to financial planning, the council is confident it has the credibility to build on the Auditor's suggested improvements, and to build on this report.

The Annual Audit Letter endorsed progress made by the council, by acknowledging the following:

• Good budget management has been maintained whilst improving services in most priority areas - performed within budget for the last six years, with council tax increases held at 1.9 per cent for the last four years
• Short and medium term efficiency measures in place (eg Business Transformation)
• Capital spend is well managed and treasury management procedures are robust (eg Birmingham did not make any losses as a result of various banking failures)
• The council has responded well to the economic downturn (eg loans to businesses, enhanced housing benefit support services etc)
• Well established and appropriate processes for managing the council's own financial standing in the economic downturn
• The council has a good track record of financial management with a good level of reserves
• Performing well in managing resources – good arrangements in place for managing its effect on and use of natural resources

Paul Dransfield added: “We have been on a journey of radically improving our financial systems and structures for a number of years now, and so welcome the more rigorous approach taken by our new external auditor to help us continue to drive through these improvements as a matter of urgency.

“Building on good practice, and challenging bad practice, we have for example already put a team in place to improve the way we record and value our assets, which we are confident will ensure our fixed asset register is in a 'best of breed' state for next year's audit.”

Further initiatives to help improve performance include: a thorough review of the existing team who produce financial accounts with an enhanced project management approach; a strict regime, now in place, where the council's audit committee is given more detail of non-compliance of procedures, allowing significant risks to be routinely flagged up to cabinet members; and recommendations by the council's internal audit department will be tracked personally by the director of resources, who will find solutions.

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