Damning audit reports highlights town council’s ‘unsatisfactory’ accounting issues

Dale Spridgeon, local democracy reporter

A town council failed to file accounts for a year and its clerk bought a £21,000 vehicle “without council approval” and failed to submit an invoice for the purchase, a spending watchdog has found.

The clerk, Rhys Parry, was also paid a “large amount of overtime” without “any evidence that these payments were approved by the council” and sold a transit van, again “without council approval” a damning report by Audit Wales has found.

Audit Wales director Richard Harries, on behalf of the Auditor General for Wales Adrian Crompton, also found Llangefni Town Council failed to submit any accounts for 2021-22 for audit and failed to provide accounts for the year 2020-21, 2022-23 or 2023-24 “on a timely basis”.

‘Unsatisfactory’

In a message to the town council, on January 16, Audit Wales said it had closed the audits for 2021-22, 2022-23 and 2023-24 – but that the council’s arrangements were “unsatisfactory.”

Llangefni Town Council Mayor Terry Jones said: “As chair of Llangefni Town Council since 13th May 2024, I would inform you that we will be considering its (Audit Wales) contents, which we are taking extremely seriously.” Mr Jones said the council would provide a full response to the concerns raised by Audit Wales “within the next 28 days”. The clerk, Rhys Parry, was also approached for comment.

Audit Wales said it would be “reviewing the situation again” for the 2024-25 accounts and was “considering” whether to issue a report “in the public interest” if ongoing issues were “not properly addressed”.

The Auditor General’s report found the council had shown an “ongoing disregard for its statutory duties under the Public Audit (Wales) Act 2004”, for the 2021-22 accounts. It had also “disregarded” an audit notice and subsequent correspondence requiring it to “submit the accounts for audit” for that year.

Mr Harries, in an audit opinion, wrote: “I have therefore been unable to undertake an audit of the 2021-22 accounts.” The council had also not prepared “its 2020-21, 2022-23 or 2023-24 accounts on a timely basis,” he added.

Staff costs

In a report for 2022-23 , year ending March 30, the Auditor General’s report was “unable to conclude” whether or not the accounting statement “fairly presents” the council’s income, expenditure and financial position.

Mr Harries wrote: “The council has not provided an explanation for the significant increase for staff costs and the council has disposed of a vehicle and replaced it with a new vehicle, but has not updated the asset register.”

The council was also obliged to prepare and approve the accounts by June 30, 2023, but “failed to do so and did not approve the accounts until July 2024”.

The audit noted the council did not “operate consistently” or identify “payments being made before authorisation”. Contracts of employment for two members of staff, including the clerk did “not state the relevant salary point or state the agreed number of working hours,” Mr Harries found.

“This exposes the council to a significant risk of loss” and the clerk was “unable to provide a contract of employment for a third member of staff,” he added.

The report went on to criticise actions taken by the clerk, Rhys Parry. Mr Harries found: “The clerk was paid a large amount of overtime during 2022-23. We have not been provided with any evidence that these payments were approved by the council.” The clerk had, “in violation” of financial regulations, also “sold an asset, a transit van, without council approval”.

“The clerk then purchased a new vehicle for £21,000. The council did not approve this payment and the payment was not listed on a schedule of payments provided for audit,” Mr Harries wrote.

Invoice

He added: “Notwithstanding that, we requested all invoices be provided for audit, the clerk did not provide an invoice for the purchase of the new van. We have confirmed that the £21,000 payment was made from the council’s bank account. The council has not removed the old van from its assets register and has not added the new van to the asset register.”

The council had also failed to provide information concerning the waiving of members fees. Audit Wales had “recommended” that the council provide “confirmation from all members confirming that they do not wish to receive their allowance”. Mr Harries concluded: “In my opinion, the council does not have proper arrangements in place to secure economy, efficiency and effectiveness in its use of resources.”

For the 2023-24 accounts, he found: “I am unable to conclude whether or not the accounting statement fairly presents the council’s income and expenditure financial position. The council has not provided explanations for significant variances within the year. The council has not provided a properly completed bank reconciliation as at March 31, 2024.” Mr Harries also noted that the council’s website “contains very little information,” and he recommended that “the council should ensure that the website is updated on a regular basis”.

A spokesperson for Audit Wales said: “The Public Audit (Wales) Act 2004 requires the council to make up its accounts to March 31, each year and to submit the accounts for audit by the Auditor General.

“We were unable to identify any evidence that the council prepared accounts for 2021-22 and nothing was submitted for audit.

“We have concluded and reported on the audits of Llangefni Town Council for the 2021-22 to 2023-24 financial years. Our conclusions are set out in our audit report and opinion issued for each of these years.

“The reports and opinions are attached to the council’s annual returns and the council is required to publish the audited accounts along with the audit opinion. There is no separate report to the council for these years.”

Review

The Auditor General’s arrangements for the audits of community and town councils include a more detailed review of the council’s accounts on a three-yearly basis.

“Llangefni is due for a more detailed examination for the 2024-25 accounts. As part of the 2024-25 audit, we will specifically consider the matters raised in our reports on the 2021-22 to 2023-24 financial years.

“We expect the council to take appropriate steps over the next couple of months to address the deficiencies we identified. We will consider our reporting options once we have concluded our audit work,” the spokesperson said.