MAJOR concerns about management of spending within Thurrock Council were highlighted at an audit committee meeting this week.

Major 'red flags' warnings were raised over control of council spending - including managers deliberately flouting rules to use multiple credit card transactions to buy 'inappropriate vouchers', Christmas decorations and flowers for staff.

Following the council's financial crash in 2022 when the government-imposed intervention at the council to try and bring its rampant and rash spending under control, commissioners brought in to rectify problems imposed spending limits on officers and strict rules about how bill payments need to be authorised.

Three years on, Tuesday's (3 February) audit committee showed significant abuses of the rules, with some managers cynically manipulating payments to breach limits.

A raft of red flag warnings ran through an internal audit report that was completed in November last year and took almost four months to be presented to the audit committee at their last meeting of the civic year. With elections pending and the audit committee chair Cllr Fraser Massey not standing again, it remains to be seen whether issues raised will be followed up after May's elections.

Parts of the report regarding spending controls made difficult reading and Cllr Massey said: "I must admit I had a feeling of Deja Vu, going back to when we reviewed internal audit for expense claiming.

"It's not good is it. I really am concerned to see some of the things that have occurred. 

"We look at things like the purchase cards. Do we even have a list of how many cards we have and who has got what? I want to check the basics, because it seems like the basics have not been done."

The report said: "Discussions with management confirmed that for one expenditure sample reviewed, an invoice totalling circa £2.5k had been split into smaller payments. This allowed the £500 card limit to be maintained, whilst deliberately circumnavigating the controls so that the payment would not be declined.

"Discussions with management confirmed there are instances where spend on the cards was not appropriate or aligned to what they should be used for. Examples include purchases of inappropriate vouchers, Christmas decorations and flowers for staff.

Head of Internal Audit, Counter Fraud, Risk Management and Insurance Satindar Jas, brought in as a troubleshooter to dig deep into the council's financial structure in February last year, responded by saying: "We do have a list of the number of cards and just to give members some assurance managers are looking at reducing them overall."

Co-opted member Charles Clarke asked Mr Jas: "Are these things that have been recurring in the past?  Is this a case of they have not been picked up or are they still in the system.

"I am concerned a lot of these are budget holders who need to be reminded of the inbuilt practices that have been going on for a long time.

"What is being done to get us to a place where procedures are followed, processes are in place and everything works as it should be - not otherwise?"

Mr Jas responded: "I will not be able to give you any assurance in terms of in the past outside the 25/26 year because we didn't look at that.

"In the 25/26 year these are payments we have identified that should not have occurred or have not gone through the right processes.

"We have a system that is now live and we are reducing the number of these issues."

Cllr Massey said: "I find it really disappointing that someone (with a card) knew there was a limit and then used it multiple times to chip away at £500 here, £500 there. Someone knew what that limit was. This is the public purse. It's disappointing that someone has literally deliberately broken and bent the rules." 

Cllr Mark Hurrell highlighted significant spending (£13,750 on one purchase order for a shower cubicle) that that had been approved verbally by a director, 'with no audit trail'.

"What systems have we got in place to stop this", he asked. "£13,750 might not be a significant amount, but what if there were two zeroes on the end of that? This is what got us in a mess. We cannot go through this again."

Mr Jas said: "If there were another couple of zeroes, it couldn't have been processed, there are limits. But in relation to this, I don't want to say small because it is a significant amount, but it shouldn't have happened.

"It's one of those unfortunate things where someone who should have followed the process, didn't follow the process. It was a breach of the expenses control process. It shouldn't have happened.

"They were written to remind them that it was not appropriate, and everyone has been reminded."

Interim Chief Financial Officer and Section 151 Officer Dawn Calvert, who was brought into the council on a salary approaching £150,000 more than two years ago to get a grip on the flawed council financial process and lack of control on spending, told the meeting there were clear guidelines – which had been broken.

Referring to who could authorise spending, she said: "Up to £500, that is left to the directorate. between £500 and £25,000 it goes to an expenses panel, a series of middle grade managers who have to agree it, over £250,00 up to £500,000 that is myself and the chief executive and over that it goes to the cabinet.

Cllr Hurrell thanked her for the clarification and said: "I hope this doesn't happen again."

Cllr Massey also referred to the spending on shower cubicles and said that he was someone who regularly downloads and examines the council's spending record sheets for supplies. He asked: "How now can I have confidence that it true and accurate?"

Mr Jas said: "You are right, there is a gap there. The problem is this was shown on the list, but the spending did not go through the correct channels to make sure it was a correct cost for an acceptable expenditure." 

Cllr Massey then turned focus on direct debits paid by the council, saying they were not reviewed and there was not an accurate list or what was being paid, wo whom – and why. He said: "People managing their own homes check their direct debits at least once a year - it's worrying that we do not have that process in place.

"As it stands it is very open to fraud or crime. Things could slip on the direct debit list and no one would spot it."

Ms Calvert said: "All direct debits should be signed off by myself. What we are saying is that we have found out here that not all are. What we need to make sure is that we have control in future. That people cannot sign a direct debit without going through myself.

"Unless we have to sign a direct debit we would tend to try and avoid them so we don't have that risk that the direct debit continues when the service is ceased. They are controls we want to put in place now."

Cllr Hurrell asked 'The most awkward question of the night', saying it was not personal." Who checks yourselves."

He was told by Ms Calvert, there are controls on the system. I can sign up to half a million pounds, but I could not put something on this system and authorise it myself. There has to be independent approval."

Ms Calvert acknowledged it was a very reasonable question to ask.

Cllr Srikanth Panjala said: "We need greater assurance about public finances. There is a lot more assurance I would like to see."

Mr Jas conceded there were still gaps in the process of control, saying: "There will have to be training. For example, people who have purchase cards get them pulled until their training is complete. In terms of budget holder expense, for example the shower, there is still that culture that hasn't quite got to the point where no breaches are occurring. 

"Unfortunately no system will ever stop every breach because it is almost impossible."

Cllr Panjala said that it was important that where there were breaches, people 'faced the consequences'.

As the meeting drew to a close, Cllr Hurrell reflected on past failures and fiscal mismanagement that got the authority into a billion pound plus debt, on his tenure on the committee observing the financial processes and said: "As a council we have moved on and got better, but we are certainly not where we should be."

Cllr Massey concluded his time as chairman by acknowledging the council was now more open and matters that had not previously been addressed were being debated and put in clear sight. And though failures of process continued to be found, progress has been made.

He concluded: "This is really good work to get this out there in the open. Now we know how we can improve."

The meeting can be viewed on the council's web library, discussion on the internal audit commenced at 1:57:20 on the film clock.

https://thurrock.public-i.tv/core/portal/webcast_interactive/1052031/start_time/0