LIB DEMS SHOCKED AT DOWNGRADING OF TORY-CONTROLLED WOKING COUNCIL'S FINANCIAL MANAGEMENT ABILITY

8.00.00am BST (GMT +0100) Fri 3rd Apr 2009

Woking Liberal Democrats are shocked that the Audit Commission downgraded the council on basic financial management including:

• Not getting accounts prepared on time.

• Poor management of Council reserves.

• No overall strategy to improve the council's financial position.

Liberal Democrat Group Leader, Cllr Ian Johnson said:

"Woking Borough Council were twice late in handing accounts to auditors on time. I am not surprised that the Audit Commission downgraded Conservative financial management of council reserves from 3 to 2. Reserves were raided by the Tories to pay one-off redundancy and early retirement costs of key staff to deliver a one-off electoral bribe of a 0% council tax rise in 2008.

Now we, as Woking residents, have to pay council tax rises of at least 5% every year for at least the next five years to restore the level of the Environmental, Protective and Cultural Services (ECPS Reserve) from £447 000 to £3 million by 2013/14. The KPMG auditors also highlighted that the Council has no clear strategy to restore council reserves."

Lib Dem Parliamentary Spokesman, Rosie Sharpley said:

"At a time of recession, when residents need help with their council tax bills the most, there is no money in the kitty to reduce council tax rises in the future, tenants have been hammered with huge heating bill rises and the promised "hardship fund" never materialised. To make matters worse the Conservatives have been too hasty to shed valuable and experienced staff.

We will of course all have to pay for this. Woking Conservatives cannot point the finger at the Government for not saving for a rainy day, when they did not do so themselves smacks of the kettle calling the pot black"

ENDS

Key Quotes from Audit Commission (Paragraphs 6 and 8 on Page 3 in Annual Audit and Inspection Letter attached)

"The overall use of resources score was 2. This is a reduction from a score of 3 in 2007. Driving this movement was a reduction in the score for Financial Standing from a 3 to a 2. In 2007/08, reserves were used on a one-off basis to fund redundancy/early retirement costs in order to bring staffing costs down permanently. The reserves position of the Council is challenging. However, the level of reserves remains within the tolerances set out by CIPFA (that is maintaining reserves at 5 per cent of net budget requirement). The Council should ensure a robust action plan is in place to prevent ongoing access and reduction in the reserves."

"There remains scope to increase the timeliness with the financial statements and

Whole of Government Accounts submission are completed. A final set of accounts, with all adjustments processed and technical issues resolved was not received by the appointed auditor until February 2009. As part of the planning process for 2008/09 your appointed auditor will work with you to identify how these processes could be improved to ensure the more timely delivery of the final financial statements. Your audit certificate was issued on 27 February 2009."

Key Quotes from KPMG External Audit Report attached (See Use of Resources on Page 2)

"Between July and September 2008 we completed our scored judgement on the Authority's use of resources. This assesses the Authority against Key Lines of Enquiry (KLOEs)specified by the Audit Commission, resulting in a score on a scale between 1 (below minimum requirements) and 4 (performing strongly). The scores were reviewed by both KPMG's local and national quality control processes and then by the Audit Commission to ensure consistency in scoring with other auditors and authorities.

The Authority's overall score in 2008 was 2, a decrease from the prior year. The change in overall score is due to decrease in performance in the Financial Standing theme from a 3 to a 2. The key development point in this area is the need to have a strategy in place to increase reserves or at a minimum better manage reserves going forwards. Performance within all other themes has not changed from prior year."

See Officer Comment General Fund Papers in Paragraph 9 on page 10 and 11 particularly Paragraph 9.7 (attached as FINAL REPORT EXE09-002). This was approved at the 12 February Executive Meeting.

"9.7 Reserves are not being used to meet the cost of running services. They are being used to fund management of change costs and one off service enhancements and improvements. The current forecast level of reserves is adequate. It is essential to identify options for restoring the level of reserves to an aggregate of at least £3million. This may necessitate above inflation increases in service charges and council tax if service reductions are to be avoided."