Oakham Town Council's 2024-2025 Audit unsatisfactory: Progress Made, But Key Areas Need Immediate Attention

Oakham Town Council's 2024-2025 Audit: Progress Made, But Key Areas Need Immediate Attention

The internal audit report for Oakham Town Council for the financial year ending March 31, 2025, conducted by Stuart McDonald of Leicestershire and Rutland ALC IAS, reveals a mix of positive improvements and critical areas requiring immediate action. While the council has made strides in addressing previous concerns, several significant issues have led to the audit being unsatisfactory in key governance and transparency objectives.

The audit, carried out on June 11, 2025, and reported on June 13, 2025, highlights the challenges faced by the council, particularly due to the absence of the Clerk due to illness. This absence notably impacted the auditor's ability to fully access the accounting system and documentation, limiting the scope of the review to the evidence presented by Deputy Clerk Kathy Geraghty, who received commendation for her assistance.

Positive Developments:

The report acknowledges several areas where Oakham Town Council has demonstrated improvement since the previous audit:

• Accounting Records: The RIALTUS system is now reportedly updated regularly, with reports presented at each meeting, indicating a significant improvement in the proper keeping of accounting records.
• System of Internal Control (Financial Elements): While not fully compliant, there has been an improvement in the adherence to financial controls, particularly with the new Lloyds account facilitating online pre-authorisation for payments, a welcome development for 2025/26.
• Risk Assessment: The council has adopted an adequate Risk Assessment, with an updated version approved in March 2025, addressing a previous concern.
• Accounting Statements Preparation: The preparation of accounting statements using the RIALTUS software has improved, carrying over positively from the latter half of 2023/24.

Areas of Concern and "Unsatisfactory" Findings:

Despite these advancements, the audit report explicitly states that the overall conclusion is not fully satisfactory, with "No" marked against three critical objectives in the Annual Internal Audit Report (AIAR):

• Bank Reconciliations Not Evidenced (Objective I): The auditor found that while monthly bank statements and transaction lists are reviewed, there is no evidence of a formal reconciliation between the bank balance and the RIALTUS cash book being consistently presented and signed off at meetings. This is a fundamental control weakness.
• Lack of Required Website Information - Transparency Code Not Complied With (Objective L): The "Notice of Conclusion of Audit," a mandatory requirement of the Transparency Code, was not published on the council's website by the September 30th deadline. This represents a failure in transparency obligations.
• Annual Governance Statement Not Approved (Objective N): The 2023/24 Annual Governance Statement was not formally approved by the Council in a meeting, despite appearing as "approved" on the document itself. This is a significant governance oversight.

Further Issues Highlighted:

The report also draws attention to several other important matters:

• External Auditor Comments: The council previously faced issues with mismatches between internal auditor conclusions and its Annual Governance Statement assertions, as well as insufficient explanations for variances in accounting statements.
• Timing of Public Rights Period: There was too much time between the approval of the Annual Governance and Accountability Return (AGAR) and the commencement of the Public Rights period in the previous year, not adhering to proper practice.
• Discrepancies in Accounting Statements: The comparative figures for 2023/24 on the 2024/25 accounting statements do not match previously approved figures, with an unexplained £9,487 difference in staff costs and other payments. If restated, this should be explicitly disclosed.
• Clerk's Absence and Risk Assessment: The current Risk Assessment does not account for the sudden reduction in critical staff resources, such as the Clerk's absence, recommending an update to include such risks.
• Minute Keeping: A minor but important point raised is that each page of the minutes should be initialled, and the last page signed, to ensure proper record-keeping.
• Closed Sessions: While some improvement was noted, one closed session proceeded without a vote, and the outcome was unclear, indicating that proper procedure is not always followed.

Urgent Deadlines and Recommendations:

The auditor stressed the immediate need for the council to address fast-approaching deadlines for submission and publication of documents for the External Auditors (Moore), including approval and publication of Sections 1 and 2 of the AGAR, bank reconciliations, variance explanations, and the Annual Internal Audit Report, all by July 1st.

Conclusion:

Stuart McDonald's report concludes that while there has been continued improvement in control and governance arrangements in the latter half of 2023/24 and into 2024/25, the "No" responses to key objectives related to bank reconciliations, website transparency, and the formal approval of the governance statement mean that the audit is not entirely satisfactory.

Oakham Town Council is urged to take immediate and comprehensive action on all matters raised in this report to ensure full compliance with proper practices and to strengthen its internal controls and governance for the benefit of its constituents. The upcoming 2025/26 audit will also introduce a new assertion regarding "Digital and Data Compliance," which the council should begin preparing for now.

Internal Audit Report:

LRALC, Jubilee Hall, Stadon Road, Anstey, Leics, LE7 7AY

0116 235 3800 | admin@leicestershireandrutlandalc.gov.uk

www.leicestershireandrutlandalc.gov.uk

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Leicestershire and Rutland ALC IAS

Internal Audit Report to be read in conjunction with the Annual Internal Audit Report in the

Annual Governance and Accountability Return 2024 - 2025

Name of Authority: Oakham Town Council

Name of Internal Auditor: Stuart McDonald Year ending: 31 March 2025

Date audit carried out: 11/6/2025 Date of report: 13/06/2025

Internal audit is the periodic independent review of an authority’s internal controls. This should result in an assurance report designed to improve the effectiveness and efficiency of the activities and operating procedures under the council’s control. Managing the authority’s internal controls should be a day-to-day function through its staff and management and not left for internal audit. It would be incorrect to view internal audit as the detailed inspection of all records and transactions of an authority to detect error or fraud. This report is based on the evidence made available to me and consequently the report is limited to those matters set out below.

The proper practices referred to in the Local Audit and Accountability Act 2014 and Accounts and Audit

Regulations 2015 are set out in the Smaller Authorities Proper Practices Panel (SAPPP) Practitioners Guide.

This is a guide to the accounting practices to be followed by local councils which sets out the appropriate

standard of financial reporting to be followed.

• Para 4.11 of the Practitioners’ Guide asserts that the independence of the appointed person or firm should be reviewed every year.

• Para 4.16 requires that authorities should carry out a review of the effectiveness of their overall internal audit arrangements, at least once each year.

• Para 5.103 specifies that the authority should take appropriate action on all matters raised in reports from internal and external audit and to respond to matters brought to its attention by internal and external audit.

This report is addressed to the Chair of Council or Parish Meeting for circulation to all members. It must be considered in a meeting of the full council or parish meeting.

The authority needs to have considered all matters brought to its attention by internal and external audit, and should have taken corrective action as appropriate. Practitioners Guide 1.39

LRALC, Jubilee Hall, Stadon Road, Anstey, Leics, LE7 7AY

0116 235 3800 | admin@leicestershireandrutlandalc.gov.uk

www.leicestershireandrutlandalc.gov.uk

Registered office as above. Registered in England No. 11323405

To the Chair of Oakham Town Council.

Before I start my review, and noting the absence of the Clerk, I must draw your attention to the deadlines for submission of documents to the External Auditors and for publishing certain information on your website. I understand that the Council meeting planned for 11th June did not take place and I am conscious that the deadlines are fast approaching.

The precise requirements are laid out on Pages 1 and 2 of the AGAR (Form 3) pack. In summary (not

exhaustive):

A. Sections 1 and 2 of the AGAR must be approved (in that order) and published by the Council

before July 1st, preferably after noting this Annual Internal Audit Report (AIAR).

B. These, along with bank reconciliations as at 31/3/25, an explanation of significant variances in the

accounting statements, notification of the dates for Public Rights, and the AIAR, must be returned

to Moore by email or post by June 30th

.

C. Before 1st July, the Council must publish the Notice of the period for the exercise of Public Rights.

Moore’s website provides templates to assist.

The Council should also check its obligations under the mandatory Transparency Code.

Now to my audit.

I met with Kathy Geraghty, the Deputy Clerk to the Council, at the Council offices, to carry out the internal audit for the year ended 31st March 2025. I should like to thank her for her assistance and hospitality.

Some background may help here. I was informed in early May that the Clerk was not available through illness. Our original planned meeting on 21/5/25 was postponed until 11/6/25 which is understandable in the circumstances. I was informed that this meeting would be with the Chair of the Council and the Chair of the Finance Committee. Due to unforeseen circumstances, this was not possible, and Kathy has helpfully stepped in. It is apparent that only the Clerk has the knowledge to access fully the accounting system and resulting documentation. My audit is, therefore, as the rubric at the top of this report indicates, based only on the evidence that has been presented to me.

Firstly, I will examine the Council’s response to the matters raised by the internal auditor last year:

1. The auditor reported that appropriate accounting records were not properly kept throughout the

financial year. This related especially to the early part of the 23/24 year. I have reviewed the

available evidence and am satisfied that the RIALTUS system is updated regularly and is reported at

each meeting. Improvement implemented

LRALC, Jubilee Hall, Stadon Road, Anstey, Leics, LE7 7AY

0116 235 3800 | admin@leicestershireandrutlandalc.gov.uk

www.leicestershireandrutlandalc.gov.uk

Registered office as above. Registered in England No. 11323405

2. The auditor reported that there was little or no evidence of compliance with many of the financial

elements of the council’s “System of Internal Control” document. My limited review of the

payment files, and RIALTUS reports indicated that these controls have improved. However, I will

highlight one issue. Re. electronic banking, the document states that “two signatories are to sign

such documentation as well as any order for payment (i.e. BACS)”. I understand that the HSBC

system used throughout 24/25, and before, did not allow for online authorisation by other

signatories, and that it was possible for payments to be made without additional pre-authorisation.

Be assured that there is no evidence of any mismanagement here, and I note that there are

additional controls down the line e.g., presentation to each meeting of the payments list, and

regular budget reviews. I understand that the new Lloyds account does indeed facilitate online preauthorisation – this is being implemented fully in 2025/26 and as such, is to be welcomed.

Other smaller concerns with the “System of Internal Control” document are: It refers to a “General

Power of Competence” – I have seen no minute nor any reference to such a power. It refers to Petty

Cash – I understand there is no such system. Some Improvement

3. The auditor reported that the Risk Assessment (RA) had not been adopted. At the meeting on

12/6/24, minute 06/24-11, it was agreed that the RA was adequate and was adopted. Furthermore,

at the meeting on 12/3/25, an updated Risk assessment was adopted – minute 04/25-17.

Implemented.

4. The auditor reported that the accounting statements were not prepared correctly. He noted that

this referred specifically to the first half of 23/24. I am satisfied that this improvement has carried

over to 24/25, using the RIALTUS software. Implemented

5. The auditor noted that the Council had not complied with the mandatory requirements of the

Transparency Code (TC). I note that it is a requirement of the TC that the “Notice of Conclusion of

Audit” is published on the website by 30th September each year – however, it is not there. I have

therefore marked “No” to Objective L on the Annual Internal Audit Report (AIAR).

6. The auditor reported that the Council used “Closed sessions” incorrectly. Used 3 times in the year

(after the receipt of the internal audit report), one session went ahead without a vote to go into

closed session (September meeting – minute 09/24-16), and the outcome was unclear as to what

the recommendation of the Staffing Committee was (minute 09/24-17). The other 2 sessions were

satisfactory. Partial improvement.

Secondly, the External Auditor (EA) made the following comments.

7. The EA’ s main comments derived from the mismatch between the Internal Auditor’s conclusions as

summarised in the AIAR and the Council’s Annual Governance Statement’s (AGS) assertions. The

Council should always consider carefully its responses to the assertions on the AGS.

Other matters. The Council left too much time between approval of the Annual Governance and

Accountability Return (AGAR) on 8/5/24 and the commencement of the Public Rights period on

19/6/24. Proper practice and the Audit and Accounts Regulations 2015 state that commencement of

Public Rights should follow the AGAR approval as soon as reasonably practical, bearing in mind that

the Public Rights period must include the first 10 working days of July. (Given my comments at the

top of this report, this will not be an issue this year). The EA also noted that insufficient explanation

of variances had been provided in the initial submission, although later provided on request. I do not

know what additional information Moore required in this instance, but I have seen them request this

LRALC, Jubilee Hall, Stadon Road, Anstey, Leics, LE7 7AY

0116 235 3800 | admin@leicestershireandrutlandalc.gov.uk

www.leicestershireandrutlandalc.gov.uk

Registered office as above. Registered in England No. 11323405

when a narrative explanation does not show the figures involved. For example, explaining that

income has risen because you have received a grant for playground equipment is insufficient. You

will need to say it has risen because you have received a grant for £xx.

These are the matters I should draw to your attention as a result of my 24/25 review

a. The Annual Governance Statement for 23/24 was not approved by the Council. In the meeting on

8/5/24, minute 03/24-18, only the Internal Audit report and the Accounting Statements were

“reviewed and accepted”. I appreciate this appears to be an oversight as the Governance Statement

itself shows it was “approved” at the same meeting with the same minute number – 03/24-18. I

have therefore marked “NO” against Objective N on the AIAR, as the Council has not complied

with the requirement to publish an approved Annual Governance Statement.

b. Bank Reconciliations. I note that each meeting’s papers contain an item named “RIALTUS Bank

Reconciliation” or “Bank Reconciliation Receipts and Payments” along with copies of the HSBC bank

statements. These “Reconciliation” documents show the monthly receipts and payments, and it is

possible to agree these individual transactions to the Bank Statements. The month-end bank

balances are also visible.

However, whilst these documents and the control they afford are valuable, I cannot see an actual

reconciliation between the balance in the Bank and the balance in the RIALTUS “cash book”. I have

seen that RIALTUS does facilitate this as I have seen a year-end document entitled “Bank

Reconciliation Statement as at 31/3/2025”. It starts with the Bank Statement balance for the

account concerned, deducts unpresented payments, adds unpresented receipts, which produces a

balance which is then compared to the cash book balance, and a difference noted. There are two

spaces noted for signatures, the Clerk and Deputy Clerk.

The very fact I have been able to see this document (produced on 8/4/25) indicates that perhaps it is

completed by the Clerk, but just not presented to the meeting for sign off.

I recommend that this reconciliation document is also agreed at each meeting (in addition to the

others) and the Bank Statement figure on it checked across to the actual Bank statement. I have also

been unable to see any of these documents actually signed by councillors – it is important that the

documents are signed to indicate they have been reviewed at the meeting.

Given the evidence made available to me, I have answered “No” to Objective I on the AIAR.

c. Accounting Statements. The Accounting Statements 2024/25 contain comparatives for 23/24. The

comparative figures for 23/24 on the current 24/25 statement do not match those 23/24 figures that

were approved last year. There is a difference in both the Staff Costs Box 4 and All Other Payments

Box 6. The difference of £9,487 is equal and offsetting, thus the closing balance is unaffected. If the

Council has restated the basis for the figures in these boxes for 24/25 which has resulted in a change

to 23/24’s numbers, this should be disclosed and marked as “Restated” on the form.

LRALC, Jubilee Hall, Stadon Road, Anstey, Leics, LE7 7AY

0116 235 3800 | admin@leicestershireandrutlandalc.gov.uk

www.leicestershireandrutlandalc.gov.uk

Registered office as above. Registered in England No. 11323405

d. Clerk’s absence. I wish Chris well and a speedy recovery. The sudden reduction in important staff

resource such as this is the sort of thing that should be included in your Risk Assessment, but on this

matter, it is silent. I recommend updating the Register.

e. Other Governance matters. Each page of the minutes should be initialled and the last page signed.

I am required to state why I have ticked “Not covered” in answer to objective F (Petty Cash) – it is that I

understand the Council does not operate a Petty Cash system.

Included in the assertion statements on the AGAR in 25/26 will be a new assertion 10, which will cover “Digital

and Data Compliance”, previously covered under assertion 3. I would recommend reviewing any steps needed to be able to answer this assertion with a “Yes”. This is clearly outside the scope of this year’s audit, but will

of course be considered next year, so I thought it worth bringing to your attention now.

CONCLUSION

I have tested the objectives that the AIAR requires me to consider on the basis of the evidence presented to me, and control and governance arrangements have continued the improvement seen in the latter half of 23/24. Nevertheless, I have marked “No” against 3 objectives – namely I (Bank Reconciliations not

evidenced), L (Lack of required website information) and N (AGAR Section 1 not approved). I have signed the

Annual Internal Audit Report accordingly.

Yours Sincerely,

Stuart McDonald – Internal Auditor to the Council

sminternalaudit@yahoo.com

LRALC, Jubilee Hall, Stadon Road, Anstey, Leics, LE7 7AY

0116 235 3800 | admin@leicestershireandrutlandalc.gov.uk

www.leicestershireandrutlandalc.gov.uk

Registered office as above. Registered in England No. 11323405

Areas in the 2024-2025 AGAR Annual Internal Audit Report for which Yes or N/A cannot be ticked

Reason

Bank Reconciliations not evidenced

Transparency Code not complied with

Governance Statement not approved

Section 2 - Accounting Statements 2024/25

Year ending

31 March 2024

Year ending

31 March 2025

1. Balances brought forward 305,301 291,038

2. Annual precept 262,675 280,325

3. Total other receipts 69,416 284,632

4. Staff costs 67,390 72,798

5. Loan interest/capital repayments 0 0

6. Total other payments 278,964 327,197

7. Balances carried forward 291,038 456,000

8. Total cash and investments 289,228 442,051

9. Total fixed assets and long-term assets 1,658,162 1,727,628

10. Total borrowings 0

LRALC, Jubilee Hall, Stadon Road, Anstey, Leics, LE7 7AY

0116 235 3800 | admin@leicestershireandrutlandalc.gov.uk

www.leicestershireandrutlandalc.gov.uk

Registered office as above. Registered in England No. 11323405