Governance failures at council allowed £9m overspend to go unchecked
Governance failures including a lack of oversight of procurement practices within Dorset Council's Place, Assets and Regeneration Team allowed for the team's budget to surge from £4m to £13m without proper oversight, external auditors have found.
- Details
The report, published by South West Audit Partnership (SWAP), also revealed that key decisions lacked transparency, audit trails were incomplete or absent, and there was "limited accountability in the use of public funds".
The council initially terminated the contracts of 11 interim officers in its Place, Assets and Regeneration Team in September 2024 due to concerns over lack of compliance with financial controls and rising levels of budget overspend.
An internal review was later launched, which highlighted issues around poor financial control, lack of adherence to financial procedures and lack of programme and project management.
The council's monitoring officer then commissioned external auditor SWAP to complete an internal investigation.
The investigation focussed on the team's building health and safety compliance work and considered:
- The identification and approval of a service/work requirements and of budgets.
- Procurement and award of contracts inside and outside of the council’s managed service provider, including approvals and ensuring best value.
- The required approvals such as Key Decisions or under the Officer Scheme of Delegation.
- Receipt, review and approval of payment of invoices.
- Evidence of illegal activity or fraud and/or failure to comply with council rules and procedures.
- Potential obfuscation and dishonesty by council officers
The investigation ultimately identified governance failures in a number of areas, including the recruitment of interim staff, the creation and use of budget codes, procurement practices, and payment approvals.
It found "significant non-compliance with council policies, poor record-keeping, and a lack of effective oversight" across these areas.
On budget approval and monitoring, the report highlighted an initial £4m agreement from Cabinet in support of the team's work in September 2023.
However, spending on the building health and safety compliance programme reached nearly £13m over two years without subsequent Cabinet approval, a funding strategy, or a documented business case.
The spend went unflagged until the June 2024 outturn report, by which time proactive scrutiny was no longer possible.
Meanwhile, the report said the team's procurement practices involved " significant governance and procedural failing".
Key procurement issues included inappropriate influence and lack of transparency in the use of one company, breaches of procurement policy, repeated unexplained budget increases, and frequent use of "urgent" justifications and references to potential fines to likely bypass proper governance.
The report also said the team often kept budgets just below cabinet approval thresholds, and that there was an "over reliance" on an email from the former chief executive that said "you have my full support to commit such resources as may be required to remediate any identified matters”.
Elsewhere, the auditor identified instances of undeclared gifts and hospitality offered to officers in the Assets and Property service in breach of the council’s Code of Conduct and transparency requirements.
"The cumulative impact of these failures resulted in substantial unmonitored expenditure, reduced assurance around value for money, and increased exposure to financial and reputational risk," the report said.
The findings were reviewed by the council's Audit Committee in a private meeting earlier this month. Committee members will provide continued oversight as the remediation plan is implemented.
In parallel to SWAP’S audit of the procurement team, a separate audit looked at contract and expenditure compliance.
This audit report was discussed at Audit and Governance committee in public on 2 June.
It identified gaps between the council’s decision-making authority and its financial systems, raising concerns about authorisation limits, procurement processes, and the transparency of high-value spending.
In response to the investigation reports, Dorset Council has developed an action plan which includes a commitment to strengthening financial oversight and budget monitoring, improving procurement and contract management processes, and enhancing governance and member involvement in complex decisions.
The plan also commits to reviewing recruitment and management of interim and agency staff, providing enhanced training and guidance for officers, and ensuring regular monitoring and reporting to the Audit and Governance Committee.
Cllr Nick Ireland, Leader of Dorset Council, said: “I take the findings of the two external reports extremely seriously. Although the original intent of the work carried out from 2022 was to improve safety and address prior shortcomings, the way it was delivered at that time did not meet the standards our residents rightly expect. This matter predates the current administration, and I fully support the commitment to transparency and accountability.
“A robust action plan has since been developed, and a dedicated team is in place to drive the necessary improvements. It is essential that public funds are managed with the highest standards of integrity.
“I welcome the scrutiny of the Audit and Governance Committee and fully endorse the organisation’s commitment to learning from past mistakes to ensure such failures are never repeated.”
Adam Carey
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