Response to KPMG audit report published 1 September 2016

Published: Friday, 02 September 2016

Cllr Mary Markham, Leader of Northampton Borough Council, acknowledged the comments from auditors KPMG in their report being considered by the Council’s Audit Committee on Monday 5 September.

While accepting KPMG’s recommendations and the seriousness of their comments, Cllr Markham stressed that they relate specifically to the handling of the loan to NTFC, not to the Council’s financial management in general.

Cllr Markham said: “I accept the comments in KPMG’s report and welcome the feedback on our processes. The reason I asked for two audit reviews and involved Northamptonshire Police in our investigations is to ensure that we learn the lessons from the failure of the loan to the football club, and to ensure it does not happen again.

“We have already put a number of improvements in place to tackle the issues raised in this report, and we intend to make further changes in how we do things as we review our processes in the wake of the loan.

“I will put in place a rigorous system with a set process that must be followed in every case, which identifies who is responsible for every stage of the process and that records that each stage has been followed and properly signed off.”

Cllr Markham added: “I acknowledge that this is a very serious issue, but it is the exception. We are using all the means we can to try to recover the £10.25million owed to the council, but this must be balanced against the £450 million of transactions that the Borough Council handles efficiently every year. We also manage assets worth £725 million.

“We will take on board all of the comments and make the improvements necessary.”

Improvements already put in place include:

  • Carrying out enhanced due diligence checks, including external scrutiny, for new loans issued, such as the loan to the University of Northampton
  • Using a new checklist, on advice from KPMG, to ensure all aspects of loans are properly considered
  • Initiating a thorough review, using external experts, of our governance, risk management and due diligence processes