Thetford Town Council defends its financial management after auditor’s ‘bordering on insolvency’ warning

A council has defended its financial management after a report warned it is ‘bordering on insolvency’.

The recent internal audit found Thetford Town Council has ‘excessively low balances’ and urged it to reassess its investments.

The council has been criticised for several months over the handling of its finances after it voted to declare a ‘climate emergency’ and commit £30,000 of its funds to combat the issue.

However, councillors have dismissed the warnings of the auditor as ‘isolated items’ and maintain the authority is ‘well run’.

The decision to declare a climate emergency included a commitment for all council meetings and committees to consider carbon and ecological impacts of decisions made wherever relevant, and for funds to be set aside to support sustainability projects in the area, such as installing rainwater harvesting systems in council-owned buildings.

Ieuan Evans, a member of the council, said this investment is ‘entirely unrelated’ to the insolvency warning given by the auditor.

The new audit report said: “Balances reported by the council are excessively low and bordering upon insolvency.

“The council must ensure it maintains adequate capital and has not unduly committed excessive capital into long-term investments.”

Following the audit – which all councils must routinely carry out – the authority said it still had sufficient funds but that much of them were in stocks and shares and that these would be ‘revisited’.

Councils routinely keep some of their funds in long-term investments to generate additional income and provide financial security.

However, the auditor advised that no more than £100,000 should be held in stocks and shares.

At the time of the review, the council had invested more than £600,000.

The auditor said the council was exposed to ‘excessive risk’ and advised that the long-term investments in held in shares be liquidated “immediately”.

Thetford Town Council has hit back at criticism and said it is ‘taking steps’ to reduce the amount held in shares to the recommended amount.

It said the auditor had praised its ‘prudent budget setting and monitoring system’ despite the warnings about its investments.

Cllr Terry Land said: “It is very disappointing that a council which is exceptionally well managed can fall prey to isolated items from a wider report being taken out of context.

“The town council takes its financial responsibilities seriously. It is well run, as acknowledged by the auditor, and inherited an investment situation which it is already acting to address in line with advice.”