SWINDON Council has spent £40,000 commissioning experts to investigate the financial management and reporting arrangements of Swindon Commercial Services Ltd after a £1m downturn in predicted income from the public services firm.
SCS, based at Waterside Park, Cheney Manor Industrial Estate, is wholly owned by the council, which budgeted to receive a forecast dividend of £3.6m in 2012/13.
However, the latest figures, up to November, show that SCS is now projecting a return of £2.6m, a reduction of £300,000 from the previous month. Swindon Council says the most significant reason is a sharp dip in prices obtained for recyclable materials.
The reduced SCS income is a key reason for a predicted £992,000 overspend in the council’s revenue budget for 2012/13, which it hopes to plug by the end of March through a number of measures, including using £570,000 from reserves.
In response, Cabinet and SCS jointly commissioned Price-waterhouseCoopers (PwC) to carry out an in-depth study into the firm’s financial probity, looking at aspects such as financial structures, levels of resources and reserves, and the allocation of costs, rather than the business model or individual managers.
Coun Mark Edwards, the cabinet member for finance, said the reasons for the slump were known and the investigation was to make recommendations to ensure the lower-than-predicted dividend was a blip rather than a trend.
He said: “It’s making sure that the finances of the organisation are robust and appropriate and everything is running in the right way. And it’s not about individuals, it’s about financial probity.
“We have got some people that want to make more of this than it is. It’s part of normal processes we do these things.
“A financial audit is incredibly detailed and we don’t have the skills to do it within the organisation. We don’t have the skills of PwC to do this kind of work. These guys do this all the time.”
Coun Des Moffatt, the Labour group’s lead on finance, said the council should have saved money by using its own internal auditors.
He said: “It’s a complete waste of money. It all comes from the same place and it gets spent doing the same thing. It’s just a different way of counting the beans, that’s all.”