Local Govt - Council lashed for DLO deficit

North Lanarkshire Council has been slammed by Scottish audit controller Robert Black for the poor financial management which led to a #4.66m deficit in its direct labour organisation.

In a public-interest report published this week (5 November), Black said the deficit was not identified earlier due to misleading and inadequate financial monitoring reports, insufficient financial expertise, and failure of the council’s finance department to scrutinise financial monitoring reports produced by the DLO closely enough.

The report identifies nine factors which are likely to have caused the deficit: bonus and overtime payments, travel allowances, overhead recovery, transport, subcontractor and material costs, working practices and workflow.

Additionally, Black recommended that the contracting, communication and management arrangements within the DLO should be addressed.

North Lanarkshire was among 32 Scottish authorities to have its DLO examined earlier this year when the Accounts Commission for Scotland was called in by Scottish Secretary Donald Dewar.

At the time, North Lanarkshire chief executive Andrew Cowe said councillors had received inadequate DLO bookkeeping reports.

A spokesman for the council refused to comment. The public-interest report is due to be considered by the full council today. The Accounts Commission will report its findings early next year.