The Accounts Commission for Scotland is to launch a special probe to discover the extent of deficits in 32 council direct labour organisations, following losses by one approaching #5m.
The commission was asked to act by Scottish Secretary Donald Dewar after disclosures about the losses led by North Lanarkshire, said to be #4.8m in the red, and East Ayrshire, with #3m owed. Smaller losses have also been reported by East Dumbarton and Argyll & Bute.
Harris Wells, the commission’s audit strategy director, said checks were previously done on a one-off basis, but that a full inquiry was now vital.
‘We propose special exercises as part of our overall audit with a particular focus on high-level controls at the DLOs. We want to make sure all these controls are looked at simultaneously to get a clear and full picture,’ Wells said.
North Lanarkshire’s problem involved the suspension of at least two senior council officials and reports of practices that allowed one plumber to claim for working a ’25-hour day’. Chief executive Andrew Cowe said councillors received inadequate reports and said that all DLO bookkeeping had now been placed under the supervision of the finance director.
Dewar had already served a notice on North Lanarkshire requiring reports from the council and enabling him as a last resort to order the council to shut down the DLO.
The Scottish office told East Ayrshire it must bring in auditors to conduct an immediate investigation. An East Ayrshire official said this ’caused panic’. He said: ‘Things were being lumped on to the commercial operations deficit because it was thought it didn’t matter as it was going down the plug anyway.’
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