NAO qualifies local government accounts

THE DEPARTMENT for Communities and Local Government has been found to have breached its authorised spending limits, following a review by the National Audit Office.

The NAO qualified the local government accounts for 2012/13 after it discovered two instances where department spending exceeded the annual limits set down by parliament.

In the first instance, the department exceeded its net cash spending limit by £55m from a budget of £28.97bn because it failed to identify and adjust for movements in working capital. As a result, liabilities exceeded current assets.

According to the NAO, the department failed to monitor its position during the year and only became aware it was close to its limit in February 2013 after it was contacted by HM Treasury.

“This was too late for the department to manage its cash position sufficiently to avoid the breach,” the NAO said.

The department met further liabilities at year-end with an unauthorised bank overdraft and finished the year £217m overdrawn. It also incurred HM Treasury imposed penalty interest charges of £20,000.

It also breached the departmental expenditure limit of £80,000 by spending £1.2m. The breach arose as the Valuation Tribunal Service and the Commission of Local Administration in England (CLAE), exceeded their delegated capital budgets. Individually, either excess reported by these bodies would have caused an overall breach for the department.

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