Local authorities, which in 1996 received £851 million in State funding, have been criticised for poor financial practices, excessive spending and poor debt collection.
The shortcomings have been highlighted by the Local Government Audit Service which audits the accounts of all local authorities.
Critical comments made by the service, which were common to a number of authorities and feature in the Comptroller and Auditor General report, include:
expenditure in excess of estimates on various programmes prior to approval.
year-end deficits not included in the following year's estimates.
substantial amounts of money owed to local authorities at yearend.
unsatisfactory collection yields for commercial rates, housing rents, loan repayments and water/ service charges.
numerous unfunded balances on capital works which needed to be addressed.
State grants claimed from and paid by the Department of the Environment in advance of requirements.
internal audit functions not in place or restricted.
Other weaknesses were found in internal controls and practices which, it says, could result in waste or loss of public funds or lead to a build-up of deficits.
The report notes local authorities are reminded of the need to maximise their income and to pursue outstanding money legally due to them but "it often happens that collection of debt can be adversely affected by social, legal and political factors which delay or prevent settlement".
Despite criticism of local authorities' financial practices, the report accepts that "unforeseen events can give rise, at short notice, to large expenditures in excess of levels provided in the Estimates and for which it is not possible to obtain prior approval from the elected members". For these reasons, it adds, retrospective approval is often unavoidable.
By August 1997, all of the 1995 and some of the 1996 audit reports for local authorities had been completed. "Arising from these, there is no concern in relation to fraud or misuse of funds by the authorities, irrespective of the income from which individual programmes were sourced."
