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Finance Scrutiny Made Simple: questions every councillor should ask

A plain-English beginner's guide to assuring yourself that your council's finances are being run properly. For each core function: what to ask, what good looks like, and the red flags that deserve follow-up.

Browse the functionsLessons from real cases

How to use this guide

You do not need to be an accountant to ask good questions. Effective member scrutiny tests whether officers can show evidence, explain variances, and escalate risk early. The terms below are the ones used in UK local government: CIPFA codes, the Accounts and Audit Regulations, the Public Sector Payment Policy, LGPS, Section 151 and Section 114 of the Local Government Finance Act 1988.

This is general assurance guidance drawn from published practice and publicly documented council failures. It is not legal, audit or financial advice for any particular authority. Figures and dates below are taken from official notices, Best Value / inspection reports, public interest reports and government publications; follow the links for the primary sources.

What to ask, function by function

Open a card for the questions, evidence of a healthy service, and the red flags that often appear before a Section 114 notice or Best Value intervention.

Core finance and accountancy

Budget monitoring, closedown, the statement of accounts, audit opinion, balance-sheet reconciliations, reserves, and the Section 151 / Section 114 framework.

Ask

  • Is the in-year forecast still within the approved budget, and when did the last material adverse movement appear?
  • Are all key balance-sheet reconciliations (bank, control accounts, debtors, creditors, payroll) complete and signed off each month?
  • What is the external auditor's expected opinion, and are there open statutory recommendations?
  • Are usable reserves adequate for known risks, and is the Section 25 (CIPFA) statement still valid?
  • If pressures cannot be contained, when would the Section 151 officer need to consider a Section 114 notice?

What good looks like

  • Timely monthly monitoring to Cabinet / scrutiny with clear owner actions
  • Closedown plan hitting Accounts and Audit Regulations deadlines
  • Unqualified or unmodified audit opinion, with VFM commentary acted on
  • Documented reconciliation schedule with aged exceptions tracked to zero
  • Reserves policy linked to risk register, not just a residual balance

Red flags

  • Repeated late or incomplete accounts; disclaimer or qualified opinions
  • Growing unreconciled balances or suspense accounts
  • Savings "delivered" on paper but not evidenced in the ledger
  • Reliance on one-off capital receipts or flexible use of capital receipts without a published strategy
  • Section 151 warnings ignored or not minuted
Accounts receivable / sundry debt

Ask

  • What is the aged debt profile, and how much is over 90 / 365 days?
  • What is the collection rate versus target, and the bad-debt provision trend?
  • Are invoices raised promptly, and are credit notes / write-offs properly authorised?
  • Is there a clear recovery pathway before enforcement or write-off?

What good looks like

  • Stable or improving collection %, with exceptions explained
  • Aged debt reducing, with ownership by service and finance
  • Write-off policy applied consistently and reported to members
  • Income systems reconciled to the general ledger

Red flags

  • Rising unallocated cash or unmatched receipts
  • Large one-off write-offs without root-cause analysis
  • Billing backlogs after system changes
  • No segregation between raising invoices and processing credits
Accounts payable

Covers No PO No Pay, prompt-payment performance under the Public Sector Payment Policy, duplicate payments and supplier bank-detail fraud controls.

Ask

  • What percentage of invoices are paid within 30 days, and what is the value of invoices outside policy?
  • Is No PO No Pay enforced, and what is the volume of retrospective / emergency orders?
  • How are supplier bank-detail changes verified (call-back, dual control)?
  • When was the last duplicate-payment and vendor-master cleanse?

What good looks like

  • Published prompt-payment statistics meeting or approaching Public Sector Payment Policy expectations
  • High PO compliance; exceptions logged and reviewed
  • Mandatory dual control on master-data and bank changes
  • Regular duplicate-payment recovery with reported recoveries

Red flags

  • Chronic late payment to SMEs or disputed invoice piles
  • Widespread retrospective purchase orders
  • Single-person ability to create a supplier and approve payment
  • Unexplained spikes in credit notes or urgent "same-day" payments
Payroll and pensions (LGPS)

Ask

  • Are payroll to GL and payroll to HR establishment reconciliations complete each pay run?
  • What is the value and age of salary overpayments, and the recovery rate?
  • Are LGPS contributions calculated correctly and paid to the fund on time?
  • How are starters, leavers and variations controlled around system changes?

What good looks like

  • Clean pay runs with exception reports cleared before BACS
  • Overpayment recovery policy working in practice
  • Timely, accurate LGPS returns; fund queries answered promptly
  • Clear audit trail from establishment change to payslip

Red flags

  • Repeated mass corrections or emergency off-system payments
  • Growing unrecovered overpayments
  • Contribution under/over payments flagged by the pension fund
  • Inability to produce payslip or deduction evidence after an ERP go-live
Treasury management

CIPFA Treasury Management Code, borrowing and investment strategy, cash forecasting and prudential indicators.

Ask

  • Does the Treasury Management Strategy comply with the CIPFA Code, and were mid-year / outturn reports presented?
  • What are the prudential indicators for borrowing, and are they still within approved limits?
  • Is cash-flow forecasting reliable enough to avoid unexpected short-term borrowing?
  • What is the Minimum Revenue Provision (MRP) policy, and has it been reviewed for prudence?
  • Are commercial investments understood by members, including exit risk?

What good looks like

  • Clear separation of strategy (members) and day-to-day (officers)
  • Prudential indicators reported and explained in plain English
  • Counterparties and limits within policy; no unauthorised instruments
  • MRP set aside on a prudent basis consistent with statutory guidance

Red flags

  • Debt rising faster than the asset base or tax base can support
  • Short-term borrowing funding long-term speculative investments
  • MRP under-provided relative to the capital financing requirement
  • Investments approved under very wide officer delegations with limited scrutiny
Revenues and benefits

Council tax and business rates collection, arrears, Housing Benefit subsidy, overpayments and fair enforcement.

Ask

  • What are in-year council tax and NNDR collection rates versus target and peers?
  • How is the arrears book ageing, and what is the write-off / enforcement mix?
  • Is Housing Benefit subsidy claimed accurately, and what is the extrapolated error risk?
  • Are overpayments recovered fairly, with vulnerability checks before enforcement?

What good looks like

  • Stable collection performance with transparent seasonal explanation
  • Clear enforcement policy balancing yield and fairness
  • Subsidy claims reconciling; DWP / audit queries closed promptly
  • Joined-up view of resident debt across CT, rents and sundry

Red flags

  • Sudden drop in collection after system or staffing changes
  • Large unreconciled suspense or "held" payments
  • Repeated subsidy clawbacks or qualifying errors
  • Enforcement activity without proportionate vulnerability screening
Procurement and contract management

Ask

  • What share of spend is on-contract, and how many waivers / direct awards this year?
  • Are major contracts delivering outcomes, and who owns benefits realisation?
  • How are conflicts of interest and related-party transactions declared and checked?
  • Is the contracts register complete and published where required?

What good looks like

  • Pipeline of renewals visible to members in good time
  • Low, explained waiver rate; strong category strategies
  • Contract KPIs reported; underperformance escalated
  • Clear link from procurement decisions to the Medium Term Financial Plan

Red flags

  • Habitual urgent waivers around the same suppliers
  • Contracts rolling on without retender or value review
  • Weak separation between specifying, awarding and managing
  • Company / subsidiary spend outside normal procurement controls
ERP, systems and programme assurance

Ask

  • What is the independent delivery confidence (RAG) and who provides it?
  • Are data migration, controls, reconciliations and user readiness exit criteria met before go-live?
  • Can the council still produce a full audit trail for payments, payroll and the ledger?
  • What is the total cost of ownership versus the original business case?
  • Is there a stabilisation / recovery plan with named owners and dates?

What good looks like

  • Independent assurance reporting to SRO, Section 151 and audit committee
  • Adopt standard processes; limit customisation
  • Parallel run / reconciliation evidence before cutover
  • Transparent cost and benefit tracking against the approved case

Red flags

  • Go-live despite failed exit criteria or incomplete reconciliations
  • Inability to close accounts or pay suppliers / staff reliably after cutover
  • Costs multiples of the original business case without reapproval
  • Programme marking its own homework with no external challenge
Internal controls, internal audit and risk

Ask

  • Is the internal audit plan risk-based and adequately resourced?
  • How many limited / no-assurance opinions remain open past their due date?
  • Does the risk register match what scrutiny and audit committee actually discuss?
  • Are key financial controls tested after every major system or process change?

What good looks like

  • Annual Head of Internal Audit opinion informing the AGS
  • Management actions tracked to closure with evidence
  • Fraud / whistleblowing routes publicised and used appropriately
  • Control self-assessment joined to real testing, not a paper exercise

Red flags

  • Chronic overdue audit actions in finance or IT
  • Internal audit sidelined or under-strength relative to risk
  • Risks downgraded without evidence of mitigation
  • Same control failures repeating after "completed" actions
Governance and the audit committee

Ask

  • Does the audit committee have the skills, independence and information to challenge effectively?
  • Are external auditor reports (including statutory recommendations and public interest reports) debated in public and tracked?
  • Is overview and scrutiny given timely, complete financial information?
  • Are company / subsidiary boards reporting back to the council as shareholder?

What good looks like

  • Published work programme covering accounts, VFM, risk, treasury and programmes
  • Clear minutes showing challenge, not just note-taking
  • Member development on CIPFA audit committee guidance
  • Transparent relationship between Cabinet, scrutiny and audit committee

Red flags

  • Reports arriving late or heavily redacted without good reason
  • Culture that discourages bad news
  • Companies and commercial ventures outside effective shareholder oversight
  • Repeated Best Value or intervention findings on culture and scrutiny

Lessons from real cases

Published UK cases where weak financial grip, commercial risk or poor programme assurance led to Section 114 notices, Best Value inspections or government intervention. Each summary sticks to official reports and public notices. Use the linked questions as a scrutiny checklist — not as a judgement on any current administration.

Northamptonshire County Council · 2018

Section 114 and Best Value inspection

On 2 February 2018 the Section 151 officer issued a Section 114 notice because of a significant risk that the council could not balance its budget by year-end. The government's Best Value inspection (Max Caller, reported March 2018) found prolonged failure of budgetary control, blurred accountability and a culture that did not live within budget constraints; the external auditor also issued an Advisory Notice on the budget.

Sources: Best Value Inspection report (GOV.UK PDF) · BBC report of the s114 notice

Questions that might have caught it earlyAre savings backed by demand and deliverability evidence? Is flexible use of capital receipts reported to full council with a compliant strategy? When the Section 151 officer warns, what decisions follow within weeks?

Croydon · 2020 onwards

Section 114 notices and Brick by Brick

Croydon issued a Section 114 notice on 11 November 2020 after forecasting a large in-year overspend (reported at around £66m), with more than half linked to its housing company Brick by Brick. Grant Thornton's October 2020 public interest report and later government rapid review found the council had lent the company in the order of £200m without receiving dividends or interest, with weak governance and oversight of the company and related projects.

Sources: Croydon s114 notice (PDF) · Grant Thornton PIR coverage (LGC) · Government rapid review (Inside Housing)

Questions that might have caught it earlyWhat return has the council actually received on loans to companies? Are shareholder / board reporting lines documented and used? Would further borrowing for the company still meet Best Value?

Thurrock · 2022–2023

Investment strategy, debt and Best Value inspection

Between 2016 and 2022 Thurrock borrowed heavily (largely from other local authorities) to fund a large investment programme, including solar and other commercial assets. The strategy failed to control risk; the council issued a Section 114 notice in December 2022. The May 2023 Best Value inspection described systemic weaknesses in governance, audit, risk and scrutiny around that strategy, with debt reported in the order of £1.3bn.

Sources: Best Value Inspection report (GOV.UK PDF) · BBC on the s114 notice · BBC on the inspection findings

Questions that might have caught it earlyAre investment decisions inside CIPFA treasury limits and member-approved strategy? How wide are officer delegations for "non-specified" investments? Can scrutiny see counterparty concentration and exit risk in plain English?

Woking · 2023

Disproportionate debt and Section 114

A May 2023 DLUHC external assurance review found Woking had exceptionally high borrowing relative to its size (around £1.9bn at review, with a higher capital financing requirement), driven largely by regeneration vehicles. The council issued a Section 114 notice on 7 June 2023 because expenditure was likely to exceed resources; government Directions followed for financial and commercial recovery.

Sources: DLUHC external assurance review (PDF) · Woking s114 explanation · Government Directions

Questions that might have caught it earlyIs MRP being set aside prudently on regeneration borrowing? Do debt-servicing costs fit inside a sustainable revenue budget? Are company business plans stress-tested for interest-rate and income shocks?

Slough · 2021 onwards

Section 114, MRP and accounts quality

Slough's Section 151 officer issued a Section 114 notice on 2 July 2021, citing incorrect MRP calculations since 2016/17, borrowing that had risen from around £180m to around £760m, effectively exhausted unallocated reserves, and revenue costs charged to capital. External audit later attached a disclaimer of opinion to the 2018/19 accounts — described by the auditors and commissioners as unprecedented for a local authority — and government commissioners remain in place.

Sources: Slough s114 report (PDF) · BBC on the disclaimer of opinion · GOV.UK intervention memorandum

Questions that might have caught it earlyIs MRP calculated in line with statutory guidance? Why are prior-year accounts still open? What do reserves look like after audit adjustments, not just the budget book?

Nottingham · Robin Hood Energy and later s114

Company governance and financial resilience

Grant Thornton's 2020 Report in the Public Interest on Robin Hood Energy found inadequate governance and "institutional blindness" to escalating commercial risk; cumulative losses were reported at around £34m by March 2019. On 29 November 2023 the council issued a Section 114 notice for the 2023/24 budget; published recovery material noted that the energy company's failure had reduced financial resilience even though it was not the sole cause of that year's overspend.

Sources: Grant Thornton PIR on Robin Hood Energy (PDF) · LGC summary · BBC on the 2023 s114 context

Questions that might have caught it earlyDoes the council have the commercial skills to oversee a trading company? Are loss trajectories reported to scrutiny before further loans or guarantees? What contingent liabilities sit outside the General Fund view?

Liverpool · 2021

Best Value inspection on governance

In December 2020 the Secretary of State appointed inspectors to examine Liverpool City Council's compliance with the Best Value duty in planning, highways, regeneration and property management, and the strength of associated audit and governance. The March 2021 Best Value inspection found serious governance and control weaknesses in those areas and recommended commissioner support; government intervention followed.

Sources: GOV.UK inspection collection · Best Value inspection report (PDF) · Appointment of commissioners

Questions that might have caught it earlyAre high-risk property and regeneration decisions audited and minuted to standard? Can internal audit and scrutiny obtain complete records? Is there an independent route to raise governance concerns?

Birmingham City Council · 2023 onwards

Equal pay liability, Oracle ERP and statutory intervention

On 5 September 2023 Birmingham City Council issued a Section 114 notice, stating it could not meet an equal-pay liability then estimated in the region of £650m–£760m and faced an in-year budget gap in the region of £87m. The government's explanatory memorandum records that external auditors Grant Thornton had raised concerns that equal-pay provisions in prior-year accounts were materially understated, and that the failed implementation of the Oracle financial ledger was estimated at up to £100 million, highlighting weaknesses in the wider control environment. Government-appointed commissioners were installed in October 2023; their first report described the April 2022 Oracle deployment as the poorest ERP implementation they had seen, and Exceptional Financial Support correspondence in 2024 set out a minded-to capitalisation envelope running to over £1.2 billion across stated years while recovery work continued.

Sources: Birmingham s114 statement (5 Sep 2023) · GOV.UK explanatory memorandum · Government intervention announcement · Commissioners' first report (PDF) · EFS letter 2024-25 (PDF)

Questions that might have caught it earlyAre equal-pay and other contingent liabilities provided for on an auditor-accepted basis? Before ERP go-live, were reconciliation and reporting exit criteria actually met? Can members see an independent view of programme cost, data integrity and financial-reporting risk — not only the delivery team's RAG?

Why listen to me

Short credentials only — the guide above stands on published practice either way.

Birmingham City Council (interim) · September 2022 – August 2026

Operational Finance Assurance Lead

Member of the Finance Leadership Team and Directorate Management Team; later deputy to the Head of Transaction Services. Led Accounts Payable, Accounts Receivable, Payroll, Pensions and Finance Support (189 staff) across a 12-directorate council through financial recovery and ERP change. Provided assurance and independent challenge over the Oracle ERP and finance transformation programme to the leadership team, and introduced digital process mapping, standard operating procedures and automation across transactional finance.

NHS Property Services · June 2018 – March 2019

Head of Central Finance Operations (P2P), interim

SMT and board-facing lead for P2P optimisation; introduced No PO No Pay across the business and suppliers; relocated the London AP team to Stockport (reported saving c.£3m a year); managed supplier payments of c.£20m a week and a 52-strong AP team.

Related reading: local government transformation · programme assurance · Oracle ERP assurance.

Council facing recovery, an ERP programme, or a scrutiny gap?

Available for interim, fixed-term and assurance engagements across the UK. Happy to talk through how member scrutiny and officer assurance can work together.

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