External auditors have identified five “significant weaknesses” in a review of BCP Council’s operations over the past two financial years.

Grant Thornton UK LLP has not ruled out issuing statutory recommendations going forward if the situation does not improve.

The professional services company has produced a combined annual report for 2021/22 and 2022/23, which will be discussed by the council’s audit and governance committee on Thursday, September 7.

Significant weaknesses have been identified across the three key areas of financial sustainability, governance, and improving economy, efficiency and effectiveness.

“Given the number of significant weaknesses reported across both years and the seriousness of the challenges facing the council, we would expect to see significant improvements in arrangements going forward and do not rule out the need for a statutory recommendation in the future should arrangements not improve,” the external auditor’s report said.

As reported, Grant Thornton concluded the authority’s arrangements for ensuring financial sustainability were not good enough in its 2020/21 value for money report.

In its latest assessment, the external auditor said “serious concerns about the continued financial viability of the council remained”.

Grant Thornton’s view was the council had continued to adopt “a high-risk alternative funding strategy” to deliver transformation efficiencies, minimise council tax increases and avoid significant cuts to services in the past two years.

Under the governance heading, the firm said BCP Council’s statutory officers had raised concerns over possible late amendments to the proposed 2023/24 budget at the start of this calendar year.

This led to Grant Thornton intervening and sending a formal letter to ensure “decision making by the administration had proper regard to governance best practice".

A paper to the audit and governance committee on Grant Thornton’s annual report by chief internal auditor Nigel Stannard said: “In the context of their report which is a look back at 2021/22 and 2022/23, the external auditor has noted that the May 2023 local election, and the resulting change of administration, has led to some early indications of a change in approach to financial management.

“The external auditor emphasises to the new administration, in their executive summary, the need to: Fundamentally review the council’s approach to financial sustainability; stocktake the transformation programme, what is deliverable at what cost; review current service provision to identify further savings to address the underlying deficit.”