The auditor which accused Nottingham City Council of 'institutional blindness' upon the downfall of Robin Hood Energy will revisit its risk assessment of the Labour-run authority after unlawful payments were uncovered.
In 2020 external auditor Grant Thornton published its public interest report looking into the failings at the city council.
It came upon the collapse of Robin Hood Energy, the city council's failed energy firm which ultimately resulted in the loss of many millions in taxpayer cash which could have been spent elsewhere.
While the auditor did uncover a number of failings, most notably accusing the authority of "institutional blindness", one significant issue remained buried.
The council's interim corporate director of finance and section 151 officer, Clive Heaphy, only recently discovered a series of "unlawful" payments totalling £15m which were made between Nottingham City Homes and the authority.
Money had been transferred from the Housing Revenue Account, which finances the council's housing stock, to its general fund, money from which is used for day-to-day services.
Nottinghamshire Live understands these payments could have been used to tackle a surge in homelessness in the city, which could have been seen as 'morally justified' at the time.
A legal notice (section 114) was subsequently served and the council must now pay this money back.
New documents written by Grant Thornton say it will now revisit its risk assessment "in light of the matters which led to the issuing of the section 114 report, in relation to the transactions between the council and Nottingham City Homes".
It added: "This has resulted in us needing to carry out further focused work in areas such as related party transactions and management override controls."
The report from the auditor comes as the council continues to be scrutinised by the Government-appointed Improvement and Assurances Board.
Grant Thornton continues to assess the council's operations, and gave its opinions of the council's 2018/19 accounts in March of last year, but it has been unable to provide a conclusive report on the 2019/20 accounts due to "records not being available".
The council has however commissioned new valuations for its specialist properties and the auditor must wait until these have been finalised.
Grant Thornton's latest documents, which outline the areas which it feels are of "most concern", will be discussed at a meeting at Loxley House on Friday, February 25.
They state "significant weaknesses" have been found in three areas in its review of the 2020/21 year.
These are financial stability, companies governance and delays to annual accounts production and finalisation.
It has not completed its audit of the council's accounts for both 2019/20 and 2020/21 because of these delays.
Documents add: "This audit was also delayed by uncertainties regarding how we could gain assurance in relation to the figures for the council's former subsidiary, Robin Hood Energy, given that the administration of the company meant that its auditors never concluded their audit.
"The council has not yet been able to produce and formally publish its full statement of accounts for 2020/21, because it is waiting for new valuations to be carried out on the specialist properties and has been exploring how it can obtain financial results for RHE for the nine months of the year prior to its administration, which it is required to consolidate.
"We have not therefore commenced our substantive audit work."
