A LITANY of errors has been revealed in Lydney Town Council's accounting statement for the year ending 2011 explaining in detail why the residents saw a hike in the town's Council Tax costs.

The statement, a publicly available document, shows that 'significant' increase in staff costs from £91,573 in 2010 to £210,428 to end of March 2011 accounted for much of the problem.

In explanation, the council said the increase in staff costs related to "the former town clerk being on long term sick leave which resulted in:

•Council paying an enhancement to assistant clerk

•Council employing a temporary clerical assistant for 12 weeks

•The former town clerk being paid a notice period and termination costs

•Council's employee liability in respect of an ill health pension deficit (part paid this financial year (£71K, second installment to be paid following receipt of 2011/12 precept)

•Recruitment of 'acting clerk'

•Employment of permanent town clerk

•Payment out due to ill health of £72K

•Resignation/holiday pay – financial officer

•Employment of temporary financial assistant for 10 week period

The new town clerk, Mrs Jayne Smailes, notes in the statement that: "Lydney Town Council's general reserves will be significantly depleted due to there being an employers ill health pension liability in respect of the former town clerk.... (and) .... the lack of guidance given previously to the council when compiling the Annual Budget Forecast and applying for the precept in respect of the year 2010/11 has resulted in the necessity for additional funds to be drawn from general reserves in order to meet this and former years budget deficits.

She adds: "Lydney Town Council have now taken out insurance against any similar future employee sickness claim, thereby reducing the associated 'risk' to the 'public purse'.

In its annual governance statement, the council further admits "that there were inadequate 'in-house' financial controls in place during both this and previous years" and accepts "It failed in its corporate responsibility to protect the 'public purse'"

The report also, says the council, failed to adhere to audit regulations and standing order/financial regulations "as it allowed the clerk/RFO or the assistant clerk to sign wages cheques without prior council approval. The bank account was also set up in such a manner as it did not insist on two councillors being required to sign all cheques."

In failing to ensure 'in-house' financial checks the council accepts it "failed in its duty to manage or identify areas of risk."

This resulted in inflated employer ill health pension liability costs for which (previously) there was no insurance protection available and inflated salary and staffing costs.

The council says it is now: "fully committed to ensuring 'in-house' controls are implemented and that all areas of 'risk' are reviewed and addressed accordingly" and outlines a series of objectives it aims to achieve.

A second installment of the council's ill health pension liability (as regards the former town clerk) is due to be paid once the precept for 2011/12 has been received. It should be noted that this is paid to Gloucestershire County Council's Local Government Pension Scheme not directly to the former town clerk.

•The Audit Commission is currently investigating the town council's accounts following an official complaint. It is not known when it will report.