Auditors have highlighted significant financial, operational and reputational risks around the council’s use of consultants, procurement and cash management.
Chief internal auditor Duncan Black gave three “unsatisfactory” opinions on areas of council business which he said required “urgent attention”.
Speaking at today’s (Wednesday) audit committee, Mr Black said he had found “serious deficiencies” around the use of consultants.
According to his report, sample testing found non-compliance with the procurement process in 14 of 15 cases reviewed, including paying the consultant above the value of the contract.
The council’s procurement work was also flagged as a “significant” risk of potential financial and reputational risk.
Despite having highlighted problems in 2020, Mr Black said no changes had been made to the council’s procurement arrangements.
His report noted the council made a £264,000 payment to a supplier, which had been engaged through a lapsed framework and an £11,000 payment for which no information was provided.
A spot check investigation into the management of cash and belongings in care homes also revealed unsatisfactory practices.
Mr Black said there was insufficient guidance, variances between records and physical cash and issues in record-keeping as well as gaps in the audit trail.
In a number of instances, management had taken money from petty cash for personal use – although it has since been returned.
Mr Black said these were “significant matters” and raised concerns around “reputational risk”.
Committee chairman Allison Duncan said he was “concerned and disillusioned” by the report and called for improvements to be made.
Vice-chairwoman Catherine Hughson said she found it “really worrying”.
She called for the recommendations to be enacted as a “matter of urgency”.
“We cannot just keep renewing the date hoping it’s going to go away,” she said.
“We have to act on this and internal audit should be given the priority it deserves.”
Lerwick North and Bressay member Stephen Leask said there had “obviously been complacency” and a “laissez-faire” attitude around the use of consultants and procurement.
He said he hoped the recommendations could be acted on as a “quick fix”.
Depute leader Gary Robinson said that while the issues highlighted were serious, the recommendations seemed “fairly straight forward”.
“On the whole, this report points us in the right direction and we just need to accept that and move forward on that basis,” he said.
Shetland Central member Moraig Lyall said she was most concerned by the fact so many of the issues had been flagged previously.
“We would need to hope that it’s not a case of history repeating itself here but that the serious but straight forward actions required to be made actually are made on this occasion,” she said.
Director of corporate services Christine Ferguson said the council would look to make its guidance on these issues “much more specific and clear”.
She said the delays in enacting previous recommendations had been due to a lack of resources, pressure of workloads and the pandemic.
“We are determined, on the back of this, to put together a programme of work and to address the issues,” she added.
Mrs Ferguson said the council’s use of consultants was not “going to go away” particularly as they would be required on large projects such as the Knab redevelopment, Islands Deal and Orion.