Persistent whistleblowing allegations within Falkirk Council have been flagged as a risk to its reputation.
While the exact nature of the allegations has never been made public, the report states that they are "relating to procurement decisions and awarding of contracts within the same department".
Falkirk Council's annual audit report by Ernst & Young (EY) also noted concerns raised by two accidents that have been investigated by the Health and Safety Executive that "are likely to lead to fines".
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The external auditors made it clear that all of the whistleblowing allegations have been investigated thoroughly - both by the auditors' forensic specialists and the council's internal fraud team - and no evidence of fraud or wrongdoing has been found.
However, presenting their final annual audit report, the auditors told members that "the number and nature of the concerns really present a reputational risk to the council" and recommend a review.
The annual audit report covers four key areas: financial management; financial sustainability; governance and transparency; and value for money.
The persistence of the allegations meant that the auditors gave an amber rating to Falkirk Council for governance and transparency.
Overall, the auditors said they were satisfied that "the key features of good governance are in place".
However, the report added: "While improvements have been made to the whistleblowing reporting arrangements to Audit Committee, we consider that underlying cultural issues have not been fully addressed."
Speaking at a meeting of Falkirk Council's audit committee, Grace Scanlin explained their decision further.
She told members: "We don't normally get allegations that come back year after year so it is just about shining a light on that and making sure it is dealt with appropriately."
The Labour group leader, Councillor Anne Hannah, said it would be useful to get some more information on the actions that are going to be taken.
She said: "To me, a series of whistleblowing allegations suggests a systemic problem. Nobody is alleging that there is actual fraud going on or anything of that sort - there has been no wrongdoing found - but a series of allegations suggests there is something distinctly wrong with the systems that are in place.
"I think it's important that we are upfront about that and addressing that."
Karen Algie, director of transformation, communities and corporate services, agreed that while no evidence of fraud has been found "there have been recommendations in terms of tightening up the processes and I can assure members that the actions that were recommended by our fraud investigators have been put in place".
She said that the internal audit team had been asked to carry out a further audit of the areas of work to ensure that the changes made continue to be implemented.
With reference to cultural issues she said they were now working with trade unions to create an action plan with an improvement group to oversee it.
"That will involve our trade union colleagues so we get direct feedback, not just from the perspective of managers but also from the perspective of employees on the front line," she said.
When the report was discussed at a later meeting of Falkirk Council, Councillor Lorna Binnie asked for reassurances that staff were able to raise concerns anonymously.
She was assured that systems were in place to allow people to speak out anonymously.
The other issue that merited an amber rating was the fact that the Council has disclosed two accidents which have resulted in action from the Health and Safety Executive (HSE).
The audit report states: "During 2021/22 we were informed of two accidents which have resulted in action by the Health and Safety Executive (HSE).
"The HSE has issued a number of notices of contravention and improvement notices and are likely to issue fines in due course.
"The Council’s own investigation has highlighted a number of concerns in relation to the culture and working practices and a cross-service working group has been established to respond at pace."
Commenting after the meeting, a spokesperson for Falkirk Council said: "Falkirk Council notified the HSE of two accidents during 2021/22 which resulted in action being taken against the Council.
"In each case the Council responded quickly with comprehensive improvement action plans to address the issues raised, and the HSE are satisfied with the ongoing progress being made.
“We are currently working on an action plan to address the issues that were mentioned in the audit report related to our ‘whistleblowing’ process.”
