Overspending at cash-strapped Guildford is continuing into the current financial year and could increase its deficit, a council meeting will hear this week.

The authority flagged in July it may be in the territory of having to issue a Section 114 notice, effectively declaring itself bankrupt, following accounting errors being uncovered.

A full council meeting to be held last Wednesday (August 30) will look at several recommendations as officers try to shore up the financial situation, for the immediate future and beyond.

July’s meeting heard the council was looking at a remaining in-year deficit of £1.6million and a budget gap of £18.3m over the time of its medium term financial plan, which runs to 2027.

Officers have set a deadline of October to set the finances right. It is a legal requirement that councils set a balanced budget each year, at which time the council will look again at issuing the same bankruptcy notice as neighbouring Woking.

Since the July meeting, officers have been working on a review of the 2022-23 out-turn position, which showed that “a number of the key areas of overspend in 2022-23 are continuing in the current financial year” with the potential of “a far greater in-year deficit than the £1.64m set out in the July 2023 report”.

If spending continues at the current rate, there could be a further £1m of overspend and £1.6m known risks within the current year.

Officers will recommend a two-month immediate halt on external recruitment, except where health and safety or the delivery of essential services would be put at risk.

Councillors will also be asked to approve a review of all existing staff not on the payroll, such as agency and interim staff.

Documents for Wednesday’s meeting said: “In addition to the work required corporately, significant work is required to improve the financial governance within the council.”

Key areas to be looked at were listed in the document including budget  monitoring, review of financial procedure rules, approval processes and delegations, audit interaction and audit plan, and balance sheet management, reconciliations, and key controls.

The meeting will also be asked to approve a new interim head of finance at the council.

Guildford shares some senior staff with Waverley Borough Council, including its executive head of finance, who carries out the role of Section 151 officer.

Richard Bates was appointed as interim executive head of finance on July 17, but to be appointed to the Section 151 role, a legal requirement, he needed to be approved at the authorities’ Joint Appointments Committee.

The current Section 151 Officer, Peter Vickers, leaves Waverley Borough Council on September 3, and as well as Guildford’s meeting, Waverley will need to approve the interim appointment at a meeting on August 29.