Highland Council made overpayments totalling more than £800,000 to former employees - because it did not check ’to confirm the existence of its staff’.
A new report found the authority made the payments to almost 600 employees after they had left the organisation.
The revelations – described by one MSP as ’beyond belief’ – emerged in the council’s 2022-23 annual audit, which shows £863,000 in total was distributed to the former members of staff.
Auditors found there were issues with how leavers were being recorded on council systems, leading to the error.
The surprise finding is a massive blow at the worst possible time for the cash-strapped council.
Views are being urgently sought from the public over ways Highland Council can cut £60million from its budget.
The auditors reported: "We found there were issues with leavers and how these were being notified and subsequently recorded on the council’s systems.
"In general, there was a lack of oversight and timely housekeeping regarding the notification and processing of leavers."
National Fraud Initiative (NFI) matches also confirmed that the "current control was not working as intended".
The auditors added: "There are currently no checks being done within the council to confirm the existence of its staff.
"There was a failure by departments to provide timely information to HR/payroll regarding leavers and as a result, individuals were overpaid."
Highland Council says it is in the process of recovering the funds and recommendations would be implemented to reduce the risk of overpayments in the future.
A spokesperson said: “These overpayments were identified in tax year 22/23 and in line with council policy recovery of the overpayments is taking place. Reporting procedures and guidance for leavers has been reinforced to managers and will be reviewed and reported to the Audit Committee during 2023/24.
“Furthermore, it is anticipated that internal audit will make recommendations which will be implemented to improve practices and prevent or mitigate the risk overpayments in the future.”
There were 602 overpayments to 593 individuals. The highest amount paid out to an individual was £57,067.58 (Gross) / £42,272.28 (Net).
Highlands MSP Edward Mountain, of the Scottish Conservative, said: “This is beyond belief. We all look after our own money but it appears when we give that money to the council they are incapable of doing the same.
"Frankly, those who are responsible for these overpayments should bear a proportion of the costs.”
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