Folkestone & Hythe District Council: Cash Withdrawals on Purchase Cards, Weak Evidence, No Questions Asked
A routine internal audit update to Folkestone & Hythe District Council’s Audit and Governance Committee has surfaced an awkward line that deserves far more daylight than it appears to have received: “Improved evidence to support expenditure in relation to cash withdrawals must be introduced.”
This sits inside the “Purchase Cards – Reasonable Assurance” section of the East Kent Audit Partnership (EKAP) quarterly report presented to the committee on 29 January 2026. “Reasonable assurance” is not a clean bill of health; it means the system is generally sound, but issues were found that “may put at risk the achievement of objectives”. In other words: the basics broadly work, but there are gaps that matter.
The context is worth spelling out. The audit describes corporate credit cards as a last resort: they “should only be used where there is no other form of practical or acceptable method of payment” and, wherever possible, payments should run through the Council’s official ordering and creditor process. At the time of the review, the Council had 21 active corporate credit cards, with three more being approved and awaiting issue. Cardholders must account for all expenditure monthly, and budget holders are meant to authorise the monthly statements.
So far, so standard. But then comes the part that should make anyone who pays council tax sit up: cash withdrawals.
Unlike a card payment (which creates an immediate audit trail), a cash withdrawal breaks the chain unless the Council is obsessive about paperwork afterwards. If a purchase card is used to take cash out, the control system has to “rebuild” the audit trail with hard evidence: why the cash was needed, who approved it, what it was spent on, itemised receipts, and proof that any change came back. If that evidence is weak, the risk is obvious: money can leave the account and become difficult to trace, verify, or challenge.
And yet EKAP’s published summary says improvement is needed because the evidence supporting cash withdrawals is not strong enough. That begs several basic, unavoidable questions.
First: why are cash withdrawals happening at all? The audit’s own principle is “use cards only where there is no practical alternative”. Cash withdrawals are the extreme version of that problem. What, precisely, was being paid for that could not be paid through an invoice, a purchase order, a direct card transaction, or an established petty-cash system with signed vouchers?
Second: how much cash are we talking about? The committee paper does not publish the amounts, the frequency, or whether this was a one-off control weakness or a pattern across multiple cardholders. If the sums are small, the reputational risk still exists; if the sums are larger, the governance risk escalates fast.
Third: who signed off the withdrawals and the follow-up evidence? The report says budget holders “must authorise” monthly statements. But authorising a statement is only meaningful if the supporting documents are complete and credible. If the evidence for cash withdrawals was insufficient, was that because it was missing, vague, late, or simply not retained? And if it wasn’t retained, why not—especially when record-keeping is a control in its own right?
Fourth: what counts as “evidence” here—and why wasn’t it already mandatory? A “reasonable assurance” report is, by definition, describing a system that exists. So how did the system allow cash withdrawals without the kind of paperwork any half-decent finance team would require as a matter of routine?
The uncomfortable truth is that “insufficient evidence” is not a technicality; it’s a warning light. In FHDC and other councils, evidence is the difference between “this was proper” and “we can’t really prove what happened”. It is also the difference between deterring misuse and inadvertently inviting it.
To be clear, the audit does record positives. It says guidance (internal not public) is issued to cardholders (who sign to confirm understanding), expenditure is authorised and reconciled, and receipts/invoices are generally attached to support expenditure. VAT, it adds, is treated correctly “in the main”.
But that only sharpens the question: if receipts and invoices are normally attached, why does cash withdrawal evidence still need an “improved” standard introduced? That reads less like a minor tweak and more like a gap where the normal rules don’t reliably apply.
EKAP lists three other improvement areas, and they matter too, even if cash is the headline risk.
One is that the corporate credit-card “request and review processes” have improved but could be strengthened further for tighter management controls and better record management. That’s audit-speak for: the front-door controls (who gets a card, why, and on what terms) and the ongoing oversight still have room for tightening.
Another is resilience in the team managing the cards and monthly statement reconciliations. When auditors flag “resilience”, it often means key controls depend on too few people, creating a single point of failure. If one person is off sick, leaves, or is overloaded, reconciliations can slip—and delayed reconciliations are where problems hide.
The third is VAT: “irrecoverable VAT incurred via corporate credit cards should be monitored to ensure that this does not become a regular or material issue.” Translation: some VAT paid on card transactions cannot be reclaimed, and the Council needs to track whether that leakage is becoming habitual or significant. In a tight budget climate, “small” recurring losses have a habit of becoming big ones when nobody is watching.
So where does member scrutiny come in?
The Audit and Governance Committee exists to provide independent assurance that the Council’s controls are robust and that weaknesses are properly fixed, yet at the 29 January meeting not a single councillor asked a single question about one of the most alarming lines in the audit update: that “improved evidence to support expenditure in relation to cash withdrawals MUST be introduced”. Not the Chair, Cllr Liz McShane (Lab), nor Cllr Gary Fuller (Lib Dem), Cllr David Godfrey (Con), Cllr Belinda Walker (Lab) or Cllr John Wing (Green) pressed for the basics residents would expect from supposed guardians of the public purse: how it is even possible that cash could be withdrawn on a council card without sufficient supporting evidence, what exactly was missing, who is responsible for tightening the paperwork, what the new standard will be, and—most importantly—when it will be introduced and enforced.
What cash withdrawals occurred, how many, how much, and by whom? What were they for? What evidence was missing or weak? What is the new evidence standard (exactly), from what date does it apply, and what happens when a cardholder cannot produce it? And—perhaps the key governance question—why did the old process allow public money to be converted into cash without a watertight paper trail every single time?
If the Council can answer those cleanly, this becomes a story about tightening controls. If it cannot, it becomes a story about how a basic safeguard slipped below the line of acceptability—without any Cllr on the committee, making a fuss.
The Shepway Vox Team
The Velvet Voices of Voxatiousness
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