KPMG (external auditors) advise councillors that report nearly finished on objection to Merseytravel’s 2014/15 accounts

KPMG (external auditors) advise councillors that report nearly finished on objection to Merseytravel’s 2014/15 accounts

KPMG (external auditors) advise councillors that report nearly finished on objection to Merseytravel’s 2014/15 accounts

                                                   

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Liverpool City Region Combined Authority Audit Committee 3rd November 2015

John Fogarty speaking at the Liverpool City Region Combined Authority Audit Committee 3rd November 2015 about risk management
John Fogarty speaking at the Liverpool City Region Combined Authority Audit Committee 3rd November 2015 about risk management

Risk management was a subject John Fogarty tried very hard to be interesting about by making topical references to Thomas Cook, TalkTalk and Volkswagen, however he was completely unaware that he was being upstaged by a couple in the background flirting while waiting for the lift (as pictured above).

That is the most interesting introduction I can make to a write-up of yesterday’s Audit Committee meeting. You can read the reports for the public meeting on Merseytravel’s website.

The one Wirral Council councillor on the Audit Committee (Cllr Mike Sullivan) wasn’t present and didn’t send his apologies. The other five councillors on the Committee were there (the Chair Cllr Anthony Carr (Sefton Council), Deputy Chair Cllr Nina Killen (Sefton Council), Cllr Andy Moorhead (Knowsley Council), Cllr Rob Polhill (Halton Borough Council) and Cllr Pam Thomas (Liverpool City Council)).

On the agenda were three main items a presentation by John Fogarty (Treasurer to the Liverpool City Region Combined Authority) on risk management, a quarterly update on internal audit work and the final item was a report from the Treasurer on the final accounts for 2014/15 (which had two appendices the draft report to those charged with governance from the external auditors KPMG and the Annual Audit Letter 2014/15.

Although one of those reports only mentions one formal objection (I referred to the objection I made here), there is still another formal objection to the accounts.

As Merseytravel and the Liverpool City Region Combined Authority are audited separately (although this Audit Committee covers both bodies), I would guess that this relates to the matter discussed at Merseytravel’s meeting on the 1st October 2015 and minuted in this way (Members means councillors)Finally the Director advised of an objection raised by a member of the public in relation to a historical item from the accounts relating to the internal transfer of funds between two Merseytravel services. The outcome of this matter could be reported to Members once resolved. Councillor Abbey asked that it be placed on record that such complaints did result in a cost to council taxpayers as they required investigation by external auditors.

The external auditors (KPMG) confirmed at yesterday’s meeting that they are in the process of writing a report on that matter and hope to report back soon, however did confirm that the matter the objection related to doesn’t pass the threshold of materiality.

Due to the unresolved objection, the accounts haven’t been closed by the statutory deadline of the 30th September 2015.

There is not much else interesting I could write about the Audit Committee meeting (although video of the meeting can be watched below).

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Liverpool City Region Combined Authority Audit Committee 3rd November 2015

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Why did 2 missing words from the Liverpool City Region Combined Authority 2014/15 accounts end up costing YOU £4,755?

Why did 2 missing words from the Liverpool City Region Combined Authority 2014/15 accounts end up costing YOU £4,755?

Why did 2 missing words from the Liverpool City Region Combined Authority 2014/15 accounts end up costing YOU £4,755?

                                                  

Councillor Phil Davies (Chair) at a meeting earlier this year of the Liverpool City Region Combined Authority

In the interests of openness and transparency here is an email I’ve just written. We’ll see what happens tomorrow morning. You can read the objection that led to the KPMG (the external auditors for the Liverpool City Region Combined Authority) increasing their bill by £4,755 here.


To
Councillor Anthony Carr (Chair) anthony.carr@councillors.sefton.gov.uk
Councillor Nina Killen (Deputy Chair) nina.killen@councillors.sefton.gov.uk
Councillor Andy Moorhead andy.moorhead@knowsley.gov.uk
Councillor Rob Polhill rob.polhill@halton.gov.uk
Councillor Mike Sullivan mikesullivan@wirral.gov.uk
Councillor Pam Thomas pamela.thomas@liverpool.gov.uk

Subject: Liverpool City Region Combined Authority Audit Committee meeting (3rd November 2015) item 6 LCRCA Final Accounts 2014/15

Dear all,

I have read the reports for tomorrow’s meeting and as you are the people on the Audit Committee there to represent the people of Merseyside I wish to make the following points to you.

If you wish me to explain at the public meeting itself why I made the objection I am happy to do so, but as you will understand in this email what I stated in the objection is the tip of a larger iceberg.

Firstly, the same error was also made in the Merseytravel accounts (I think since Merseytravel’s Audit and Governance Sub-Committee was disbanded you are also responsible for Merseytravel’s accounts too). I know someone else made an objection to the Merseytravel accounts (I didn’t), but had I made the same objection to the Merseytravel accounts too as this would’ve added an extra ~£5k to your audit costs.

As it’s never been made clear to me if the same error in Merseytravel’s accounts was also corrected, I would appreciate an answer to that point.

There are other points about the accounts that I did not raise in my objection, that you as the Audit Committee should be made aware of.

The accounts for 2014/15 and accompanying reports refer to the Accounts and Audit Regulations 2015. However the Accounts and Audit Regulations 2015 only apply to financial years from 2015/16 onwards, therefore this is another error.

Finally, I am concerned that the system of internal controls at the LCRCA, the external auditor or the councillors approving the accounts did not spot this or the matters relating to my objection.

I hope at the meeting tomorrow you will exercise some scrutiny as to what happened and why and put into place controls to prevent it happening in the future.

Yours sincerely,

John Brace

P.S. I will clarify what it stated on page 11 of the auditor’s report.

The accounts in their original form didn’t comply with legal requirements. It’s been acknowledged by the auditors and officers they were wrong. The point about the external auditors applying to the court for a declaration that the accounts are unlawful is therefore moot as they’ve been changed.

However it is important that councillors consider the reasons behind the objection in a public interest report, otherwise the people tasked with corporate governance will be in the dark as to what was wrong, why it had to be changed and be aware to check for this next year. I hope I have made this clear.

P.P.S On another audit related note, as the LCRCA now has a website, the Local Government (Transparency Requirements) (England) Regulations 2015 make it a legal requirement that certain information is published on its website (such as payments over £500 for example the payment to the auditors).

Currently this is being done on Merseytravel’s website, which makes it very hard to find the LCRCA payments amongst the Merseytravel ones. I would like the Audit Committee to please find out why this information isn’t published on the LCRCA website as it would aid with better openness and transparency about what the LCRCA is doing.

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Who was paid a £150,707 salary by the Liverpool City Region Combined Authority?

Who was paid a £150,707 salary by the Liverpool City Region Combined Authority?

Who was paid a £150,707 salary by the Liverpool City Region Combined Authority?

                                          

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Monty Python’s famous sketch about chartered accountancy (as it’s very hard to make jokes about this subject)

Councillor Phil Davies shows off the LGC award Wirral Council received for being most improved Council 12th March 2015
Councillor Phil Davies (Chair of the Liverpool City Region Combined Authority) shows off the LGC award Wirral Council received for being most improved Council 12th March 2015

As it states in the video above, accountancy can be dull. However I wrote this email below (sent the day before the meeting) about a disclosure mistake in the Liverpool City Region Combined Authority accounts for 2014/15. The Liverpool City Region Combined Authority meets this morning to approve the accounts for 2014/15.

It’s quite simple really, about six years ago the law changed so that public sector employees that are paid a salary of £150,000 or more had to be named in the accounts.

For example on page 160 of the accounts for the Merseyside Fire and Rescue Authority approved last week Dan Stephens, the Chief Fire Officer (on a salary of £170,000) is named. In fact Merseyside Fire and Rescue Authority also name the Deputy Chief Fire Officer and Deputy Chief Executive, as despite their salaries being below the £150,000 threshold it is more transparent to do so as the total they receive is over the £150,000 threshold.

The Chief Executive of Merseytravel (David Brown) on a salary of £150,707 should’ve been named in the Liverpool City Region Combined Authority’s accounts. The email below from myself details the reasons why (KPMG are the external auditors for the Liverpool City Region Combined Authority). Hopefully this will be sorted out at the meeting and corrected.

Subject: agenda item 7 (Liverpool City Region Combined Authority Final Accounts 2014/15) meeting 20th September 2015

To: Cllr Phil Davies
CC: Mayor Joe Anderson
CC: Cllr Barrie Grunewald
CC: Robert Hough
CC: Cllr Andy Moorhead
CC: Cllr Rob Polhill
CC: Cllr Ian Maher

CC: David Brown (Chief Executive/Director General, Merseytravel)
CC: Louise Outram (Monitoring Officer, Merseytravel)
CC: Angela Sanderson (Monitoring Officer, LCRCA)
CC: Stephanie Donaldson (Head of Internal Audit, Merseytravel)
CC: Tim Cutler (Partner, KPMG LLP (UK))
CC: Ian Warwick (Manager, KPMG LLP (UK))
CC: Richard Tyler (Assistant Manager, KPMG LLP (UK))

Dear all,

I am bringing this up in advance of Monday’s meeting, in the hope it can be amended. If it isn’t amended, please class this as a formal objection by a Merseyside local government elector to the accounts of the Liverpool City Region Combined Authority for 2014/15.

The draft statement of accounts at note 9 (which is page 41 in the numbering of the report or page 67 of the supplementary agenda) contains details of the remuneration paid to the Liverpool City Region Combined Authority’s senior employees.

For the year 2015 (I presume this means financial year 2014/15), the Chief Executive/Director General received a salary of £150,707.

A number of years ago the Accounts and Audit (Amendment no 2) (England) Regulations 2009, SI 2009/3322 changed the audit regulations (this change started in financial year 2009/2010) and added the paragraph below:

"(c) the remuneration, set out according to the categories listed in paragraph (d), by the relevant body during the relevant financial year of—

(i) senior employees, or

(ii) relevant police officers,

in respect of their employment by the relevant body or in their capacity as a police officer, whether on a permanent or temporary basis, to be listed individually in relation to such persons who must nevertheless be identified by way of job title only (except for persons whose salary is £150,000 or more per year, who must also be identified by name)."

This requirement was kept in The Accounts and Audit (England) Regulations 2011, SI 2011/817 reg 7(2)(c) and the Accounts and Audit Regulations 2015, SI 2015/234 (which although referred to in the draft statement of accounts will apply from the 2015/16 financial year onwards).

Clearly, the Chief Executive should’ve been explicitly named and wasn’t. I think everyone I write this email to will know he’s called David Brown, but the draft statement of accounts should be amended to state this.

It’s a basic issue of openness and transparency (which I’m sure you’d expect the press to take a viewpoint on).

Yours sincerely,

John Brace

P.S. I know Merseytravel’s accounts are audited separately to the LCRCA, has the same error been made there too?

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Liverpool City Region Combined Authority choose Cllr Phil Davies as Chair

Liverpool City Region Combined Authority choose Cllr Phil Davies as Chair

1 Mann Island, Liverpool where the Liverpool City Region Combined Authority met
1 Mann Island, Liverpool where the Liverpool City Region Combined Authority met for its first meeting

Liverpool City Region Combined Authority choose Cllr Phil Davies as Chair

                                

The Liverpool City Region Combined Authority met for the first time in the Authority Room on the first floor of 1 Mann Island (pictured above).

The meeting started with appointment of the members of the Combined Authority. These nominations had been made by the Merseyside councils, Halton Council and the Local Enterprise Partnership.

Organisation Appointment Substitute appointment
Halton Council Cllr Rob Polhill Cllr Mike Wharton
Knowsley Metropolitan Borough Council Cllr Ron Round Cllr Graham Morgan
Liverpool City Council Mayor Joe Anderson Deputy Mayor Roz Gladden
Sefton Metropolitan Borough Council Cllr Peter Dowd Cllr Ian Maher
Saint Helens Metropolitan Borough Council Cllr Barrie Grunewald Cllr Gareth Cross
Wirral Metropolitan Borough Council Cllr Phil Davies Cllr Ann McLachlan
Liverpool City Region
Local Enterprise Partnership
Robert Hough Asif Hamid

These appointments were agreed. The meeting then had to decide who would be the Chair and Vice-Chair of the Authority. Cllr Phil Davies was nominated and proposed as Chair, there were no other nominations and he was elected as Chair.

He said, “Can I just say a few words? First of all thank you to my colleagues for nominating me to this position. It really is an honour and a privilege for me to chair the Combined Authority for the Liverpool City Region. I believe that we have huge potential to take this city region forward around the growth plan that we’ll be talking about a bit later on, how we get more powers, responsibilities and funding from central government and operating in an open and transparent way, the way we are this morning. I’m delighted to see so many members of the public here and I do sincerely believe that together we can be a formidable force in the job that we’ve got ahead of competing with other city regions, not just in the UK but elsewhere in Europe. So it’s an absolute delight and pleasure for me to do this role and I thank everybody for their support.”

Cllr Phil Davies invited nominations for Vice-Chair of the Combined Authority. Cllr Ron Round was nominated and seconded. There were no other nominations so Cllr Ron Round was elected as Vice-Chair.

No declarations of interest were made. Cllr Phil Davies invited Angela Sanderson (Monitoring Officer Designate) to present item 4 (establishment of the Combined Authority. She said, “Thank you Chair, on the agenda this is at pages three to 141 and you’ll be pleased to know I don’t intend to go through it page by page. The report outlines the two main documents which deal with how the Combined Authority will operate in practice and from today the Combined Authority is a legal entity in its own right, with its own duties, its own powers, its own responsibilities and in order to ensure that it can meet its duties and exercise its powers in a manner consistent with good governance it’s worked with the other authorities and developed its constitution.

This work has been carried out by legal and democratic services officers from the six local authorities and from Merseytravel. The constitution is included on the agenda from page 9 to page 105 is the outcome. It’s divided into eight parts and much of it will be familiar to members in the constitution of their own local authorities. We recognise the constitution has been developed quite quickly and that its utility can only be measured in the light of experience and it will be kept under review to ensure that it meets the needs of the Authority.

The operating agreement has also been developed by those officers and partners and it sets out the basis that the Authority will run and in particular because the Merseyside Integrated Transport Authority no longer exists and the transport functions and policies have been transferred to the Combined Authority by order, the agreement deals with the establishment and membership of the Merseytravel board to deal with the Authority’s transport functions.

The Authority will be asked to review these arrangements on the 1st April 2015. It also sets out several protocols which have been developed by other officers and intend to cover how the Authority covers regeneration functions that the Authority will need to cover. The operating agreement has been approved by the six local authorities and subject to agreement by this Authority steps will be taken to execute the document by all parties.

Finally, the Authority is obliged to legislation to appoint certain officers and also to ensure as an organisation with no employees, it appoints sufficient other officers as officers of the Authority to also implement its decisions. The proposals in respect of this are set out in paragraph six of the report for Members’ consideration. The recommendations are set out in paragraph two of the report.”

Cllr Phil Davies thanked Angela and said that it was document setting out the powers and terms of reference of the Combined Authority and the various committees. He asked if there were any questions on the report? There were no questions, so Cllr Phil Davies moved the following recommendations in 2.1:

2.1 The Combined Authority is recommended to:

(a) Approve and adopt the Constitution of the Halton, Knowsley, Liverpool, Sefton, St Helens and Wirral Combined Authority as set out in Appendix One;
(b) Approve and adopt the Operating Agreement for the Combined Authority as set out in Appendix Two;
(c) Establish the Merseytravel Committee as set out in Part 3 of the Constitution;
(d) Approve the appointment of Co-opted Members of the Merseytravel Committee on the basis of continuing with the former Merseyside Integrated Transport Authority appointments, with the addition of Cllr B Woolfall and Cllr J Stockton from Halton Council, until the Annual Meeting of the Combined Authority on 13 June 2014;
(e) Approve the continuation of the Merseyside Integrated Transport Authority Allowance scheme as a transitional arrangement; and
(f) Confirm the appointment of Officers of the Combined Authority as set out in
section 6.1 of the report.

The recommendations were agreed.

The meeting then considered the following notice of motion proposed by Cllr Barrie Grunewald and seconded by Cllr Rob Polhill.

“The Order to create the Combined Authority identified that the legal name of the organisation would be the Halton, Knowsley, Liverpool, Sefton, St Helens and Wirral Combined Authority. This wordy title has been imposed nationally by the Secretary of State for Communities and Local Government, showing his scant regard for the view of local areas.

All constituent Councils have consistently stated that the Combined Authority should be known as the Liverpool City Region Combined Authority: this was set out in the Review of Strategic Governance in September 2013 and in Councils’ responses to the Government’s consultation in January 2014.

In the debate to establish the Combined Authority in the House of Commons on 18 March 2014, Local Government Minister Brandon Lewis, under pressure from Knowsley MP George Howarth, stopped short of apologising for this imposition by stating that "The authorities can choose whatever name they want, work under that name, brand it and "logo" it." He went on to say "Under the powers that we have introduced, combined authorities can now choose the brand name that they want to use, whatever it may be, and use it strongly and effectively to represent themselves".

This is a clear u-turn by Government and presents an opportunity for the Combined Authority to be clear on its name from day one by using the existing Liverpool City Region brand.

Therefore, the Combined Authority resolves to:

(i) Adopt the name Liverpool City Region Combined Authority for public purposes; and

(ii) Write to the Secretary of State for Communities and Local Government to inform him of this decision.”

Cllr Grunewald said, “Thank you very much Chair. In September 2013 across six councils in the City Region and the Local Enterprise Partnership representing over 1.5 million people agreed to submit a document to the government proposing the establishment of the Combined Authority proposing that it be called the Liverpool City Region Combined Authority. No other name was proposed and there was no disagreement between us, all agreed on Liverpool City Region was a attack brand.

Despite that, the government went out to statutory consultation on the proposals calling it Greater Merseyside Combined Authority. In January 2014 once again and in response to the statutory consultation the elected representatives of over 1.5 million people requested the name of the Combined Authority should be called the Liverpool City Region Combined Authority. No other name was proposed by any other council, there’s no disagreement between us. Yet again, despite that the government have imposed an unworkable title of Halton, Knowsley, Liverpool, Sefton, St Helens and Wirral Combined Authority.

In doing so the Secretary of State has demonstrated his contempt for the people of the City Region and their elected representatives. The mantra of localism has never appeared more ludicrous. Six councils in the City Region have a track record of working together effectively. This has been demonstrated most recently by the speed with which this organisation has achieved Combined Authority status, something which others elsewhere thought couldn’t be done in the timescales that we worked to.

In working together we have always recognised the value of the attack brand Liverpool City Region. We’ve emphasised this time and time again. We’ve no intention of losing the instant recognition which this brand gives to us across the world but today is so much more about than a name, we need to deal with this now and move on to the vital work ahead.

The Combined Authority will be used as a vehicle to push forward the economic development and regeneration of the City Region and the City Region will have greater pace. There’s no ambiguity or disagreement about our intentions and our ambitions, nor is there any ambiguity or disagreement about our identity. We’re all part of the local City Region and we intend to stay in our own as such.”

Cllr Polhill, the councillor who seconded the motion said, “Thank you Chair, I agree with as set out what Councillor Grunewald has said. Just for the record when Halton Council passed it unanimously and when we had a consultation that was unanimous as well. Liverpool is a well-known brand both nationally but internationally and I’m not going to say otherwise so it’s a no brainer.”

Robert Hough confirmed that the local enterprise partnership had unanimously endorsed the choice of Liverpool City Region and supported the motion.

All seven members of the Combined Authority voted in favour of the motion.

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