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

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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Incredible first 5 minutes of Wirral Council councillors’ public meeting to discuss BIG & ISUS investigations

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Above is video of the entire special meeting of the Audit and Risk Management Committee (Wirral Council) on the 22nd July 2014

Below is a partial transcript of the first five minutes of a special meeting of Audit and Risk Management Committee on 22nd July 2014 to discuss the investigations into the BIG and ISUS programs.

COUNCILLOR JIM CRABTREE (CHAIR)
Good evening everyone, welcome to the Audit and Risk Management Committee. Errm

[Agenda item 1]Members’ Code of Conduct – Declarations of Interest.

Have we got any? No.

[Agenda] Item 2, minutes of the last meeting, are they agreed?

COUNCILLORS
Agreed.

COUNCILLOR JIM CRABTREE (CHAIR)
Thank you.

[Agenda] Item 3, Business Investment Grant (BIG) and the Intensive Startup Scheme (ISUS) Investigation.

There’s been concerns from Members about the lateness and thickness of this item and, if I can given the size of the document and the concern that Members have about the lateness of receiving this, and that along with the written address from Mr Hobro, I’d like to recommend an adjournment of a week and we convene back here next Tuesday. Problem?

COUNCILLOR JOHN HALE (CONSERVATIVE SPOKESPERSON)
I’ve got a problem with that Chair.

COUNCILLOR JIM CRABTREE (CHAIR)
You’re on holiday?

COUNCILLOR JOHN HALE (CONSERVATIVE SPOKESPERSON)
I won’t be back …..

COUNCILLOR JIM CRABTREE (CHAIR)
….?

UNKNOWN COUNCILLOR
I’m on holiday as well Chair.

COUNCILLOR JIM CRABTREE (CHAIR)
Sweet, (can’t be heard). Pardon?

GRAHAM BURGESS (CHIEF EXECUTIVE)
Chair is it alright if I cut in? Chair I was just saying that obviously, we’re entering the holiday season. It’s inevitable that there will be people on holiday throughout the holiday season so obviously I’m concerned both for the Members and Council to get this matter resolved as speedily but as comprehensively as possible.

So clearly, we’d urge you to consider the meeting adjournment, because clearly we feel that this matter for everybody’s interest needs to be considered as quickly as possible to the satisfaction of all the Members though.

COUNCILLOR JIM CRABTREE (CHAIR)
Thanks for that, so I’m going to move that as a recommendation and…

(murmuring by councillors)

COUNCILLOR LEAH FRASER
… point of order, … should … we’re doing…before we do… (turns on microphone) sorry Chair, could I suggest we make it in a fortnight? Normally you would liaise with the spokes of each party and obviously you haven’t spoken to Councillor Hale and it would help. I think he should be here at the next meeting. Thank you.

COUNCILLOR RON ABBEY (VICE-CHAIR)
Fifth of August then Chair.

COUNCILLOR JIM CRABTREE (CHAIR)
Fifth of August.

COUNCILLOR JOHN HALE (CONSERVATIVE SPOKESPERSON)
No, I won’t be back.

COUNCILLOR RON ABBEY (VICE-CHAIR)
Well the problem is you’re going to need to prolong it then and,

COUNCILLOR JIM CRABTREE (CHAIR)
Yeah and there’s certain of the officers that won’t be here on the 5th,

COUNCILLOR RON ABBEY (VICE-CHAIR)
people will not be their deputies?

(multiple councillors talking at once)

COUNCILLOR LEAH FRASER
….. Council.. stepped on…

COUNCILLOR JOHN HALE (CONSERVATIVE SPOKESPERSON)
I’ll be back around the 7th.

COUNCILLOR LEAH FRASER
….

COUNCILLOR PHILLIP BRIGHTMORE
Chair, am I correct in thinking that err if any party has one of their members away so then they can be substituted by a deputy and if indeed if one of those deputies then can’t make it then they can’t be substituted?

COUNCILLOR JOHN HALE (CONSERVATIVE SPOKESPERSON)
We do have deputies, even though we’re charged with finding a substitute spokesperson.

COUNCILLOR PHILLIP BRIGHTMORE
It remains the case you’ve got deputies you can call on.

COUNCILLOR STUART KELLY (LIBERAL DEMOCRAT SPOKESPERSON)
I think the reality is, I think that that would normally be the case but the reality is that from the time that we’ve had it, I dare say amongst the lead Members, the spokespeople, would have made an ??? effort to digest as much of it as we possibly can without any slight meant to any other Members who clearly they will have done that, but certainly the spokespeople would have attempted that.

I mean I think what we probably do need to settle on a date, at which I, John and yourself could be there. Certainly if we push it to the 12th of August then I’m in Butlins (laughing)..err..

COUNCILLOR LEAH FRASER
Who’s the Chair?

COUNCILLOR STUART KELLY (LIBERAL DEMOCRAT SPOKESPERSON)
I mean I’m available up to that date. In moving your recommendation Chair is it your intention that we have a real discussion on what we have in front of us so far?

COUNCILLOR JIM CRABTREE (CHAIR)
No, it’s not really worth breaking up the meeting when we’re halfway through, so it’s not worth having a new discussion tonight. Errm and we could go round all night and come to different dates couldn’t we? Just her and me and then the Monitoring Officer would be away.

COUNCILLOR DAVID ELDERTON
We’re relying on deputies. We’re relying on deputies because for all Members …all Members have problems if they’re not involved at all … basis that… would first, it’s the first time .. Chair… I’m looking for a way forward.

COUNCILLOR JIM CRABTREE (CHAIR)
What time do you leave next Monday John?

COUNCILLOR JOHN HALE (CONSERVATIVE SPOKESPERSON)
Early.

COUNCILLOR DAVID ELDERTON
We can’t be arranging times just to suit John Hale.

COUNCILLOR JIM CRABTREE (CHAIR)
No, no we can’t.

COUNCILLOR DAVID ELDERTON
It’s a service, I can easily update John Hale he comes back.

COUNCILLOR RON ABBEY (VICE-CHAIR)
Now we’re moving into the peak holiday period errm middle of August.

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Why Wirral Council’s auditors state Wirral Council doesn’t provide value for money

In an audit report released to the public on the 6th September written by Wirral Council’s auditors Grant Thornton, they anticipate issuing a qualified “adverse” opinion on Wirral Council’s arrangements to provide value for money.

Their report also refers to “continuing concerns raised by regulators” and how “residents also continue to raise concerns with us“. They conclude that during the financial year 2012/13 that “the Council’s arrangements for securing financial resilience were inadequate during this time” and that “the Council accepts that for 2012/13 it was less than adequate and improvements were needed in its financial management“.

The auditors went on to state that “The Council had yet to fully address the corporate governance weaknesses which have been repeatedly identified in respect of key issues such as whistleblowing, conflicts of interest, compliance with procedures, risk management, Internal Audit and providing value for money. In addition there was a high incidence of non-compliance with procedures” and that “there were weaknesses in corporate arrangements for risk management, compliance with policies, procedures and internal control.”

Their final conclusion is “that the Council did not put in place proper arrangements to secure economy, efficiency and effectiveness in its use of resources for the year between 1 April 2012 and 31 March 2013.”

Another report published today entitled Wirral Council – Review of Arrangements for Securing Financial Resilience gives more detail as to what Wirral Council’s auditors think needs to improve. Both reports will be discussed by Wirral Council councillors on 18th September at the Audit and Risk Management Committee.

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EXCLUSIVE: Million pound contract between Wirral Council and Enterprise Solutions (NW) Ltd for ISUS scheme was never signed

A blog post about the unsigned contract between Wirral Council and Enterprise Solutions (NW) Ltd for the ISUS (Intensive Startup Support) Scheme

Million pound contract between Wirral Council and Enterprise Solutions (NW) Ltd for ISUS scheme was never signed

In my previous post on a Freedom of Information Act request I made to Wirral Council I stated that it would be one of a series of blog posts on interrelated topics, this is the second on audit rights.

Each year (this year it was from 15th July to the 9th August as you can read from this notice published on Wirral Council’s website), anybody can inspect the accounts for Wirral Council for the previous financial year and any books, deeds, contracts, bills, vouchers and receipts. This is a right the public have enshrined in legislation. If this person is also someone who can vote in the Wirral area they also have a right to make objections to the auditor (which in Wirral Council’s case is Grant Thornton UK LLP (previously it was the Audit Commission)).

One of the areas I was interested in is to do with Nigel Hobro’s question to Cllr Phil Davies at the last Council meeting and the Grant Thornton report into the Business Investment Grants program. The end of Cllr Phil Davies’ answer to Mr. Hobro was “Errm however if it turns out that err others have been affected similarly since the report came to us I’m happy to ensure they’re properly investigated and indeed if there are any further evidence of wrongdoing or the irregularities of accountancy methods brought to my attention, then errm I am errm willing and indeed I make a commitment to refer those to others.”

On the 17th July I requested the following (using the above audit rights) “I’d also be interested to see and have a copy of any contract Wirral Council has with Enterprise Solutions (NW) Ltd” and on Tuesday afternoon (20th August) I was invited along to receive it (I’ve since scanned in and links to all of it are at the start of this blog post). It is for the ISUS (Intensive Startup Scheme) side of the business grants program and covers “awareness and development workshops”, monitoring the businesses that receive grants for three years after they receive grants at at least ten points over that three years and for “provision of specialist post start and aftercare adviser support”. Basically all pretty important things for Wirral Council to prove value for money for the taxpayer for these grants.

The contract states just under a million pounds of taxpayer’s money is involved and as a lot of records would rest with Enterprise Solutions (NW) Ltd requires them to supply information to do with the project including invoices, certificates, vouchers, books and records if required as well as keeping copies of documentation (and make them available for inspection) for seven years after the grants are awarded.

Section seventeen of the contract allows Wirral Council to vary the amount of grant payable, suspend payment of grant, withhold payment of grant or require Enterprise Solutions (NW) Ltd to repay some or all of the grant if the terms and conditions are breached at any time before three years after Wirral Council has last paid them the grant. It also requires Enterprise Solutions (NW) Ltd to if required to pay back money to Wirral Council to do so within fourteen days, otherwise interest at 3% above the base lending rate of NATWEST Bank plc will be charged.

However the most interesting bit of the contract is page ten. It’s not signed by Wirral Council or Enterprise Solutions (NW) Ltd. However invoices from Enterprise Solutions (NW) Ltd were paid and according to this Freedom of Information Act request Wirral Council also used Enterprise Solutions (NW) Ltd to produce business plans for organisations wanting to take over Council assets as part of the Community Asset Transfer program (in the request’s case New Brighton Community Centre).

In that FOI request the Council admits “there was no contract with Enterprise Solutions (NW) Ltd” and the fact that the one drafted between Wirral Council and Enterprise Solutions (NW) Ltd for the ISUS project (which according to the copy I’ve been given wasn’t signed by either party) how can Wirral Council prove it got value for money both to the public (and its auditor)?

Isn’t actually getting a signed contract in place, before you make any payments the kind of basic good governance that Wirral residents should expect from Wirral Council?

Is Cllr Davies’ commitment if he knows of “further wrongdoing” or “irregularities of accountancy methods” to “refer these to others” going to help matters? Referring the whistleblower’s concerns to Grant Thornton and Merseyside Police allowed Wirral Council to draw a veil over the matter and claim exemptions to legitimate questions asked by the public through Freedom of Information Act requests. Councillor Phil Davies is the Cabinet Member for Finance, he’s the elected politician at Wirral Council with democratic accountability to the public for financial matters. I clearly remember Cllr Davies saying last year that when he became leader that there would be more openness and transparency, not less.

Unless politicians (of all political persuasions) are willing to persistently ask difficult questions of senior officers at Wirral Council and put them on the spot during public meetings, instead preferring to be seen to be doing something by requesting reports (there’s the recent example of the case of the Grant Thornton report into the BIG scheme which was never published in full) I fear that all the talk about improved corporate governance and glowing peer reviews at Wirral Council won’t be believed by the public.

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

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Incredible first 5 minutes of Wirral Council councillors’ public meeting to discuss BIG & ISUS investigations

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Why Wirral Council’s auditors state Wirral Council doesn’t provide value for money

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Million pound contract between Wirral Council and Enterprise Solutions (NW) Ltd for ISUS scheme was never signed

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