Posted by: John Brace | 27th January 2020

Wirral Council’s “independent auditors” Grant Thornton also advised Nicklaus Joint Venture Group over £26 million loan proposal (from Wirral Council)!

Wirral Council’s “independent auditors” Grant Thornton also advised Nicklaus Joint Venture Group over £26 million loan proposal (from Wirral Council)!

                       

Wirral Council Audit and Risk Management Committee 27th January 2020

Wirral Council Audit and Risk Management Committee 27th January 2020

By John Brace – Local Government Editor

This is a report on the Wirral Council Audit and Risk Management Committee meeting held on the 27th January 2020.

Wirral Council is audited by a company called Grant Thornton.

In their audit Grant Thornton have to comply (as far as I know it’s a legal requirement) with the Code of Audit Practice (which as an aside has been updated with a new version effective from 1st April 2020 for the 2020-21 financial years onward).

Last year I made an objection to the legality of Wirral Council’s accounts – which was upheld by the auditor and resulted in a recommendation to change their accounts.

A Naomi Povey from Grant Thornton informed verbally the Audit and Risk Management Committee that I had been written to (by letter) about the objection but Grant Thornton did not receive a reply from me.

As the objection was made on the 12th July 2019 and Grant Thornton usually provide a formal response by letter deciding on an objection – I’d have to manually search through 6 months of mail to know for sure whether I had received a letter (however this is why the timescales for responding to objections and questions in the new Code of Practice are welcome).

However their written report states, “We also received an objection to the Council’s 2018/19 accounts and also formal questions at audit. We are currently dealing with this formal correspondence.”

The formal questions relate to Wirral Council underpaying its payroll taxes to HMRC over a number of different years (so I could fully understand why the Chair of the Audit and Risk Management Committee Cllr Jeff Green wouldn’t want to hear about that).

But I want to point out some strange things going on during this meeting.

Just before the Chair went for a break, the Audit and Risk Management Committee decided to exclude the public for reports on the Celtic Manor Resort (also called Hoylake Golf Resort).

This was pages 187-238 on the agenda (52 pages) which was a report and two appendices.

In response to an information request of mine 56 pages (albeit with three blank pages and one page duplicated which comes to 52 pages) with the same title which was about the proposed £26 million loan to the Nicklaus Joint Venture Group that Cabinet decided to refuse at a special meeting back in July 2019.

Indeed the minutes of that special Cabinet meeting on 8th July 2019 did not exclude the press and public for those reports (effectively making them public due to an inspection right under s.100C(1)(d) of the Local Government Act 1972.

But of course Wirral Council completely ignore the decision of the 10 councillors on the Cabinet (which included Cllr Stuart Whittingham who then showed a reversal of his previous Cabinet decision by making the opposite decision at the Audit and Risk Management Committee meeting).

Grumbles about openness and transparency aside though, what shocked me into asking Wirral Council for a response was that Wirral Council’s auditors Grant Thornton were also advising at the same time as being auditor to Wirral Council the Nicklaus Joint Venture Group or as it’s put in 3.2 “This enabled the NJVG to commission Grant Thornton UK LLP to prepare the Funding and Phasing Plan” and in 4.6 “Grant Thornton acting on behalf of the NJVG prepared the initial commercial funding and Phasing Plan”.

The official response to this from Wirral Council (a Helen McLoughlin on behalf of their Chief Financial Officer Shaer Halewood) was “You are correct that Grant Thornton advised NJVG. It is not uncommon for these large advisers to act in a different capacity for different clients, eg using different offices and different departments with information barriers in place.”

Going back to the Code of Practice (a legal requirement for Grant Thornton LLP to follow) I will quote from paragraph 1.8:-

“1.8 The auditor should carry out their work with integrity, objectivity and independence, and in accordance with the ethical framework applicable to auditors, including the ethical standards for auditors set by the Financial Reporting Council, and any additional requirements set out by the auditor’s recognised supervisory body, or any other body charged with oversight of the auditor’s independence. The auditor should be, and should be seen to be, impartial and independent. Accordingly, the auditor should not carry out any other work for an audited body if that work would impair their independence in carrying out any of their statutory duties, or might reasonably be perceived as doing so.”

Now to me, even with Chinese walls in place Grant Thornton advising NJVG to apply to Wirral Council for a £26 million loan (whilst also auditing Wirral Council) is something I’d expect to see explicitly stated in the Annual Audit Letter for 2019-20 (assuming that all or part of this work was carried out in that year). Yet there is nothing there!

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Responses

  1. I’m still waiting for my LOBO loans objection to be formally answered by Grant Thornton.

    But…

    It was only £135 million.

    And…

    It was only lodged three and a half years ago.

    • Hi Paul,

      Thanks for your comment.

      It was discussed last night and councillors asked questions on it.

      From memory Grant Thornton turned up late to the meeting and sent a manager.

      But here are the new timescales that will apply for objections made relating to the 21-22 financial year onwards:-

      “5.6 When considering objections, the auditor should do so in a timely manner, keeping the objector and the authority updated as to their progress.

      Specifically:

      • when considering eligibility, the auditor should use best endeavours to determine whether the objection is eligible within one week of receipt;
      • when exercising their discretion whether or not to consider the objection, the auditor should use best endeavours to reach their decision and to inform the objector and the authority of their decision within one month of determining eligibility; and
      • where the auditor decides to consider the objection, use best endeavours to complete their work and inform the objector and the authority of their decision within six months of their decision to accept the objection for consideration. Where the auditor is not able to decide the objection within six months, they should inform the objector and the authority and provide a further update on progress every three months until the objection is decided.”

      As an update though – Liverpool City Council’s auditors (also Grant Thornton) at a cost of around £21k have rejected the LOBO loans objection made there.

      It’s mentioned in the papers for their Audit and Governance Select Committee meeting tonight.

  2. Having just watch the BBC’s 1960’s drama about Christine Keeler and the way our Government seems to protect its self, we are now in to 2020 nothing seems to have changed?
    Are they still going ahead with this golf course? and lending my money? and the same time putting up the Council tax again?

    • Thanks for your comment.

      There will always be political scandals – otherwise I’d have nothing to write about. 😀

      The Cabinet decided back in July not to lend the developer £26 million (having previously decided “in principle” to lend the money).

      So the answer to your question is no (in relation to the money).

      Council tax however is set to rise (from April of this year).

      As all the meetings haven’t yet been held and formal decisions made (police, fire, council etc) I can’t at this point state exactly how much (just predict).

      However the rise to council tax is capped by annual decisions by national government and it looks like all concerned will rise it by the maximum allowed.

  3. Thanks John for your very succinct and prompt analysis of events in relation to The Audit Risk Management meeting at the Town Hall last night. I personally thought , before we were asked to leave, the Stake Holder. Management team we’re going up a blind alley . no appâtent accountability or transparency as far as I could see. Would it be possible for a member of the Department meet up with me and enlighten me?

    y

    • Hi Stephanie,

      Thanks for the comment.

      Many years ago when there was an LGA Improvement Board, Wirral Council accepted a recommendation from it that independent people must be coopted or appointed to the Audit and Risk Management Committee.

      All political parties agreed to this, yet over 7 years later nobody has ever been appointed!

      The point was to have some independent scrutiny rather than an echo chamber.

      There are a majority of independent people on Wirral Council’s auditor panel – but Wirral Council has outsourced this.

  4. I am still waiting for a reply to the following letter I sent to their ‘independent’ auditors in October 2019:

    Dear xxxxxxxx,

    I am writing to raise my concerns about Wirral Borough Council failing to adhere to advice found in the ‘Local Government Transparency Code 2015’, Part 2.2: Information to be published annually / Parking Account / 46:

    Local authorities must publish on their website, or place a link on their website to this data if published elsewhere:

    • a breakdown of income and expenditure on the authority’s parking account. The breakdown of income must include details of revenue collected from on-street parking, off-street parking and Penalty Charge Notices, and
    • a breakdown of how the authority has spent a surplus on its parking account.

    I recently made a Freedom of Information request asking for information to be provided (https://www.whatdotheyknow.com/request/wirral_council_parking_account_2#incoming-1427601) to which, I was unsuccessful. It appears that apart from the scant breakdown of Parking Account information submitted to the Find Open Data website (data.gov.uk), WBC do not supply any other detailed information about how their surpluses are reinvested.

    Furthermore, WBC have never to my knowledge, offered a link to the Find Open Data website from their own website, nor purposely made the information available to the public from there. It was only thanks to Councillor Stuart Kelly I was able to learn of the Find Open Data website where WBC chose to publish their Parking Account information.

    Incidentally, it is worth noting their last submission to the Find Open Data website was June 2018 and there is nothing for 2018-19.

    I find it somewhat woeful that my FoI request was unsuccessful because “…Council is not required to create information in response to an enquiry…”

    This essentially means, Wirral Borough Council have never bothered to collate any meaningful or detailed information about how and where their Parking Account surplus is spent, or even carried forward. In order to answer my original question, they would have had to have created information that did not exist.

    I believe this to be an admission of their failure to meet required expectations.
    As Grant Thornton are Auditors of WBC, I must ask why WBC have seemingly avoided being scrutinised on how they spend or publish information and how their Parking Account surplus revenue is spent. It is clear under the ‘Information which must be published’ section of the ‘Local Government Transparency Code 2015’, what Councils must do regarding their Parking Account surplus. Evidence of other Council’s adhering to the requirements are easily available to find; yet WBC have been allowed to operate in ignorance of their obligations.

    Searching through the 221 pages of ‘Wirral Council Statement of Accounts 2018/19’ I can find no reference to income from car parking enforcement from on-street or off-street parking, nor any reference to Parking Account surplus. Yet if I perform the same analysis in the ‘Milton Keynes Council Statement of Accounts 2018/19’, there are many references to parking income and how it has played a part in the cashflow of their financial year.

    The lack of such information from WBC is made even more unpalatable to the people of Wirral, following their blatant, unashamed use of their powers as a Traffic Authority to intentionally raise revenue to fund other services via (non-PCN) off-street parking revenue.

    A case in point would be the income from the newly installed pay & display machines at the four Wirral Country Park off-street car parking locations.

    Following a FoI request, I was able to learn that the gross combined income from these new car parking charges were £169,714 less combined expenditure of £20,000, leaving a surplus of £149,174 (2018-19). However, there is no information available to specify how much of the gross figure was raised via enforcement (PCNs) and how much was raised from parking places.

    There is no information recorded as to how the two different revenue streams flowed through the Council’s budget.

    As Council Auditors, should Grant Thornton be making sure WBC record how surplus from their Parking Account is being applied within their budget? After all, legislation is quite specific as to how different revenue streams from parking operations can be channelled, yet WBC can offer no details to back up their vague statement saying they “…invest any surplus income from parking both on and off-street back into highway improvements in the local authority area…” It is worth noting that Wirral Borough Council raise in excess of £1,000,000 in Parking Account surplus annually.

    As WBC are not meeting the minimum Government requirements for publishing detailed Parking Account surplus financial information, I would like to know if Grant Thornton in their capacity as Auditors have a responsibility to make sure this information is being published. I would also question whether it is even being diligently recorded.

    Thank you in advance for your help.

    ———————————-

    Still, the deafening sound of silence persists….

    • Thanks for your comment.

      Outside the remit of auditors to deal with unfortunately (unless you are during the 30 day window each year requesting a decision on a public interest report).

      Better to bring up with Wirral Council’s Monitoring Officer, Director of Finance or Head of Internal Audit instead.

      If you still get stony silence, try the Cabinet Member for Finance and Resources or your local councillor/s.

      • I shall prepare a ‘non-vexatious’ letter!

        • If it helps the address is:-

          Wallasey Town Hall,
          Brighton Street,
          Seacombe,
          CH44 8ED .


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