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

                       

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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