Chaos at the Barnet Council Audit Committee

"They that sow the wind, shall reap the whirlwind"

I would suggest that Council Tax payers in Barnet start battening down the hatches. The whirlwind The Barnet Conservatives have sown with its One Barnet Outsourcing program is looming large on the horizon. The Audit Committee of Barnet Council met last week to review the results of the annual audit. For those unfamiliar with local government, each year, external auditors are called in to make sure that the councils business is in order. The purpose of this independent audit is to ensure that the council is spending our money (because all the money they spend is collected from us in the form of taxes, charges and levies) in a legal and controlled manner, with regards to proper accounting practices. The auditors have a responsibility to report any issues where the council is not meeting its legal commitments and to ensure that we, the taxpayer are protected from "nasty surprises". For the auditors to discharge this duty professionally and to do their job properly, they rely on the council officers and those contracted to run the departments to make all information required available to them in a timely fashion and in a format that can easily be audited, ie to the standard laid down in the various statutes that govern accounting practices and the operation of local government.

None of this is a surprise to the council, to Capita (the contractors who by and large run the council) and to the audit committee, who are the committee responsible for democratic oversight of the Council. Until 2014, Barnet Council had a very wise policy of making the audit committee the one committee in Barnet Council that was chaired by an opposition councillor. The committee is a very dry affair usually and requires perhaps a higher calibre of professionalism than any other, as the reports are detailed and require proper attention from councillors. It was deemed "good practice" for an opposition councillor to run the committee and to conduct the affairs in a far less partisan manner than the other committees that constitute the council. As such, historically the audit committee was one which tended to be of less interest to bloggers etc than committees that make political decisions. The job is largely to simply review external audits and ensure that voters concerns are reflected, should the auditors not peform their task to the highest standard.  As such, having an opposition councillor as chair, guaranteed probity. Sadly, as the committee attracts a hefty allowance, in 2014, the Barnet Conservatives decided to end this practice. A Conservative councillor, Brian Salinger took over the committee, and following his elevation to Mayor, veteran Hale Ward Conservative Councillor Hugh Rayner has taken over the role.

Last Thursday, the committee met to discuss the results of the audit. Mr Reasonable has provided a full write up of the chaos at the meeting, I strongly suggest that you read this.I couldn't attend, due to a pre-existing commitment.  However the meeting was unable to perform a proper review. The reason? They had not been provided with all of the information required. According to the auditors report,  The following matters remain outstanding at the date of this report:

1. Completion of audit work in a number of areas, including testing of manual journals,
investment properties, receivables, provisions, housing revenue account and housing benefit expenditure.

2. Clearance of outstanding issues on the audit tracker currently with the finance team. The most significant of these relate to:

Receipt of an updated actuary’s report in respect of the net pension liability
Review of updated financial instruments note
Review by management for transactions with related parties declared, but omitted from original finance working paper

3. Completion of the ongoing review of the audit file by the manager, Partner and Engagement Quality Control Reviewer, and clearance of any points arising.

4. Receipt of outstanding bank and lender confirmations.

5. Receipt of a component auditor return from the auditor of The Barnet Group Ltd.

6. Partner and final technical review of the financial statements and clearance of any points arising.

7. Receipt and checking of final amended financial statements, incorporating any agreed audit adjustments.

8. Subsequent events review.

Furthermore, the auditors were not notified of the damning OFSTED report into Childrens services.  The Draft Annual Governance Statement details a series of risks and issues. This identified five significant areas. Here is a brief summary. It is quite shocking that there are five areas of significant concern.

4. SIGNIFICANT GOVERNANCE ISSUES  –   2016/17

This year has  been a  period of  continued financial pressures.
Despite this  challengingenvironment, there have been achievements and improvement in the Council’s governance arrangements.
Where we have identified areas for further improvement (see below) we will continue to take the necessary action to implement
changes that will  further  develop our governance framework.

4.1 Family Services OFSTED Inspection of services for children in need of help and protection, children looked after and care  leavers,  and  review of the effectiveness of  the Local Safeguarding Children
Board’.

4.2 Electoral  Services – Electoral Registration and Elections Continuous Improvement

4.3 Oversight, accountabilities and roles and responsibilities

4.4 Health and Safety Compliance


4.5 Pensions Administration 

Each one of these areas warrants a blog of its own (watch this space). John Dix raised a series of questions listed below



As you can see from answer to the second to last point, there is a follow up meeting scheduled.

So what does all of ths mean to the layman? It amazes me how little understanding of what the council does there is in the general public. I've often heard the refrain "apart from emptying the bins, what do the council do". The OFSTED report into Childrens services perhaps answered this question. Sadly, due to minimal press coverage, it passed many people in Barnet by.  But the reality is that vulnerable young people are being let down. Barnet Council took an ideologically driven decision to outsource vast swathes of the council operation to Capita. The justification was modernisation and cost savings. The result was hundreds of Barnet residents working for the council lost their jobs. Services were disconnected from the people that require them. Now we find out that the audit process which is meant to ensure that the operation runs smoothly is not working and as Mr Reasonable clearly lays out in his blog, Capita are not providing the information required to be properly audited.

When an organisation fails to have the necessary checks and controls, things start to go wrong. Inevitably, this costs the taxpayer money. Mending things which are broken is always more expensive in the long term than doing the job properly in the first place. We saw another example of this recently. Last week the FT reported that Barnet had been fined by the regulator over its pension scheme administration


https://www.ftadviser.com/pensions/2017/07/27/regulator-fines-barnet-over-pension-failings/

 There is a lack of control of spending as detailed in Appendix A

In 2016/17, the Council has reported an overspend on services against budget of £8.3
million. The majority of this relates to adults and communities (£5.4 million) and
housing needs and resources (£1.8 million), as a result of sustained demand
pressures in these area

Another concern of mine is in relation to property, plant and equipment valuation, does this breed confidence?

We have challenged the valuer in respect of a number of property valuation movements which appeared unusual in comparison to general indices, and some of this work is still ongoing

In summary, the audit has unveiled a wasps nest of issues. An emergency meeting in September will have another stab at trying to get to grips with the issues. As the issues are spread across the council and are clearly far too wide for the Audit committee to manage, given their limited remit, it is clear to me that the council should convene an emergency committee, ideally under an independent chair, to see exactly why the council has degenerated into such a complete mess in such a short time. The effects of the One Barnet Outsourcing experiment should be a central theme and ideally there should be a report detailing whether there has been a financial impact on residents pror to Council elections in May 2018.