Anyone who has followed this blog or any of the other Barnet Blogs will most probably not be surprised by what this report has found. The fact that there are 32 recommendations in the action plan in Appendix A gives some idea of the scale of the problems. The fact that 15 are High Priority and require immediate action demonstrates just how badly the council have lost control of their own business and how poor the management is.
Before we discuss this further, I'd really recommend you watch this video made by Barnet Blogger John Dix in 2014 explaining why the One Barnet Capita outsourcing was a hugely risky proposition. This clip was an extract from a film I produced to try and persuade the council to see sense, called "Capita - The Movie". This film was a series of videos showing just what the risks and effects were for Barnet Residents. Sadly, I couldn't raise the funding to schedule a release across Barnet as we had done with the other movies in the series (A Tale of Two Barnets and Barnet - The Billion Pound Gamble). Unlike Barnet Council, I can't write blank cheques! However the videos in the series were well received on Twitter. They act as a record of the fact that the Bloggers of Barnet predicted the mayhem
Lets have a look at the major actions. My comments are in Red Italics
These are documented under "Financial Control Analysis".
• (GT1) Develop a Scheme of Financial Authorisation for Re and review of financial roles and responsibilities.
This is scarcely believable. The implication that there is no proper scheme of financial authorisation for payments from Re (The Barnet joint venture with Capita) is staggering. It is no wonder that a huge fraud was allowed to occur. As for the implication that the roles and responsibilities for financial control have not been properly sorted out, this is staggering for one of the largest local authorities in the UK.
• (GT2) The list of budget holder authorisers to be updated on the Integra ledger system.
So the council has not been maintaining the list of people authorised to spend public money. As a Barnet Council taxpayer, I cannot believe such incompetence and failure to adhere to even the most basic standards of control of purchasing has been adhered to.
• (GT4) Improve controls over access and authorisation rights on Integra and Bankline to ensure that any changes made are appropriate to role
What this is saying is that there has been no proper control over who can access, who can authorise and who can add users etc, for the Councils payment and banking systems. As a council tax payer I am appalled that it seems that any Tom, Dick or Harriet could make payments and add their friends, with no audit in place. In short, this is an accident waiting to happen.
• (GT10) Develop a master schedule of CPO payments in progress to enable cross checking against payments requested.
What this is saying is that the Council have had no system in place to cross check expected vs actual payments. There are two ways this could have a big impact on the council budget. The first is that without such a list, any checking would be extremely costly and labourious.
That is assuming that they actually bothered checking payments. Thus far, we've established that there is no adequate control of payment authorisers, no adequate control of payment systens and no adquate controls of what is getting paid. Of course that's all OK, as you the Barnet taxpayer have given Barnet Council a blank cheque to spend your money.
• (GT11) Develop a clear process for reclaiming CPO and related costs from developers and matching to payments received.
Any organisation that is managing money efficiently and with due prudence would clearly have such processes in from day one of any outsourcing scheme such as One Barnet.
• (GT12) Confirm that fraudulent costs have not been invoiced to developers.
This is rather worrying. They still need to confirm who has paid invoices related to a major fraud.
• (GT15) Review the adequacy of controls over BACS E-form payments where the purchase order system is not used.
So at this point, they have yet to review the adequacy of controls of BACS payments (usually standing orders, direct debits and faster payments). Having spent half a million quid on this Grant Thornton review there are still massive holes in the controls that have not even been reviewed.
• (GT17) Develop a process note for journal processing that emphasises the importance of adequate explanation and documentation.
This is really quite an interesting comment. I wonder how many iterations of changes this statement was subjected to. This states that Barnet Council and their chosen major partner Capita have no culture of providing proper documentation of what they do. This is a massive problem as this means that in the event of Capita being booted out, there will be no instructions or documentation of what they do. In short there is no proper resilience. The statement shows just how deviously words have been twisted so as to paint a "happy picture".
• (GT21) Capital Budgets to be recorded on the Integra ledger system to improve the accessibility of information to budget holders.
For those of you who don't know what Integra is ( I was shocked to hear a Conservative Councillor on the Audit Committee ask that question recently) - "Integra functionality includes all the standard financial modules including GL, AP, AR, cashbook, but also includes the E-Series web management tool. This allows users in the organisation to access the Integra system via a web interface to approve invoices, raise sales orders and review the actuals. " What this statement says is that the council hasn't been using its own financial management tool to monitor Capital budgets. You don't need to be an accountant to know what happens if you do not manage and control your budgets. Is it any surprise that immediately after the council elections, the Tory administration revelaed a £9 million budget overrun.
• (GT27) Prepare documented financial procedure notes for CPO related transactions, provide training to staff and test compliance.
And finally here is another one of those very highly tuned comments, that hide a multitude of sins. What this implies is that monitoring of financial complaince was found wanting and staff lacked the training to test whether the systems were compliant. What this means in practice is that a competent accountant could under no circumstances sign off anything for CPO related transactions as trustworthy. In short, there is no assurance that your money has been spent wisely.
The report also notes
Contractual notices issued to Capita by the Council.
The Council have issued formal remedy and other notices to Capita in regard to remedial action required, with reference to the contractual obligations under the contracts held with Re and CSG. Successful action of the recommendations from this report will provide the key measure of success in regard to the effectiveness and adequacy of remedial action taken by Capita pursuant to the remedy notices.
Ongoing monitoring arrangements
Grant Thornton UK LLP are in discussion with the Council to extend their period of engagement, in order to help monitor the delivery of agreed actions undertaken by Capita. Weekly meetings are taking place with the Council, alongside more formal monthly project Board meetings that involve the Council, Capita and Grant Thornton UK LLP. In our view, successful delivery of the action plan within the agreed timeframe will facilitate the development of a robust financial control environment for Regeneration Services.
In other words, five years into the One Barnet Capita contracts, that were meant to save money, improve the quality of financial controls and ensure your taxes are spent wisely, we are faced with a situation that the Council are having to pay Grant Thornton a kings ransom to simply ensure that the council have some basic controls in place that a junior accountant would get a whelk stall business to sort out. Even your average Whelk stall owner knows who is ordering the whelks, who is paying for them, how much they are paying for their whelk stall, who can access the whelk stalls bank account how you make sure the whelks don't go bad.
You may wonder who the councils auditors were when Capita were brought in. You may wonder what the Auditors opinion of the robustness of the Barnet Council management of them was. I hope this letter below goes some way to explain. Maybe you understand why the bloggers of Barnet think this whole thing stinks to High Heaven! You may also want to note the fee for this letter.
Barnet London Borough Council Annual Audit Letter 2014/15 - Grant Thornton by Roger Tichborne on Scribd
When it comes down to it, Capita is the gift which keeps giving. It is an endless well of stories for bloggers. It is an endless source of revenue to firms like Grant Thornton, who .
There is only one real conclusion that any sane and rational person would draw. That is that we Kick Out Capita. Please watch this video we made to launch our campaign!