Capita reject the Grant Thornton Audit Report as incompetent

This morning my attention was drawn to an item on the Barnet Council website that has just appeared. It is the full, unredacted Grant Thornton report into Capita's cock ups

Perhaps the most worrying aspect of all is the response from Capita

Capita statement in response to Grant Thornton report

Capita wholeheartedly refutes the conclusions of this highly caveated and limited report, which Grant Thornton themselves admit is not a comprehensive formal audit. 

The report’s conclusions regarding financial controls across the council and Capita’s CSG and DRS contracts have not been independently verified, are not underpinned by clear evidence, and in many instances seem to be based on opinion and hearsay. 

Capita accepts that this case highlighted failings, which we have worked in partnership with the council to overcome. All the actions raised as a result have already been delivered by Capita and are in the process of being audited. We are committed to continue working with the London Borough of Barnet to deliver all of the activities in its rectification plans to achieve improved financial controls across Re, CSG and the Council. 

This is clearly the most crass example of an organisation in denial that I have ever seen. Does it not occur to Capita that Grant Thornton are independent? Furthermore, they call into doubt the professional competence and integrity of Grant Thornton. There are only three possible conclusions that can be drawn from this statement.

1. Grant Thornton are incompetent and Barnet Council should commission a new report from a company that is recognised as capable of doing the job and not presenting "opinions and hearsay" as fact. If this is the case, Capita should demand that a new report is commissioned by a company that can be deemed "independent". If this report exonerates Capita, Grant Thornton should pick up the tab. If it confirms Grant Thorntons findings, then Capita should issue an apology and pick up the tab.

2. Capita have issued a defamatory statement that is both misleading and libellous. If this is the case, then presumably Grant Thornton will sue Capita (and possibly Barnet Council) for publishing it. No potential customers of Grant Thornton could possibly consider working with a company that has such serious doubt cast on its professional integrity.

3. Both Grant Thornton and Capita are equally culpable. Capita have failed to deliver the services that they were commissioned to provide and Grant Thornton have failed to provide a competent assessment of the failings. The only way that this can be proven would be to commission a new, independent report. Should this be proven, then both Grant Thornton and Capita should pick the tab up between them.

It is quite clear what should happen now. Grant Thornton must issue proceedings against Capita for defamation and seek a full retraction and apology. If they do not, they have no credibility. If they do, then Barnet Council will have to await the outcome of the case.

If Grant Thornton do not, then either scenario 2 or 3 are clearly the likely outcomes. Barnet Council should immediately commission a new report from an independent firm and explain that they will expect whoever is found to be incompetent to pick up the bill. If indeed it is Capita, they should be summarily ejected from the Council.

 I have written to the CEO of Barnet Council, Chair of Audit, Leader and Deputy Leader this morning to express my concerns

I will keep you informed of any response

Dear Sirs,

I read in disbelief the response from Capita to the Grant Thornton report. This response, in effect calls Grant Thornton incompetent and unprofessional.  (Financial controls - barnet.gov.uk)

Financial controls - barnet.gov.uk

The response states

"Capita statement in response to Grant Thornton report

Capita wholeheartedly refutes the conclusions of this highly caveated and limited report, which Grant Thornton themselves admit is not a comprehensive formal audit.

The report’s conclusions regarding financial controls across the council and Capita’s CSG and DRS contracts have not been independently verified, are not underpinned by clear evidence, and in many instances seem to be based on opinion and hearsay.

Capita accepts that this case highlighted failings, which we have worked in partnership with the council to overcome. All the actions raised as a result have already been delivered by Capita and are in the process of being audited. We are committed to continue working with the London Borough of Barnet to deliver all of the activities in its rectification plans to achieve improved financial controls across Re, CSG and the Council.  "

There are only three possible conclusions that can be drawn from this statement.
1. Grant Thornton are incompetent and Barnet Council should commission a new report from a company that is recognised as capable of doing the job and not presenting "opinions and hearsay" as fact. If this is the case, Capita should demand that a new report is commissioned by a company that can be deemed "independent". If this report exonerates Capita, Grant Thornton should pick up the tab. If it confirms Grant Thorntons findings, then Capita should issue an apology and pick up the tab.
2. Capita have issued a defamatory statement that is both misleading and libellous. If this is the case, then presumably Grant Thornton will sue Capita (and possibly Barnet Council) for publishing it. No potential customers of Grant Thornton could possibly consider working with a company that has such serious doubt cast on its professional integrity. In this case, the Council should call time on the Capita Contract in short order.
3. Both Grant Thornton and Capita are equally culpable. Capita have failed to deliver the services that they were commissioned to provide and Grant Thornton have failed to provide a competent assessment of the failings. The only way that this can be proven would be to commission a new, independent report. Should this be proven, then both Grant Thornton and Capita should pick the tab up between them.

It is clear that Barnet Council need to take this accusation seriously. Unless Grant Thornton seek a retraction and apology in short order, a new report is required that is beyond reproach. At a recent Audit meeting the chair assurred me that Grant Thornton were a professional company with great integrity. Given that Barnet Councils chosen partner and procurement agent have issued such a scathing assessment of their work, this assessment has clearly been called into question. I seek your assurance, as  council tax and business rates payer that Barnet Council will take immediate action to ensure that residents can have confidence in the management of the Capita account. Following this statement, there can be none until either Grant Thornton are exhonourated or a new report has been published.

Regards

Roger Tichborne

Just for the record, I see no reason at all to believe that Grant Thornton have not done an entirely professional job. If Capita can support their assertion, they really will have to provide some serious evidence.

+++++ Updated 20/12/2018
As promised, I said I'd update if any response was received. After a week and a blog berating the council for their rudeness in not replying on Tuesday, I received this belated response

From: Tatlow, David

To: roger tichborne

Cc: Hooton, John

Sent: Thursday, 20 December 2018, 09:00:10 GMT

Subject: Grant Thornton Report - Capita

Dear  Mr Tichborne

Your email dated 13^th December has been passed to me by the Chief Executive for response.

It may be the case that the Council holds information which may assist you and I am therefore liaising with Information Services to identify any such information which may be relevant to your enquiry and if available this will be provided to you.

Whether or not the Council holds relevant information I am passing your email to the Director of Commercial Services so that he may take such action as he considers to be necessary.

Thank you for your interest in this matter.

Yours sincerely

David Tatlow

Chief Legal Advisor & Monitoring Officer

We will keep you posted.

------------------------------------------

---- Don't forget to make a date in your diary for The Barnet Eye Xmas party and Community awards at Mill Hill Rugby Club on Fri 14th December at Mill Hill Rugby Club at 8pm. We really hope you can come down and say Hi. Admission is Free.

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Damning report slams Capita and financial management at Barnet Coucil

On Friday this report was quietly made available on the council's website. We have loaded it up onto our Scribd site to make it more easy to find and review for our readers.


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!

Recycled blogs : Metpro response from district auditor

I got this email. I wasn't going to say anything about it, until I read this blog. Seems like our hard working district audit can't be bothered actually writing a proper reply to anyone. Andrew Dismore also received a very similar reply. I will be very interested to note just how much all of these cut and paste jobs have cost the taxpayer. I wonder how many other recycled blogs will be appearing with this email in. I feel rather special. I was treated to a whole nine words more than Mrs Angry (in red below).

Whilst the Barnet Bloggers have been issuing joint letters, we didn't realise that we were getting joint replies from highly paid contractors in public authorities, for completely unrelated questions. Do they really think we are that stupid?

--------------------------------------------------
Dear Mr Tichborne

Thank-you for for your email of 10 July.

Over the next 2-3 weeks we are carrying out a programme of work to review the Council's response to the issues raised by the internal audit report, discussed in the Audit Committee meeting and reiterated in subsequent communications. This will pick upon the specific questions you raise.

We will report our findings in our Annual Report to Those Charged with Governance, which will be presented to the 6 September Audit Committee meeting. Until we have completed our work and presented this report we will not be issuing any further comment on this matter.

As noted in our previous responses we will not rule out the possibility of further reporting, including under our statutory reporting powers, should it be required after this time.

Kind regards

Paul

---

Paul Hughes | Director | Public Sector

For Grant Thornton UK LLP

Grant Thornton House | Melton Street | Euston Square | London | NW1 2EP

T (direct) +44 (0)20 7728 2256 | T (internal) 82256 | F +44 (0)20 7728 2256 | M +44 (0)7860 282763

From:        "Roger Tichborne"
To:        
Date:        11/07/2011 00:56
Subject:        Barnet Council and the Metpro Scandal

---

Dear Mr Hughes,
 
I have read with interest the correspondence between yourself and Andrew Dismore regarding the Barnet Council Metpro Scandal. I am the author of the Barnet Eye blog, which along with other local blogs, brought the scandal to public attention. I have three questions for you regarding the scandal.
 
1) At the meeting of the Barnet Council Audit committee, where the report was debated, the chair of the Barnet Council Audit committee publicly stated that the Audit department in Barnet is understaffed. He stated that for an authority with a turnover of approx £1 billion, there were three full time staff + 1.5 contract resources and this was insufficient. It seems incongruous that as District Auditor, you can ignore this comment?
 
2) Of 9,700 vendors supplying Barnet Council, the audit committee stated that only 183 are regularly monitored. Previously only 10 were. In yur professional opinion as an auditor, is this appropriate?
 
3) The remit of the Barnet Council Audit report into the Metpro scandal, only addressed issues relating to Metpro. In your professional opinion, is it likely that having exposed such a catalog of failure for this one company, is it likely that there are other, possibly worse cases lurking undetected?
 
I would be most appreciative of a prompt response. As the government minister responsible, Eric Pickles, this week publicly declared that Barnet had serious problems, only exposed by the efforts of bloggers, I'd suggest that the best way to restore public confidence is a thorough investigation of Barnet Council by your office.
 
Regards
Roger Tichborne - http://barneteye.blogspot.com/

Metpro Scandal - Grant Thornton's reponsibilities

The following extract is from a cabinet report detailing the terms of reference for Grant Thornton Barnet Council's auditors, presented to the Barnet Council Cabinet on Feb 17th. Given that the Council were giving Metpro Rapid Response Ltd over a Million pounds without a proper contract being in place, I look forward to seeing what Grant Thornton have to say :-

Needless to say, the bloggers of Barnet will be keeping a beady eye on what Grant Thornton have to say. I'm sure they will be thrilled to know. I must get round to seeing what the audit was meant to do last year, in regards to paying companies with no contract in place, no proper agreement and no monitoring of their performance.