Yet Another Audit Meeting Fiasco - Capita Fails Again

Last Wednesday I attended what I think must rank as one of the most chaotic, depressing and shocking Audit meetings. I would normally recommend people to listen to the podcast of the meeting but for some reason the first 64 minutes of the meeting, including the section on public comment and questions, does not appear to have been recorded. Convenient, most definitely, because it was during this first hour that the appalling quality of service provided by Capita was discussed.

One of the reasons I was attending and asking questions was because the Schools Payroll Service, provided by Capita, had been given a No Assurance rating by internal audit, the worst rating it can receive. The issues around control, reconciliation of payments and many people authorised to access the system, were very similar to those identified by Grant Thornton in their investigation of how the £2 million fraud by a Capita employee was able to take place.

What became apparent during the questioning was that the written answers given don't always give an accurate picture of the situation. For example, I asked:

"Given you keep discovering these similar problems, is there a fundamental flaw in the way these systems were set up in the first place, what are the risks that similar issues exist in other parts of the council, and to what extent does the geographical dispersal of departments exacerbate the problems?"

The response was: "The Council does not believe there is a fundamental flaw in the setup of the systems", so my supplementary question was "Who in the Council does not believe there is a fundamental flaw, Internal Audit, Finance, who?"

At this point there were a number of embarrassing looks at one another and a deafening silence. No one was prepared to say they agreed with the response to my question. This is what worries me. The people who are qualified to answer that question are either Internal Audit or Finance - no one else. This is PR management at its extreme and it is a dangerous route to take.

What came out a little later, raised by Cllr Alison Moore, is that there does seem to be a broader systems problem which manifested itself last week in 170 members of staff being auto enrolled in the pension scheme and payments deducted when they had already opted out of the scheme. This has hit some of the lowest paid staff in the council and affected their pay for April, a significant and unexpected financial deduction. Ironically, it transpires it also affected a number of councillors who had pension contributions incorrectly deducted from their councillors' allowance. The man from Capita, who was also taking the flak at the recent pensions fiasco meeting, said that he was new, that he was sorry that it happened and that he would get it sorted. The problem is this is a stock answer with the never ending stream of new people from Capita, but nearly six years into the contract these problems keep happening. I also got the impression that two of the new Conservative councillors who sit on the Audit Committee were deeply uncomfortable with the situation and with Capita's dismal performance.

I also asked about the budget allocation for Internal Audit. From my perspective they do a good job with limited resources but could and should be doing more. Having questioned the allocation of time, it transpired that in 2018-19 the council fraud department allocated 880 days for blue badge misuse. This compared to the entire budget for Internal Audit of 1,238 days. Don't get me wrong. I am not in any way condoning blue badge misuse but it does seem like a lot of days allocated especially when there is so much more work to do on internal audit. Apparently the blue badge misuse investigation budget is funded from the special parking account and couldn't be transferred, for example, to internal audit. It seems a crazy system but there you have it. I did get one small victory in that I asked for Internal Audit to undertake a review of the failed bin collection changes. While the problems seemed to have settled down, they have done so at a huge cost, with the latest figures showing this service is £2 million overspent. At the recent Environment Committee a detailed report was produced but with a massive omission in that there was no indication of the costs. Surprisingly, Cllr Zinkin said he agreed and that Internal Audit will be asked to review the bin collection reorganisation.

As the meeting progressed we came to the slot for the external auditor from BDO. Luckily this part of the meeting was recorded which is a good thing because what he said was shocking. The auditor from BDO said that, it was important to keep a strong control environment but they have found some challenges in this area. Unlike other organisations that provide outsource services to organisations such as the NHS, Capita “were not minded” to provide any audit assurance of the services they provide to Barnet so all the pressure fell on Barnet’s own internal audit team to check what was going on in all the remote Capita offices and that was something he had raised for the past two years. I did shout out  from the public gallery that it was a contractual obligation at which a number of councillors started asking if it was. It is, and it is included not only at numerous points within the main contract but also within the method statements for service provision which form an annex to the contract. Here are just a few examples:

In addition I specifically asked a question about this back in December 2012 when the contract decision was being made and the response I received is set out below confirming it is Capita's responsibility to undertake their own internal audit of the services they provide.

Capita is responsible for its own internal control and internal audit arrangements with regard to all the services being transferred. It is obliged to share all audit planning and activity with the Council. The Council would only undertake an audit programme itself if any of Capita’s arrangements failed to satisfy our requirements as set out in detail in the contract, and any such programme would be funded by Capita. The Council does however have the right to audit Capita’s contract delivery at any time, whether it has concerns or not.

I do sometimes wonder if I am the only person who has read the contract in detail. I was re-watching some of the fantastic recordings of Council meetings captured by the late and sadly missed Daniel Hope (Barnet Bugle). What shocked me most is how few of the councillors and officers who imposed this lousy Capita contract on us are still in post. However, three key people are still there, Mr John Hooton, now the Chief Executive of the Council, and Cllrs Richard Cornelius and Dan Thomas. So many inaccuracies were given at the time and so many concerns raised. Luckily, many of the people who challenged the One Barnet Contract at the time are still around, not least the other Barnet Bloggers and members of BAPS. The Council may have a restricted corporate memory but the residents do not. The contracts with Capita have been an expensive failure. The latest figures show that we have paid Capita £145.9 million more than the contracted sum. 

Yes, there is a limited saving on the core contract but that cannot be separated out while ignoring all the other charges and costs. I prepared a chart based on Barnet's own figures in 2018 which illustrates the point that overall the contract is costing us more money.

Once you add in the expensive special projects, including disasters such as the Mosaic IT system, which has been an operational and financial failure and which will cost us £4.6 million to sort out, the costs become massive.

It is time to say goodbye to Capita; the sooner the better.

Anger, Chaos & Conflict - Just Another Barnet Audit Committee

On Thursday evening we witnessed fracture lines opening between the old and new guard of Barnet Tories, a meeting that satisfied no one and yet again highlighted the terminal failings delivered to us by Capita.

With seven speakers and 68 public questions this was always going to be a lively meeting but I am not sure anyone had quite anticipated the frustration and annoyance that was expressed by members of the public. Each of the seven speakers gave their three minutes with little or no questioning. Even with so little feedback there was still only time for 3 of the 68 supplementary questions.

There were two main items on the agenda; the first was the review of the Grant Thornton (GT) report and second was a run through of the internal audit reports. Most of the audience were familiar with many of the issues in the GT report because it was discussed in October at the Financial Performance & Contracts Committee. However, the biggest revelation that emerged was that a number of the committee members had not been provided with an unredacted copy of the report. The public are used to being treated with contempt by the council, but for councillors and the two independent co-opted committee members who are being asked to review a serious financial investigation not to be given a full copy of the report is inexcusable. Cllr Alison Moore asked for unredacted copies of the report to be given to members immediately. Lots of rumblings and patronising comments but it went to a vote.  Imagine the shock when new Tory Cllr Alex Prager voted with Labour and Cllr Laithe Jajeh abstained and the motion was carried. These two young councillors will need to be taken more seriously. Cllr Prager is an accountant and Cllr Jajeh is, I believe, a lawyer. They have the potential to bring a different perspective to the committee. Time will tell if the whip is brought to bear on them or if we will see a bit more independent thought from the Tories.

There were reports from the S151 officer, the assurance director and the GT staff. The one group unrepresented on the night were Capita, the company who were in charge of both the regeneration team where the fraud occurred and finance team whose lack of suitable controls allowed 62 separate fraudulent transactions to go unnoticed. The Internal audit function failed to identify this problem and agreed that they would have to put more resources into this area. Yet just a couple of years ago I challenged both Internal Audit and the Corporate Anti Fraud Team about the number of days allocated to reviewing the CSG and Re contracts but as always my concerns were ignored.

The reports were noted and the S151 Officer and his team went through all the systems they have now implemented to ensure this doesn't happen again. At one point Cllr Kathy Levine made the comment that if we (the council) are doing all this work for them (Capita), why don't we just do the job ourselves. She makes a perfectly valid point. We are paying Capita ,who do a lousy job and then sort out the mess that ensues. Cut out Capita and just bring the service back in house.

A vote on the report was deferred till the end of the meeting when Cllrs went into private session to read and discuss the freshly printed, unredacted, GT report. We don't know what was said or what they agreed so no transparency there then.

They then moved onto internal audit findings. Now I suspect that many of the committee members had not read the full report as it was buried away; a hyperlink in the summary report leads to other hyperlinks which eventually take you to the report. I have mapped out the click trail below:

The report gave no assurance, the lowest possible rating to the Temporary & Interim workforce service, a contract which is managed by Capita and for which they have claimed several million pounds in gainshare. It is a shocking report which you can read here.  Examples include:

On DBS Checks:
"Four individuals (2 x Passenger Transport Escort - Level 2 and 2 x Passenger Transport Driver) indicated that they would normally be required to have DBS clearance due to the nature of their roles and contact with vulnerable residents. We looked at the compliance tab within the agency staff system for each of these individuals but none had details of DBS clearance in place,"  and
"The supplier is supposed to audit suppliers regularly (six monthly for all agencies, three monthly for social care agencies) to assess compliance with statutory requirements in areas including immigration status, DBS checks and IR35. The six-monthly audits are supposed to be reported on to Barnet, but the three-monthly ones are only reported if requested. Only one audit report has been produced since the inception of the current contract, which was sent by the supplier to the Council in February 2017."
The risk identified was as follows: "If agency staff are not subject to the relevant vetting for their post, there is a risk that inappropriate appointments will be made, leading to financial loss, increased safeguarding risks and/or reputational damage for the council."

On Monitoring:
"18 (individuals) had their assignments extended beyond the initial assignment length. We looked at the records of approvals within the workflow inbox and requested supporting evidence from the supplier for the most recent assignment extensions for these individuals (all dating from after September 2017) and were not able to verify that the required permissions had been obtained for these extensions in line with the agreed workflow for extension approvals for 17 of the 18 extensions (94%)."
The risk identified was as follows: "If the Council does not have an overview of the length of service of agency staff, there is a risk of financial loss to the Council where a permanent post would be more appropriate, or where agency staff gain additional employment rights through length of service".

On Value for Money:
"The historic savings percentage quoted in the contract is used to estimate savings to arrive at the quarterly amount to be paid to CSG. It is not clear why the historic savings percentage is being used as the basis for the CSG gain share calculation, when the contract says that actual savings should be calculated and costs rebaselined annually. The text within the contract where the savings percentage has been drawn from is explicitly flagged as an illustration of past savings performance, rather than as a rate setting exercise. As such, it is likely that the CSG gain share calculations to date for this contract have not been accurate if the historic savings percentage has been used as the assumed savings amount"
The risk identified was as follows: "If cost savings and agency staff numbers are not accurately reported, the Council may not be able to understand whether or not the contract with the supplier offers value for money."

Personally, I find all these matters shocking especially as some of them were flagged up in 2014 and again in 2015. The response from the council is "we are changing the agency contract". What they failed to acknowledge is poor contract management, that is carried out by Capita and I see no prospect of their service improving. Worse, I see the Audit committee who have a responsibility for risk management failing to take any actions which would see the situation improve.

On 11 December we are scheduled to have a Policy & Resources Committee which will discuss the business case of which Capita services will be brought back in house. We know that this includes the Finance function excluding transaction services which will remain in Darlington and Strategic HR. I think that will be the totality of services. I also have a very worrying suspicion that the deal done by Capita to pay Barnet £4.12 million to resolve "historic (sic) commercial issues" is aimed at heading off any other services being brought back in house.

Questions to the Audit Committee

I have submitted the following questions to the forthcoming audit committee this Thursday. I hold out little hope of getting appropriate answers.

Agenda Item 7

• At 1.3.1 the numbers do not seem to add up. Should it read 49 high priority actions (not 45)?
• On accounts payable the report states that “Because these controls rely on data being entered correctly, they have historically not been very successful at automatically detecting duplicates”. Is the report implying that data is not being entered correctly?
• The reports states that “CAFT have found that the high number of false duplicates identified make it uneconomical to investigate these transactions”. When did CAFT first identify the high number of false duplicates, why has this not been raised with the audit committee before this meeting given the Integra system has been in place for 4½ years, and who made the judgement that it was “uneconomic to investigate the transactions”?
• Given that there are no detective controls, outside of the annual National Fraud Initiative (NFI) data matching exercise, to identify potential duplicate payments made and, more seriously, that the  Accounts Payable team have not been able to perform their own review of data to identify duplicate invoices submitted for payment, what is the risk that over the last 4½ years duplicate payments have been made but not investigated.
• Why didn’t the Accounts Payable team disclose before this internal audit that they were unable to perform their own review of duplicate payments and why didn’t the Commissioning Group Finance identify this problem before now.
• Please can you clarify the issue relating to the BACS payment run – is it that confirmation was received for the total amount being paid but not individual payments, or that there was no audit trail to evidence the preparation of the BACS report i.e. were the BACS payments correct in the first place?
• Will ensuring all policies and procedures are uploaded to an appropriate shared drive so employees have remote access to all relevant documents ensure that staff in Sussex and Darlington actually read or familiarise themselves with the policies and procedures. What measure are in place to ensure this is more than just a box ticking exercise?
• In the separate 19 page Internal Audit Report it highlights a high risk problem with the Cashbook Team. The sample of 25 unallocated receipts amounted to £559,000. What is the current total of all unallocated receipts?
• Who is responsible for the Cashbook team, Capita or LBB.
• If 19 of the 25 unallocated receipts were not investigated at all and 6 of the 25 were partially investigated but not followed up or resolved how many residents has been hassled unnecessarily or worse, have had the matter referred to a debt collection agency when the debt had been paid?
• In the Outstanding actions section the highways actions have been deferred yet again. On point 1 why are Re taking so long to agree additional performance indicators proposed by the Council given that Re is supposed to be a JV between the Council and Capita?
• On point 2 if the KPIs in question will only include the elements that Re can influence yet Re are the council’s agent for monitoring the LoHAC contract with Conway, how can we have any confidence that the LoHAC work will be delivered satisfactorily and that there is a rigid monitoring system in place?
• Given that Capita have claimed and received a large gainshare payment for the “savings” on the LoHAC contract and that Re received a large payment from Barnet for advice on the LoHAC contract, surely they should accept responsibility for the delivery of that contract and the consequent KPIs.
• On point 3, is requesting supporting information from the contractor the most appropriate way to validate performance if you already have concerns about the performance data provided by the contractor. Surely there should be a separate third party or Council validation process?
• At Point 21 of the completed actions I note that “arrangements to streamline and make capturing and collation of DBS data more efficient will be implemented”. However, in light of the revelations identified in the recent Private Eye article where a Capita Director allegedly stated that “in the vast majority of cases the level of check could not be evidenced and in many cases was not correct”  and that such failures “will result in the DBS considering suspension or cancellation of our registration to use the DBS service”, please can you provide some reassurance that streamlining the capturing and collation of DBS data does not render the checks invalid?

Agenda item 8

• The CAFT report highlights an on-going financial fraud investigation case. While I understand that you do not wish to discuss the specifics of this case, I am sufficiently alarmed by shortcomings under agenda item 7  that I believe it is important that any investigation into how the system failures permitted this fraud to take place must be addressed immediately to ensure that no further fraud can take place. Please can you confirm that the systemic faults that allowed this fraud have been identified and addressed already, that you will investigate how the systemic failure were allowed to exist in the first place and why Capita, the Commissioning Finance Team or internal audit did not identify the systemic risk sooner?

Agenda item 9

• In light of the financial fraud investigation, do you think the additional allocation of 455 days for  blue badge investigations is appropriate and that instead the additional time should be allocated to identifying and stopping staff and financial fraud?

Agenda item 11

• I note the audit plan recognises the additional powers and duties of the external auditor and, in particular, the point that these powers allow electors to raise questions about the accounts and consider objections. What it fails to address is the time taken to address these questions and objections. As such do you think it is acceptable that it has taken the Council 9 months to provide information to the external auditor in relation to an objection to the accounts and that the objection has still not been resolved.
• I note that the external audit will bring in specialist support to review Use of Resources. Can you provide details of the particular areas they will be examining?

Audit Committee Papers Reveal Shortcomings of One Barnet Outsourcing Advisors

Barnet's Audit Committee will be considering Internal Audit work on Monday. In the Exception Report Internal Audit give a "Limited" Assurance rating on the client side of outsourced legal services (page 18). The three Priority One findings they identified are as follows:

Contract Management - The review identified areas where the client side management of the Joint Legal Service (JLS) contract could be strengthened. There is currently no Contract Manager in place. The Contract Manager post for the JLS will form part of the Commercial arrangements, as part of the retained organisation. However this recruitment process has been delayed since September 2012.

 Risk Management -The review found areas where the client side risk management controls could be improved. The Inter Authority Agreement clearly sets out the risk management procedure which the JLS should maintain in the delivery of the service. However, the absence of a Contract Manager may result in this process not operating effectively in practice. Risks noted within the project prior to go ‘live’ were not transferred internally for those retained risks identified.

Benefits Realisation - The review found that there was no documented process in place for ensuring that the cost, quality and effectiveness benefits, set out in the original business case, were regularly monitored and managed to ensure that they are fully realised. The review was unable to identify a nominated person responsible, in the absence of a Contract Manager, for the ongoing monitoring, management and realisation of benefits. The review also found that there were no documented baseline figures for the benefits to be monitored against.

Personally, I find it unacceptable that a service which was outsourced last September still has such fundamental client side short comings. Where were the advisors and why didn't they flag this up as an issue? Getting the client side functions in place is critical to the successful management of  any outsourced service. The fact that Barnet cannot measure whether benefits are being realised appears to undermine the entire rationale for outsourcing.  If these mistakes are repeated with the NSCSO and DRS contracts it could be an absolute disaster. But hang on a minute....

It is also interesting to note that while not an "Assurance Reports" and therefore no receiving an "assurance" rating there were two management reviews undertaken; one into the KPI's of the NSCSO contract and one for the DRS KPI's.We do not see copies of these reports however, the following summary is included on page 24 of the exception report:

NSCSO and DRS key performance indicators – a number of key performance indicators included to measure the success of both contracts were not robust in terms of data quality. For example, policies and procedures governing the collection of data were not in existence, some targets did not have baseline data, some data was inaccurate, and some of the source data was not adequately

protected from data loss or data error. These reviews were a proactive audit requested from the projects to ensure that any issues could be rectified pre-contract sign. 

Given that the only reason these contracts haven't been signed yet is because of the Judicial Review, perhaps Barnet should be thanking Maria Nash for helping them to avoid yet another cock up.  However, I am also left wondering how such fundamental shortcomings can arise on such a heavily resourced project that has paid millions to consultants an lawyers to avoid exactly these sorts of problems. Frankly I think this demands a an immediate independent review as it may expose many more shortcomings in these two massive outsourcing projects. Richard Cornelius may brand people like me "whingers" but when you read reports like this it is hardly surprising people are concerned.

Audit Committee - What's the point?

At last night's Audit Committee, One Barnet scarcely got a mention and only because I raised it in my questions. With just four members of the public in attendance (including Mr Mustard who took copious notes), a couple of officers and Richard Cornelius (who had been invited to attend by Lord Palmer) the meeting was a rather sad affair. Having submitted four questions and had the replies a few hours in advance, we went through the same old ritual. My first couple of questions related to the huge bill Grant Thornton had charged the council for dealing with electors questions. The answer came back that they had charged £30,400 to deal with questions from two electors and an objection to the accounts. Grant Thornton said that all these tricky questions had to be dealt with by Mr Hughes himself as he is licensed to deal with such matters Even at Mr Hughes' charge out rate of £325/hour that seems like a huge amount of time for such inadequate responses. Grant Thornton's fees for next year have been cut by 40% thanks to a re-tendering exercise and the reduction in the amount they have to pay to the Audit Commission. Perhaps it is in the extras where they will make back their money, a painful lesson that we will undoubted experience with One Barnet Outsourcing.

My next question related to the on-going role of the corporate anti fraud team  when revenue and benefits and procurement are outsourced. I was reassured that everything will be alright - where have I heard that before - and that new processes will be in place. I also managed to ascertain that yes these processes for fraud referral have been incorporated into the contract specification. I wonder however just how effective they will be compared to the current set up.

Interestingly, when this subject came up later on in the meeting, Cllr Sury Khatri also expressed concern about just how easy it would be to deal with fraud matters when the person is an employee of a different company 200 miles away. He gave an example of when his office was split with some people remaining in London while the majority were moved to Cardiff and just how difficult it had become to communicate effectively with them. It will be alright they kept saying but I think Cllr Khatri remained unconvinced.

My last question was about the "no assurance" finding for the regeneration programme. My concern was that if we have no assurance about the performance of this vital and strategically important service, it must represent a major risk if we outsource it now.  I then followed this up with the much bigger concern about Internal Audit no longer having a direct role in reviewing the performance of the outsourced services (that will be Capita's internal auditor's responsibility). Councillor Palmer, to his credit, noted the concerns and he made a point of saying that he had called in the Cabinet decision to appoint Capita at the Business Management Overview & Scrutiny Committee. Sadly it will have no effect and I think we now need to depend on the two Judicial Reviews to have any impact.

The events of last night showed me what an utterly toothless creature the Audit Committee has become and when most of our services are passed over to Capita (yes, I reckon they will get the DRS contract as well) it will be totally impotent.

Barnet Council Audit Committee - What on earth is going on!

Ploughing through the 278 pages of the forthcoming Audit Committee report pack my heart started to sink. Internal Audit carry out reviews of various services and in the latest report 11 of the 20 systems audits received only “limited assurance” opinions including:

•Parking – permits and vouchers
•Payroll
•Contract management – EPR
•Data quality of Human Resources performance indicators
•Libraries
•Establishment List
•Value for money – facilities management
•Domestic Violence
•New Homes Bonus
•IT review of LiquidLogic (Children’s Services) and
•IT penetration review

The report on Contract Management – Environment, Planning and Regeneration made particularly painful reading with quotes such as:

•All officers interviewed confirmed that they had not received contract management training in the past two years;

•Officers queried about contract variations were unclear about the specific Contract Procedure Rules (CPR) requirements for variations confirming a need for development / training in this area.

•Officers interviewed for 5 of 6 contracts confirmed the lack of a formal contract risk log, documenting risks relating to contractor delivery and performance. This was consistent with a review of the JCAD risk register (the Council’s risk management system) which did not consistently reflect risks relating to performance and delivery by the relevant contractor. In particular, there was no documented risk in JCAD for review and assessment linked to the decision to cease monthly progress meetings (including KPI discussion) for the one contractor with an annual value of £30m.

•Officers interviewed for 5 of the 6 contracts confirmed that there were no formal documented business continuity plans to address delivery failure by the contractor (although some officers stated that informal business continuity arrangements existed)

•There was not always formal record of meetings held reflecting KPI output and discussions, and resulting actions that were agreed within the meetings;

•The management and the officer responsible for the administration of the EPR contracts register confirmed that central EPR processes for identifying contract management arrangements in the contracts register and reviewing for compliance were planned but had not been implemented;

•Central EPR processes for using the contracts register for the timely assistance of contract managers in initiating procurement for terminating contracts were planned but had not been developed, this had however been partly mitigated by the Council-wide work on the central contracts register and Forward Plan that resulted;

•The documentation of formal procedures/protocols for the administration of the EPR contracts register was planned but had not been completed;

•Arrangements for identifying variations to contracts needed to be developed and implemented; and

•Instances where noted where purchase orders were not raised prior to the invoice.

On Value for Money – Facilities Management there was one high priority finding and five medium priority findings including:

Contract Management of Leases
There is a lease in place, for Building 2 Lower Ground Floor, and the lease contract has not been signed, despite the Council starting the tenancy in January 2008. In addition, this and two additional leases were identified against which some of the rents and service charges had not been billed since the start of the lease in January 2008. A provision had been made for these costs for £190K covering 2009-10 and 2010-11, this is to be increased to £310,000 for 2011-12. We had estimated the cost at the time of the audit was £590,000, against the payments of £257k since 2009-10 the accrual appears reasonable however in the absence of correspondence from the lessor could not confirm appropriate provision had been made.

Monitoring of Invoices
In a sample of five invoices, none were evidenced as reviewed by the Chartered Surveyor for appropriateness as required by Council procedure. Management confirmed that an invoice would only be reviewed in practice if there were queries around it. Management confirmed an annual process is performed to reconcile invoices received against the leases. This had not been performed at the time of audit, and the planned frequency (annually) means that issues may not be identified and resolved in a timely manner, nor is it appropriate for good budget management.

Meetings with Leaseholder
Only two meetings could be confirmed as occurring during 2011-12, despite the requirement for them to be held every six to eight weeks by Council procedures during 2011-12. Management confirmed that meetings and correspondence occur on a more frequent basis, but that this was not part of a formalised regime, and it was more reactive than proactive.

Three Year Budgeting: Planning
Management confirmed that budgeting was performed on an annual basis for Facilities Management with no active consideration of the longer term financial impact of operations. Given the size of the operational property portfolio and the cost of Facilities Management, it would be useful to profile the budget for a longer period.

Three Year Budgeting: Monitoring
Budget monitoring performed on a monthly basis. The budget monitoring reports for July 2011 and November 2011 were reviewed, and neither included comments to explain the variances against budget.

Key Performance Indicators (KPIs)
There are currently no KPIs in place in Facilities Management against which to monitor performance. Management confirmed that this issue has been identified and a set of KPIs is being developed; however, this could not be corroborated at the time of audit.

On Parking the following was noted:

•There has been a failure to retain permit application supporting documentation for sufficient time period, in accordance with the Records Retention & Disposal Guidelines, or in a structured manner. As a result of this finding we were unable to review the effectiveness of the controls in operation as an audit trail only existed for 3 months and the filing of records for the three month period was completed on an ad hoc basis.

•The controlled stationery (scratchcards and permits) is kept in multiple locations, with loosely controlled access, we also could not verify that stock was counted and reconciled periodically.

•Whilst procedures exist, they are not currently up-to date and it is not clear when they were last reviewed.

•Changes to the Civica parking system in terms of permit values, discounts or property addresses for example are not made through a formal change control process for the Civica system. In addition, there is an ability to create a new account or issue a discount without appropriate authorisation.

•There is not currently a formal service level agreement between the Customer Service Organisation (CSO) and the Parking Service.

•Within our audit sample there were instances where the daily cash-up reconciliation were not independently checked and evidenced as such.

•There are currently unexplained differences between the parking system and SAP income reconciliations which have not been followed up promptly or resolved.

This makes pretty gruesome reading and worries me significantly. Finally, at page 251, we come on to the report of Contract Procedure Rules. This also provides limited assurance and flags up the following issues:

Training Package:
Although a training package for contract management has been developed, and there are minor amendments to be made to bring it fully in line with the CPRs, it has not yet been rolled out to relevant staff members. Without consistent training delivered to all staff members who are involved in procurement, the CPRs may not become culturally embedded within the Council.

Controls and Monitoring Action Plan:
New contracts: 20% of our sample of new contracts tested could not be verified as compliant with CPRs. This was because the contracts could not be obtained/located.

Existing contracts:
10% of our sample of contracts tested were still non-compliant, despite being recorded as compliant. Additionally, 80% of contracts within our sample were waived in order to become compliant. Whilst the option to waive is in accordance with the CPRs, this should be used as an exception to the rule; the Council should consider whether the CPRs provide the necessary framework to enable compliance, however training should start to address knowledge gaps across services.

New vendors:
In 80% of the sample of cases we tested there was not an appropriate level of authorisation evidenced and recorded on the new vendor form. Of these, 62% were not authorised through the correct form, rather this was achieved by email.

Corporate Oversight:
There are limitations with the reporting in place for the completeness of the contracts register, meaning management cannot easily assess their data spend for the current financial year, it currently covers 3 year historical spend but doesn’t indicate where there is current spend. Additionally, there are still some contracts not added to the corporate repository for contracts without valid reasons. We do however note that managers do have access to SAP spend reports, reports extract spend by vendor, year, category which is an improvement from our previous reporting in December. Training is now available on these through the E-portal.

Retrospective purchase orders:
There has been a negative direction of travel, with a high percentage of retrospective purchase orders being raised in February 2012 when compared with the rest of the year.

Personally I found this report shocking and I am sure many other residents would also agree. My concern, which I have expressed on previous occasions, is that Senior Officers care much more about implementing One Barnet than ensuring the day to day operation of the council is carried out properly. How much longer will this go on before Cllr Cornelius gets a grip on how the council is being run. Perhaps he planned to do it but never got round to implementing it!

Last Night's Audit Committee - a toothless talking shop?

Last night’s audit committee was a long and unsatisfactory meeting. I’m afraid that due to work pressures this is a rather perfunctory blog. I was aware right from the start that there was a tension in the air, referred to by Cllr Rayner as “the elephant in the room”, the subject of RM Countryside’s contractual relationship took over two hours before it made a brief and unsatisfactory appearance.

Mrs Angry and I had asked a number of questions, all successfully evaded or denied in the written responses. The one response that surprised me was the admission that One Barnet, the council’s transformation programme is “inherently risky”.

Procurement remains a running sore in Barnet and the latest date for centralising the purchasing function is June next year, almost a year since it was determined that it should take place.

I have long maintained that many of the problems identified at the audit committee last night are straightforward business issue that should never have happened in the first place. I am convinced that they have arisen because senior management have spent far too much time concentrating on implementing One Barnet and far too little time making sure the day to day business of the council is operated efficiently and effectively.

Procurement is a serious and immediate problem. At the same time, £200,000 a month is being paid to just one firm of external consultants to help implement One Barnet. If Barnet were to divert some of that consultancy spend into speeding up the centralisation of procurement I’m sure it could have been implemented by now.

Sadly, the audit committee is a bit of a toothless tiger; it may roar (or purr rather loudly) but ultimately officers don’t give a stuff because the committee has no power to call officers to account, admitted several times by chairman Lord Palmer. Cabinet members are the only people who can do anything in Barnet and, whilst that remains the case, the audit committee will remain the impotent talking shop it has become.