Mrs Angry tries again: another letter to the auditor

Mrs Angry has written back to Mr Paul Hughes, of Grant Thornton, the district auditor of the London Borough of Broken Barnet.

But oh dear: Mr Hughes is either hiding under his desk with his fingers in his ears, humming very loudly, or he has perhaps packed his bucket and spade and gone to the seaside, because when Mrs Angry sent her response, she immediately received an out of office reply telling her he is away until August 20th.

This is unfortunate, and rather naughty, as he told her if she wished to object to the accounts she must do so by the 17th August.

Perhaps he thought she would not bother.

Foolish Mr Hughes: do you think Mrs Angry gives up so easily?

Dear Mr Hughes

Thank you for the reply to my letter of 17th July.

I have to say that I am astonished by the response that you have sent, as indeed is everyone else who has read it.

Let us put to one side the question of my objection to the accounts, which I will respond to separately. The issues of the unlawful redaction of the accounts, and the number of 'interim consultants' employed longterm by the authority have now been referred elsewhere.

Returning to the final part of my letter to you, I note that you have not responded to my request that you instigate a public interest inquiry into the failure by Barnet Council properly to address the risks raised by the One Barnet programme of outsourcing, as clearly expressed here:

"Risk management and the One Barnet programme of outsourcing.

I would like to make a formal complaint to you about the failure of the London Borough of Barnet adequately to address the risks presented in regard to the One Barnet programme of outsourcing, and the competitive dialogue process that is currently in hand: I believe that these failures in risk management make it clear that a halt should be put to the One Barnet programme of outsourcing, and I ask that you conduct an urgent investigation on the grounds of public interest into the authority’s management of the risks associated with the programme ... "

In my letter I specified a number of issues which I believe have been seriously mismanaged by the authority. In most cases, you have not denied that there may be reason for concern, but stated that you will review the matter over the next year, as follows, your response in italics.

a. The risk posed by an inadequate management of the potential conflict of interest in regard to senior officers of the authority and their connections with companies directly involved in the tender process for £1 billion of council services.

Although not a matter for the audit of the 2011/12 accounts, we will review this matter as part of our 2012/13 audit and report back to management and the Audit Committee in due course.

b. The risk posed by the lack of an adequate consideration of, or any proper consultation in regard to, the One Barnet scheme and the need for an Equalities Impact Assessment.

Equalities Impact Assessments do not fall within the remit of our audit responsibilities so I do not plan to take any action on this point.

c. The risk posed by the total lack of consideration of any alternative option to One Barnet, either as an in house comparator proposal, or as a solution in the case of partial or total failure in any agreed strategic partnership.

Strategic options appraisal and alternative solutions is a matter for the Council to determine.

We will, however, take your point into consideration as part of our 2012/13 audit.

d. The risk posed by a lack of scrutiny by members: the One Barnet scrutiny committee was abolished last year, preventing any proper process of overview by the elected members of the authority.

The detail of how the Council organises its scrutiny function is a matter for the Council to
decide upon. We will, however, take your point into consideration as part of our 2012/13
audit.

e. The risk posed by the depth of almost total incompetence in the management of procurement, tendering and contractual regulations and processes that has been revealed, and continues to be exposed even now, more than a year since the MetPro Audit

In our 2010/11 report to those charged with governance we reported on our work on this matter and concluded that the issues were not sufficient to result in a qualified value for money conclusion. We have kept up to date with the Council’s progress in resolving this issue during the year, including through reviewing internal audit work and through regular updates provided by management and internal audit to the Audit Committee. We are satisfied that the Council continues to make progress in addressing the identified control issues but will continue to monitor and report on progress over the coming year.

f. The risk posed by a lack of an independent risk assessment by an external body.

The commissioning of any independent assessments of the projects that make up the One Barnet programme is a matter for the Council to determine. Both internal and external audit are involved in reviewing the governance arrangements for individual projects and will report to the Council if there are any significant areas of concern relevant to our respective responsibilities ..."

First of all I would like to point out that although Equalities Impact Assessments may not come directly under your powers as auditor, I should have thought that the significant risk of legal challenge that is presented by the authority's failure properly to manage this risk most certainly does feature within your range of responsibilities.

You have not given me any reason why there should not be a public interest inquiry, and I must ask you, again, to respond directly and urgently to this request, under the terms of section 8 of the ACA 1998. The urgency of the request is based, as you must be aware, on the shortage of time before the crucial stage of the One Barnet competitive dialogue process is reached in September.

May I remind you that last year you were asked by Andrew Dismore, now the GLA member for this consituency, and others, to instigate a public interest inquiry into the circumstances of the MetPro scandal, and you refused to do so, on the grounds that it would 'have limited impact', be too expensive, and rather extraordinarily, perhaps, that it would 'risk undermining confidence in a public body'.

If you had undertaken to investigate the issues, as requested, you, rather than the local bloggers in this borough would have discovered the wide scale of enormously damaging procurement and contractual failure, a disgraceful state of affairs which has unquestionably led to the unauthorised and unregulated expenditure of local tax payers' money over a period of many years.

At our recent meeting, I asked you to explain the purpose of your role of external auditor. This was not a facetious question. It is hard to understand why a company that is paid £400,000 a year to audit the accounts of our authority appears to be so unable to criticise any apparent failure of the authority properly to manage its financial acitivities. Clearly there is an inherent difficulty in the position in which you are placed in regard to your position with the council, but as I reminded you in the case of the Wirral procurement scandal, this does not prevent a district auditor from investigating a clear case of mismanagement, and nor should it.

It is quite clearly a matter of public interest that the residents of this borough are protected by a system of scrutiny that will oversee the proper management of the accounting and audit systems of their local authority. If government policy on localism and the need for greater transparency and accountability is genuine, the need to empower local communities to exert proper influence over their elected representatives can only be facilated by a robust and truly independent external audit process.

I think we would like to see that process more actively at work here in Barnet.

In 2010 a report from your company Grant Thornton expressed concern about the lack of a business plan for One Barnet, and observed that Barnet Council had a poor understanding of risk management - see point 4.21 here:

http://barnet.moderngov.co.uk/Data/Audit%20Committee/201012071900/Agenda/Document%208.pdf

I think it is reasonable to conclude from everything that has happened since that there has been no real evidence of improvement in regard to either of these failings, and that there is all the more need, an urgent need, to investigate more closely the ability of this council to manage the risks presented by the challenge of a £1 billion procurement exercise, and I therefore repeat my request that you use your powers as district auditor to investigate this matter without further delay, and call a halt to the outsourcing programme until the issues under investigation are addressed in a satisfactory manner. To fail to do so would, in my view, present you with the considerable risk of undermining confidence in the independence of the external audit process.

Yours sincerely,

Mrs Angry


*Update:

Just fancy that, Mr Hughes: your favourite council has somehow made it back into Private Eye's Rotten Boroughs column, in the new edition, available at all good newsagents, and WHSmith's. Do rush out and buy a copy. Look for the story headed "Artful Dodgers" ...


Barnet were of course the proud winners of the 'runners up' category in last year's Rotten Borough's Legal Bullies of the Year category. All looking good for another nomination this year, wouldn't you say?

Thanks to the Pinkham Way blog for drying Mrs Angry's tears, & supplying the image. x