Thursday 9 May 2019

Joint Post - No Assurance from Capita

Tory Leader Richard Cornelius, rumoured this week to be stepping down, signed the two massive contracts with Capita on the basis that it would provide 'better services, for less money'. It hasn't. As fellow blogger John Dix, 'Mr Reasonable', reported here last week after a catastrophic Audit meeting: "we have paid Capita £145.9 million more than the contracted sum ...". 

While fees continue to increase, and local services in Barnet continue to fail, it has become apparent that lessons have not been learned from the £2 million fraud recently perpetrated by a Capita manager, unnoticed by Barnet or Capita, which exposed an abysmal lack of any competent system of financial controls in regard to the processes and performance of the contractual partnership. 

At this meeting, as the external auditors raised, as they have done for two years, their serious concerns about this issue it emerged that Capita see no reason to provide any audit assurance of the services they provide to Barnet - even though this is a contractual obligation.

If it is true that the Tory leader who has promoted and retained the contractual partnership with Capita is now leaving, it is essential that the newer, and more sensible Tory members,  who have been faced with the mess created by their longer serving colleagues, elect a replacement who will have the courage and integrity to end these contracts, and restore direct control of local services to the council itself. 

In the meanwhile, here is a joint statement from all four Barnet bloggers, to raise our concerns about the very real and continuing risks posed by this failing partnership:

Capita - “Not Minded”

 At the Barnet Council Audit Committee on 1 May the external auditor from BDO made some very worrying and serious statements about the controls systems in place. This follows a £2 million fraud last year, and pervasive problems with the pensions and payroll administration.

 “You don’t have a particularly strong control environment”, the auditor reported, and then stated that Capita were “not minded” to provide assurance over systems running processes on Barnet Council’s behalf.

 This is an astonishing response from Capita.

 Responsibility for assurance of these systems, run from Capita’s offices around the United Kingdom, falls to Barnet Council’s Internal Audit Team.

 As the External Auditor made clear, the Internal Audit team is doing good work “but it doesn’t give you that level of assurance that you would expect with so much of the service outsourced”.

 Given that Capita provide so many of Barnet’s back office systems this is a very serious situation, especially as the external auditor raised this problem two years ago, before the £2 million fraud was discovered.

 As bloggers who have closely followed and reported the story of Barnet’s partnership with Capita, we are deeply concerned about this situation and alarmed that neither the auditor nor committee members were aware that assurance of Capita’s systems is a contractual requirement, and not something that could be provided at their discretion.

 We ask the following questions of the Council:

Why were audit committee members not made aware of the auditor's concerns when they were raised two years ago?

Why are Capita "not minded" to provide assurance over their systems when the contract appears to indicate that they must provide that assurance?

Why did Grant Thornton not pick this matter up when they were the Council's External Auditors or as part of their contract review following the fraud?

Why have the Council's contract monitoring officers not identified this problem before now?

If BDO are saying the Council does not have a strong control environment, what are the risks of another fraud or systems failure happening?

And finally, 

How can Capita continue to retain the confidence of the Council without such assurances?

We ask that the Council arranges for a forensic review/audit of both Capita contracts to address the contractual failures raised by the External Auditor as a matter of the utmost urgency, to be paid for by Capita, before any further decisions are made on what services Capita will continue to provide. 

Failure to do so can only have the most serious consequences for the financial security of this borough, and the well being of all residents.


Derek Dishman

John Dix

Theresa Musgrove

Roger Tichborne