Capita - 'not minded' to provide assurance

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 the audit committee 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.

Signed:

Derek Dishman

John Dix

Theresa Musgrove

Roger Tichborne

Non-stick Nick speaks.

Each week the employees at Barnet Council wait with bated breath for the weekly missive from their Chief Executive ( please do not believe everything that you read on this blog ) telling them how fantastic things are in Barnet, even if they aren't.

For the last 2 weeks Mr Traversty has sent this missive at the probable cost of about £20 a word ( actually I am not even sure the management actually write them - there is probably a ghost writer hiding at NLBP somewhere, in the Speech Preparation Internalisation Network unit , or SPIN-u for short ) and at the end of last week's message he wrote :-

"We will announce plans next week on just how we propose to do this"

So here is this week's message, from non-stick Nick himself, fresh from his uncomfortable appearance in front of the Audit Committee, where he looked as hot and sweaty as a frying pan full of melted butter, ( watch out for the fire non-stick as the Barnet Bloggers are not about to turn the gas down low ) :-

Last night's Audit Committee meeting was, quite rightly, amongst the most difficult in my time as Chief Executive.

Alongside the Metpro report, which was dealt with in last week’s email, I attended to specifically respond to the Internal Audit Annual Report. This, like the Metpro Report, pulled no punches but is rather more important in the conclusions it draws about aspects of the council's work. Overall it gives only "limited assurance" that we have the right controls in place to ensure that we spend wisely and meet the objectives we set.

As I confirmed to the Committee its vital that we have the robust internal challenge that audit provides and for too long I do not think that has been the case. However equally important is that when we identify concerns we learn from the findings and act on them.

Members have an absolute right to expect that when we get things wrong we prioritise putting them right. Last night I committed us to addressing all of the issues raised by the Internal Audit Annual Report.

On procurement this means a rapid programme of activity that will involve many staff across the council. An action plan is in place and procurement leads across the council are being briefed.

Much media focus has been on "who is to blame" and "who is going to carry the can?". However my firm belief is that now is the time for all of us to ensure that the contractual arrangements and suppliers we depend on are documented, monitored and in place and where they are not take action to tackle this. There will be more about this process in First Team but now is the time to make sure any suppliers you use have been through the right process. Moreover if you are concerned about an issue or your own knowledge/skills in this area - speak up. This is a time to put things right and not simply point fingers.

A second strong theme in the report is our management of information. We have made really good progress on Data Protection over the last year but there are still instances of paper records in particular leaving the offices unnecessarily. Keeping adequate control is not just about the right system but also that everyone follows those systems and procedures. Across the council, information management and contract management are matters that the vast majority of us have a roll to play in.

Its an oddity of the role of Chief Executive that I find myself congratulating the Assistant Director for internal audit Maryellen Salter on the quality of her work whilst then having to challenge myself and the rest of the council to rise to the challenges that work gives us. But as custodians of public money that is exactly how it should be.

Nick

Now I expect that you have already been to the sites of other Barnet Bloggers today:-

Rocketing Roger Tichborne was first out of the traps 

Click here

and Mrs Angry of Broken Barnet was as witty & withering as usual

Click here
 

Now, this roll that you have to play non-stick Nick; would that be a cheese roll or a management role ? Oh dear.

So moving to more serious matters which the employees need to know about as they certainly won't have got the full picture from the Chief Exec's message:-

So last week Traversty said that plans would be announced and Mr Mustard was looking forward to reading them. Now non-stick Nick blithely says that "plans are in place". Oh what short memories you think we have. Please publish the plan or a Freedom of Information request will have to be made for it.

You forget to tell your staff what "Limited Assurance" means. Unless one read the definition one might think that it was almost OK. An Audit with Limited Assurance means :-

"Weaknesses in the system of internal controls are such as to put the client’s objectives at risk. The level of non-compliance puts the system objectives at risk."

i.e. the systems are pants ! and anything could be happening, as it was in the case of MetPro.

It also means management have not been doing their job, at every level, up to and including the Chief Executive.

Also, as well as paperwork going out of the building, non-stick Nick forgot to mention that Treasury were taking unencrypted laptops home that contained all of the bank details of the Council. Oh dear again, a complete data protection disaster, but evidently not worth a mention.

A good job I mentioned it then.

Yours frugally

Mr Mustard

keyword : Nick Walkley