Wednesday, 26 April 2017

Money Matters at Cornwall Council

This is a copy of the email I have written to senior officers at Cornwall Council:

I attended a very disturbing meeting of the Audit Committee on Friday.

The good news is that the measure I fought for in the last Council of having independent members on the Audit committee who actually know something about audit (not just councillors doing their best) is bearing fruit.

The last item on the agenda related to the appointment of external auditors.  I was astonished to hear an independent member of the Committee say that the Committee was being asked to make a decision about how to appoint its auditors after the official deadline for one of the two methods (the national method through Public Sector Audit Appointments Ltd (PSAA)) had passed (although we might still get under the wire).

I also heard from an independent member that 99% of similar bodies use the PSAA method.  This seems correct as if one looks on the PSAA website only 11 bodies are using the other route.  Two of these are Cornwall Council and the Council of the Isles of Scilly.  Indeed, from this it appears that the decision has already been made.  Cornwall Council is listed as having made the decision to go the other route.

The paper for members (which omitted to explain any of this relevant information) said that the benefit of us doing our own procurement is that we could 'keep it local'.

This would be great.  However, the fundamental point with auditors is to ensure that the Council’s relationship is not too ‘cosy' with them.  Further, they should not only be independent but be seen to be so.

When I asked which firms would meet all the criteria set by the Council about locality working and have the skills for the job, it became apparent that it would only be Grant Thornton.  Other national firms would have the qualifications but they would need to fund a local office.

It was the view of the independent members of the Committee that the work of auditing Cornwall Council, RCHT, Council of Isles of Scilly and related Council companies was unlikely to justify an office.

I have no reason to doubt the integrity of Grant Thornton but clear and transparent processes are very important.

In this connection, my reason for attending the Audit Committee was that I understood there would be an update on the National Audit Office investigation into the Council’s LOBO debt. There was. Grant Thornton said that the investigation was ongoing and was unlikely to be resolved before August (so nearly a year).

This has arisen out of objections to the Council’s accounts about debt inherited from the old Lib Dem led County Council.  The objector is, I understand, seeking to establish as to whether the LOBOs (particularly the ‘inverse floaters’, described by the auditors as ‘unique to Cornwall’ - not in a good way)  are ‘irrational’ and possibly illegal.  They certainly appear to be irrational. This was a case of heads the banks win and tails, Cornwall loses.

In a spirit of independence and transparency I would be obliged if the finance dept or the auditors would send me copies of the objections.  Cornwall Council should be campaigning to get out of these loans.  It should not be covering them up.

This matter was discussed at 2nd September’s Audit committee but minuted as if it was almost a good news story.  It was also discussed at Full Council on 21 February but minuted as if it was no big deal.  That is not what Channel 4 thought.

This is head in your hands stuff.

I look forward to hearing from you.

Fiona Ferguson

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