Ron Simpson, Uppingham, Management, at Police and Crime Commissioners, Meeting

Ron Simpson, Uppingham, Management, at Police and Crime Commissioners, Meeting

KPMG, Audit Report, Corby Council’s, management, Corby Cube, Oakham Enterprise Park, Progress Report, Cllr, D. Richardson, UKIP

In June of this year KPMG issued an Audit Report on Corby Council’s project management of the Corby Cube. Some of the findings were that:

• There was insufficient member oversight at critical periods of the schemes

• Where established governance arrangements and internal controls did exist they often did not operate as they should have done

• Financial and project management of the schemes was poor

 

We have, time and again, emphasised how it is essential that Rutland Councillors take a keen and deep interest in all projects, seeking and reviewing all the facts, especially the financial detail and implications, since it is we, as Councillors, that have to approve such expenditure in light of all those facts and ultimately be held accountable.

So take for example: On the 20th June 2013, given that there was a “Oakham Enterprise Park Progress Report” in the Places Scrutiny Meeting that night, I duly sent the following email requesting information:

Dear ………………,

The Places Scrutiny Meeting tonight is considering Report 154/2013, Oakham Enterprise Park Progress Report.

I note there is no financial report or detail, which I would have considered one of the most important aspects of the project, especially given the recent criticism this week of Corby Council by its auditors, KPMG, in which I understand they were highly critical of Councillors for not being diligent enough in checking the financial situation and progress of several projects.

In the Risk Management section of the Report it notes the risk for Finance as “High”, I would therefore expect a constant financial update in Reports. Would you be good enough to send a full breakdown of the finance for this project, outlining all costs and income to date. Would it also be possible to do this showing progress against the original Business Plan.

Many thanks.

Yours sincerely,

Councillor D.Richardson

This is the reply I received from the Single Point of Contact (SPOC) (Note: as a consequence I have no idea who sent this):

“The project is being managed within the project budget and business plan expenditure forecasts/income projections as set out in previous report to Cabinet (25/9/12, Report 182/2013) as delegated by Council (Report 14/5/12, Report.98/2012).”

We are willing to hear from anyone who finds this acceptable, since your Conservative Councillors do. No information or detail whatsoever has been provided. To be merely told that all is being “managed within the project budget” of some 9 months previous, for which we have had no interim Report, is, in our opinion, unacceptable. At the very least one would expect a detailed Monthly financial update made available to all Councillors and, as far as we are concerned, also published on the Council website for the public.

However, the Business Plan in Report 182/2013 referred to, was nothing more than a mere half side of A4. No Bank Manager, or anyone else for that matter, would accept such a scant Business Plan, with no detailed breakdown whatsoever. Furthermore, this Report, in our opinion, should never have been exempt; this is public money, your Council Tax and you have a right to know how they plan to spend it. Worse still, the Business Plan had changed significantly from the one of only 5 months previous referred to of May 2012, with Income suddenly over £1M more and Capital Financing costs nearly £1M more, with no detailed breakdown for such a substantial change. Yet Conservative Councillors once again blindly approved this without question.  (That Capital Financing cost will impact on your Council Tax)

We feel it is totally unacceptable that we be treated in this manner as your representative, not providing information when requested, when all we are trying to ensure is that your money is spent to best effect. It is essential we are fully informed and have detailed breakdowns of finance in any project. We do not want Rutland Council to be on the receiving end of a KPMG report which states:

“There was insufficient member oversight at critical periods of the schemes”

However, that oversight can only be provided if that information is forthcoming.

It will be interesting to see how Rutland Council’s Auditors view this?  Especially given their Report below:

Detail of the Corby KPMG Report:

Auditors raise concerns over Corby Borough Council’s regeneration management arrangements

KPMG LLP, the appointed auditors of Corby Borough Council, have issued a public interest report which highlights flaws in the Council’s arrangements for managing significant capital regeneration projects. These are the Cube civic offices, Kingswood estate developments, improvements to the Rockingham Triangle sports complex and the sale of land in the St James area of the town.

The three construction projects involved over £67 million over the last 6 years and whilst all of them involved other organisations the Council has played the major role in managing the projects and bearing related risks. The Council sold the land at St James in 2010 for £3.8 million. During this period the Council has had limited usable revenue reserves over its designated minimum balance of £0.8 million and its external borrowing increased from nil to a high point of £47 million in 2011/12.

The report acknowledges the very real benefits that the regeneration projects have brought to the residents of Corby and the surrounding areas, that external borrowing has since reduced to £36 million and that the Council is starting to take action on the reported weaknesses. However, KPMG found that:

· the Council’s arrangements for managing the projects were ambiguous and ill defined leading to uncertainty as to who should have made key decisions

· There was insufficient member oversight at critical periods of the schemes

· Where established governance arrangements and internal controls did exist they often did not operate as they should have done

· Financial and project management of the schemes was poor

· On the face of it the land at St James was sold for considerably less than best consideration without getting the requisite statutory approval to do so 

· This was compounded because the checks and balances, including the statutory responsibilities of key officers, which should have alerted the Council to the failings, did not operate

The auditors conclude that these have meant that the Council:

· may have breached its statutory obligations and made decisions and against its own internal policies and procedures;

· has exposed itself to greater risk than it needed to have done; and

· would have been in a better position to respond to the significant financial challenges currently facing the Council if the failings had not existed.

The report makes 18 recommendations for the Council to consider covering governance, statutory obligations, Council policy and procedure, financial and project management, use of professional advice and actions of senior officers.

KPMG’s audit director Neil Bellamy said: ‘There is no doubting the very real benefits to Corby residents from the regeneration projects considered in this report. However, these were at the expense of good corporate and financial governance. We found that decision making arrangements were unclear, and that there were significant failings in the design and operation of the Council’s governance arrangements. Together these led to the Council making decisions when it was not fully aware of the financial impact they would have, exposing it to unnecessary and significant financial risk, and which led to a likely breach of its statutory obligations. In our view these placed it in a weaker position from which to address the current financial challenges it faces.

“On top of this it is disappointing that the ‘failsafe’ statutory responsibilities of key senior officers did not operate as they should have done, which would have brought these failings to light sooner.

“It is imperative that the Council learns from the above and that officers and members work together to strengthen governance arrangements and establish and embed a culture and environment where the arrangements operate as they were intended.”

The report will be considered at a meeting of the Council in early July, to be held in public, when the Council will provide a response to the points raised.  The Council will confirm the date shortly.

Copies of the report are available from Corby Borough Council or from the Audit Commission website at 

www.audit-commission.gov.uk/corbypir