OPPOSITION Tories believe there are “inadequate systems of Internal Control at Warrington Borough Council that if not urgently addressed could lead to other “financial fiascos like the Together Energy debacle.”
But a move to amend the Annual Governance Statement at a recent meeting of the Corporate Governance Committee was defeated by the controlling Labour Group, with deputy leader Cllr Cathy Mitchell, who said some of the issues being raised had not yet been discussed at committee and that the council regularly reviewed examples of best practice in governance and in local government.
Tory councillors had proposed an alternative conclusion to the Annual Governance Statement. The alternative conclusion was that the Council had an inadequate system of internal control and that these inadequacies needed to be addressed as a matter of urgency.
Tory Councillors Ken Critchley and Mark Jervis drew upon their direct experience of the workings of the Council and the findings of the Audit and Corporate Governance Committee’s own self-assessment which reported that only 50% of the members who responded considered the committee to be effective!
The Audit and Corporate Governance Committee plays a key role in the Council’s governance framework along with the Corporate Governance Group and the Internal Audit function.
The Conservative Councillors not only believed that the Audit and Corporate Governance Committee was ineffective but also raised concerns regarding the effectiveness of the Council’s own Corporate Governance Group.
They say they learned there was no external input into the Group, that the Group met only four times a year each meeting lasting approximately 2 1/2 hours in duration, that the Group had not considered the implications for governance of the failure of Together Energy, the impairment of the valuation of Redwood Bank, the Adverse value for money conclusion of Grant Thornton or the Max Caller Value for money inspection report into Liverpool City Council. These concerns were further heightened when copies of the minutes of the meetings were requested to verify the Committee’s activities and there appeared to be a reluctance to release them to the Conservative Councillors.
Additionally, the Conservative Councillors were concerned to learn that the internal Audit function, had limitations to the scope in its audit opinion relating to the audit of the Council’s accounts, this related to the absence of an external audit opinion for 20/21 or 2021/22 and the absence of an independent external review of the Council’s commercial governance.
It was a further concern to note that the internal audit had not considered the recently issued External Auditors Adverse Value for Money Conclusion for the 2017/18 accounts when formulating its view of the effectiveness of the Control Systems of the Council.
Concerns were heightened when it was reported that the internal audit function was approximately 1.3 heads down on staffing levels, and that the size of the department had been reduced despite the increased complexity of the Council’s commercial operations.
Conservative councillors concluded that based upon three key elements of the Council’s Governance Framework being compromised that the systems of internal control of the Council were inadequate.
An amended wording to the Annual Governance Statement proposed by the Conservative Councillors read,
“Having due regard to the significant governance issues that have been outlined in this statement and the lack of effective member scrutiny, the lack of openness and ongoing concerns regarding the value for money being achieved by the Council our review finds that the Council has inadequate systems of internal control to support the achievements of its policies, aims and objectives and those control issues have to be addressed as a matter of urgency.”
The motion was defeated by Labour members who voted as a block against it.
Cllr. Ken Critchley (Tory finance spokesman) said: “It is my opinion that the key controls of the Council’s Governance Framework are not operating effectively.
The Audit and Corporate Governance committee is not effective, the self-assessment report supports this view, it also, in my opinion, operates in a partisan fashion which seriously undermines its governance role. Additionally, the committee has failed to follow the guidance in that it has not recruited an independent member and continues to drag its feet in this vital appointment. Furthermore, the committee’s structure is contrary to the recommendations contained within the Max Caller report into Value for Money at Liverpool Council, namely that the Audit Committee should be stand-alone and not sit within a combined Audit and Corporate Governance Committee,
“I am mystified why the Corporate Governance Group would not have considered the governance failures of Together Energy and Redwood Bank, it would also appear to me to be best practice to study reports like the Max Caller Value for money inspection report on Liverpool City Council to see what lessons could be learned by Warrington from the failures in other Councils.
“For the internal Audit function to be under strength in the context of an ever more complex Council is very concerned and for it the function not to have considered the implications of the recently issued Adverse Value for Money findings of the External Auditor, in my opinion, weakens the reliance that can be placed upon its assurances.
“I am deeply concerned that unless the flaws in Governance and internal controls are recognised and dealt with that the Council is highly exposed to more fiascos like the Together Energy debacle.”
Deputy leader Cllr. Cathy Mitchell
“A number of the matters raised have not yet been discussed at the committee. For example, the self-assessment agenda item was formally deferred in the previous meeting to be discussed at a future meeting – which current committee members will be aware of. The council regularly reviews examples of best practice in governance and in local government and also considers any external inspection reports as part of its commitment to continuous improvement.”
“Finally, it must be stressed that if elected members have concerns about officers or their operational departments or functions, they must raise these concerns through the correct channels.”
2 Comments
Methinks Cllr Mitchell protests too much.
She fails to mention that WBC were warned about failings in audit governance. This was the main recommendation arising from GT’s decision into Chris Hagget’s 2017/18 objection.
Specifically in para. 60 of their letter. It arose from the weaknesses in governance identified in para. 32, which even cast “doubt on whether lessons would be learnt”!
If foot dragging were an Olympic sport, WBC and those chairs of committees and other Cabinet members would romp home with gold every time.
I remember at least two Audit Committees where the matter of independent professional members was raised. It had been a recommendation by the LGA in their 2019 Corporate Peer Challenge Report into WBC.
Nothing of course has happened. I even remember the previous chairman, Cllr Fitzsimmons being extremely sniffy and dismissive at one Audit meeting when this was raised by Cllrs Froggatt and Marks.
I remember thinking then, ‘this ain’t going to happen/ I’ve not been disappointed.