Auditors slam Copeland Council

The Audit committee of Copeland council met today. The good news: a few days from the end of the 2008/2009 financial year, Copeland Council's accounts for 2006/7 and 2007/8 are finally being signed off, months behind schedule.

The bad news is that the Auditors have made a series of absolutely damning reports on Copeland's financial management.

Copeland is officially one of the eight worst district councils in England in terms of management of it's resources.

The last occasions I read a report as scathing about the financial management of a large organisation as the official Audit reports on Copeland Council which were presented today, those reports were about Worldcom and Enron. Here are some extracts from the reports from the Audit commission.

The "Annual Audit and inspection letter" begins as follows

Key Messages

"Overall, the council has inadequate arrangements for managing the use of its resources. In this respect, Copeland was one of only eight district councils in England which were assessed as inadequate for the financial year ending 31 March 2008.

Underpinning this assessment was inadequate performance in three of the five areas assessed:

* Financial Reporting
* Financial Management; and
* Internal Control

The council did not have adequate arrangements in place in 2007/8 to produce its annual accounts in line with statutory requirements and in accordance with professional standards. As a result the council was unable to publish its audited accounts for the year by the statutory deadline of 30 September 2008."

Other comments in the same document include

"Similarly the council continued to experience severe difficulties in producing and publishing its audited accounts for 2006/7"

"The council's published financial statements are a key demonstrator of its accountability for public funds. Failure to publish them on time and to appropriate quality standards can only weaken the coucnil's ability to demonstrate that accountability."

"Weaknesses in financial systems, in 2007/8, meant that members could not be assured that the reports they received were consistent with underlying financial records. Fundamental weaknesses were also found in the council's arrangements for managing it's asset base."

"The Council experienced significant failings in internal control in the early part of 2008/9."

"On the basis of a selected set of service and other performance indicators the council's overall performance in 2007/8 was below the average for all district councils."

"Due to the inadequate arrangements for managing the use of resources, we anticipate giving a qualified value for money conclusion for both 2006/07 and 2007/08."

"There is a particular need for the council to improve its financial reporting arrangements and to ensure that the 2008/09 accounts are produced in accordance with statutory timescales and professional standards."

The Annual governance report on the 2006/7 accounts includes the following

"There were seven material errors in the primary statements for 2006/07 including two material errors in the Income and Expenditure account, three material errors in the balance sheet, the complete re-statement of the Statement of Recognised Gains and Losses and one material error in the cashflow statement."

"I also identified a significant number of other errors within the financial statements and disclosure notes"

"During 2008 the council submitted a number of versions of the 2006/7 accounts, each of which were designed to reflect all of the amendments required to produce a statement of accounts on which I could give an audit opinion. However, my review of these versions of the accounts indicated to me that some of the required amendments had not been made correctly, and that other amendments had been made to the accounts over and above those which had been discussed with me."

"The council's arrangements for managing its asset base were inadequate. The council was unable to reconcile between the register of assets held by the external valuer and that held by the council as its asset register as at 31 March 2007."

"Fixed assets at 31 March 2007 were understated by £3.135 million (9% of the council's fixed asset base.)"

"I therefore propose to issue a qualified value for money conclusion."

The Annual governance report on the 2007/8 accounts includes the following

"There were seven material errors in the primary statements for 2006/07 including two material errors in the Income and Expenditure account, one material error in the balance sheet, one material error in the Statement of Recognised Gains and Losses and three material errors in the cashflow statement."

"I also identified a significant number of other errors within the financial statements and disclosure notes"

"Draft accounts for 2007/08 were presented to, and approved by the Audit Committee in June 2008 ... these accounts were incomplete and inaccurate and were therefore returned to the council as I considered them to be 'un-auditable'."

"I have had to make a number of recommendations in this report to address the weaknesses within the accounts processes ..."

"The council did not identify and incldue all the required items in the disclosure notes on financial instruments"

A list of serious failings identified by the auditors could go on, and on, and on. These reports indicate that the financial management regime over which the present council executive has presided was totally inadequate and it is time they took responsibility.