The District Auditor for the London Borough of Lambeth during the 2006-07 and 2007-08 financial years has today issued a Public Interest Report (PIR) on two separate issues during this period.
The PIR covers aspects of the Council's management of its 'accountable body' responsibilities for the Clapham Park Project (CPP) and, separately, how the Council took the decision to transfer its Clapham Park Estate properties to Clapham Park Homes. The report concludes there was no unlawful item of account in either case. However, there were issues which merited publication of the PIR.
The Council (on behalf of Government Office for London) paid CPP capital grants of £8.9m in 2006-07 and £7.2m in 2007-08. The first part of the report considers whether the Council operated appropriate financial systems and monitoring procedures and controls over these grants, in particular for New Deal for Communities (NDC) funding paid to CPP.
The report identifies 'significant weaknesses' in how the Council undertook specific aspects of its role:
- The CPP and Council failed to monitor adequately whether project spending was in line with annual and lifetime approvals.
- Inaccurate and uncertain information on some of CPP's spending was included in the Council's accounts.
- CPP held inadequate inventories of assets bought with the grant funding.
- There was insufficient evidence that some CPP expenditure was eligible for the grant funding it claimed.
- Incomplete audit trails were maintained for non-NDC income received by CPP.
- CPP did not comply with competitive tendering requirements when letting contracts.
- CPP did not keep adequate records of potential conflicts of interest of its board members and staff.
The Audit Commission's Kash Pandya, District Auditor at the time for Lambeth Council, commented:
'There were significant weaknesses in how the Council managed grants made to CPP. Although these were not unlawful and do not represent a failure to carry out minimum 'accountable body' responsibilities, the Council and public should be aware of these weaknesses, especially in regard of how the Council handles other partnership arrangements. My report acknowledges that the Council has put new procedures into place since May 2008.'
The report recommends:
- The Council puts suitable measures in place for the wind-up of CPP as an NDC project. (From 1 April 2011, it is likely that CPP will become an independent charitable body).
- The Council learns lessons about the need for robust financial controls and governance arrangements within other partnership arrangements.
- Regular reports on the effectiveness of the financial monitoring and controls are provided to the Corporate Committee.
The second part of the PIR covered the decision to transfer 2,000 Clapham Park Estate homes from the Council to Clapham Park Homes, taken at a full Council meeting in February 2006. This decision was taken at that meeting after 'the guillotine had fallen' which meant that it was put to a vote of all present without a debate.
The report concludes that this decision was appropriately considered as a full Council agenda item, and that it was legitimate to take a vote after 'the guillotine had fallen'. However, the Council did not comply with its own Constitution as no 'show of hands' or electronic means were used for the voting procedure.
The report concludes that this did not make the housing stock transfer decision unlawful because:
- The Council held appropriate statutory powers.
- It wanted to make the transfers.
- There was no evidence of bad faith in the decision-making process.
- There is no indication that members present had requested a debate or review of the decision.
Kash Pandya commented:
'Although I do not believe the decision to transfer the Clapham Park Estate housing was unlawful, I am not satisfied that the vote complied with the Council's own Constitution. The Council must improve its procedures, including recording the vote, for votes taken 'after the guillotine'.
The report recommends:
- The Council ensures adequate records are kept of votes taken 'after the guillotine'.
- All votes are taken in line with the Constitution.
The Council will now consider carefully the issues and recommendations raised in this report and agree the detailed actions needed in response. The current Appointed Auditor will monitor the implementation of these actions as part of ongoing routine audit work.
Notes to editors
- External audit provides accountability for public money. It makes an important contribution to the stewardship of public resources and the corporate governance of public services.
- The duties and powers of auditors appointed by the Audit Commission are set out in the Audit Commission Act 1998 [and the Local Government Act 1999 - LG version only] and the Commission's statutory Code of Audit Practice. Under the Code of Audit Practice, appointed auditors are also required to comply with the current professional standards issued by the independent Auditing Practices Board.
- Appointed auditors act separately from the Commission. In meeting their statutory responsibilities they are required to exercise their professional judgement independently of both the Commission and the audited body. Auditors may report aspects of their work widely to the public and other key stakeholders.
- The Audit Commission is an independent watchdog, driving economy, efficiency and effectiveness in local public services to deliver better outcomes for everyone.
- Our work across local government, health, housing, community safety and fire and rescue services means that we have a unique perspective. We promote value for money for taxpayers.
- On 13 August 2010 the Secretary of State for Communities and Local Government announced that he plans to disband the Audit Commission. His intention is to have new arrangements in place for auditing England's public bodies by 2012/13.
For further information please contact: Chloe Morales Oyarce, Regional Communications Manager (London) on 0844 798 2095.