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No Accounting for Fylde

No Accounting for FyldeWe have previously drawn attention to aspects of the Commissar's financial incompetence, but now the chickens are coming home to roost bigtime (as they say in modern parlance). There is a serious financial muddle at the Town Hall. The brave new world of outsourcing - which involves getting rid of expensive, experienced, loyal (and local) members of staff, and replacing them with something cheaper, was always going to be unsatisfactory. 

Some will remember an earlier financial debacle that came to a head when Ken Lee trekked out to Elswick Village Hall to hold a Council meeting after receiving an adverse report form the Council's external auditors. That was the first time the Commissar's financial mismanagement hit the headlines. Councillors were shocked, and came close to calling for a vote of no confidence in the Chief Executive. The Commissar, with his iron grip persona pushed beyond its limit, turned on one Councillor who was asking awkward questions and said "And you can shut your gob".

That all came about because a company had been appointed to take over some of Fylde's accounting work. The work was handed over to them with insufficient checks made as to what they were doing or whether their sums added up properly (which they didn't). It wasn't theft or embezzlement, just plain incompetence and bad management. The state of the Council's books was so bad, that auditors couldn't even check them, and had to undertake several thousand pounds worth of extra work to put the accounts into order before they could issue their opinion.

Since then, we have brought you further examples of the Commissar's financial incompetence in these pages. They are too numerous to list individually, but you will find them in the Recent and Archive sections of this website. 

In case you think counterbalance is being unfair to the Commissar here, you might like to note that the Council's external auditors scored Fylde:   1 out of 4 for "financial reporting",   and 2 out of 4 for "financial management." in their most recent Annual Audit Letter (March 2007).

Now we bring you another piece of scandalous incompetence.

The Council's accounting year runs from April to March, with it's annual budget approved in March each year. So by the 1st April, the Council's officers can start to order the goods and services needed to deliver our public services. 

During the year, they process invoices for what they have ordered and, once the work is completed and the invoices are approved by the spending officers, payment is made by the finance department. There is always a bit of a hiatus at the end of the financial year trying to get work completed and invoices paid so they fall into the 'right' year's spending, but it was ever thus.

Although the spending for any one year closes on 31 March, there are inevitably a few invoices that get delayed. 

Sometimes other things cause delays as well (legal and insurance claims and the like), but Councils are required by law to have their accounts closed off by a set date.

This used to be 30th September, but three years ago the Government started to move it forward, and it is now 30th June. So when their financial year closed on 31 March, FBC had April, May and June to get all their debts collected, their invoices paid, and their books closed off properly for the year.

On 29th June, (the day before the required date), Finance Officer Mr. White presented an urgent and unexpected report to the Council's Audit Committee. It said that the Council would not be able to close the books down by the required deadline of 30th June. 

He cited high staff turnover and long term sickness as the cause of the delay. He did not identify any particular or major issues that could not be resolved, only that the staff had not been able to meet the deadline in time. The Committee resolved to meet again four weeks or so later on to approve the close down of the accounts.

The agenda item for 26 July (which is published in advance of the meeting) carried a further report saying the accounts (which should have been sent with the agenda) would be made available to Councilors as soon as possible prior to the meeting. - So they still weren't ready when the 'closedown' agendas went out a month late.

We now understand the 'final' accounts were received by members of the Council's Audit Committee at 10pm the night before their second meeting and, to make matters worse, when they got to the meeting the following day, there was a different set of accounts there waiting for them, so they had changed again overnight.

The stories coming back to counterbalance say that everything is in a real muddle.

We also now hear that Finance officer Brian White is leaving for pastures new. 

Whether he was pushed or whether he has jumped ship we're not sure, but going he is.

So what's going on here, and why couldn't the books be closed down?

Well, we have banged-on ad-nauseum about the Commissar not being fit to be in charge of the beer money, let alone a few million. He simply doesn't have a proper grasp of the situation. Furthermore, he choose a nice (well, mostly nice) man called Councillor Paul Rigby to be in his cabinet, and put him in charge of "Finance and Efficiency". 

But without wishing to offend, having heard Cllr Rigby read the prepared replies to questions on financial matters posed by other Councillors, (or even financial questions posed by members of the public), it's clear his forte lies elsewhere than finance. It's also clear he was never going to financially test or threaten the Commissar (like Gordon Brown did with Tony Blair for example)

So at the top, we have politicians nominally in charge, who don't understand Local Government Finance enough even to know what questions to ask their officers, and they surely don't have the experience to read between the lines of a financial report to realise what is really going on.

This wouldn't be so bad if you had a team of loyal and experienced staff, led by strong officers who would take the strain of financial management on themselves and carry less able Councillors who are nominally 'responsible'.

But the Commissar's dangerous and warped political dogma of privatisation, outsourcing, and joint working with other Councils has dissipated the teams of staff that worked well together, knew what they were doing, lived in the area, and were loyal to it. 

It has fragmented practices that worked, and replaced them with systems that don't. It is importing in 'financial mercenaries' who have no loyalty to the area, and a horizon as short as the next pay packet.

And it continues even today, with some of the most able revenues and benefits teams at Fylde about to be disassembled as Fylde transfers responsibility for these functions to Blackpool Council, chucking out the older, more experienced (and thus more costly) staff along the way in order to achieve the 'savings'

Given the financial maelstrom engulfing Fylde, you'd expect all hands to be at the pumps, keeping the ship afloat.

Yet in the middle of all this financial turmoil, (and on the same agenda as the report saying they won't meet the statutory date for closing down the accounts), we find a new "Risk Management Strategy" has been produced. 

This 30 odd page glossy strategy with photos, tables and attractive layouts galore must have taken hours of work to produce. An example of the sort of thing it says is:

"Risk Identification. 
This is achieved by interviewing key Members and Officers to identify strategic risks that may effect the Councilís performance in achieving its objectives. The process looks at risks to the Councilís priorities and includes risks in 13 key areas. These are Political, Economic, Social, Technological, Legislative/Regulatory, Environmental, Competitive, Customer/Citizen, Managerial/Professional, Financial, Legal, Partnership/Contractual and Physical. Risks must be triangulated to be carried forward in the process."


Talk about fiddling while Rome burns.

But it neatly illustrates the problem - 

No-one has their eye on the ball. Time is being wasted on rubbish like this, whilst no one is keeping proper track of what has actually been spent. 

This sort of esoteric strategic management is fine if you are the size of a city, with echelons of accountants keeping the machine running behind the scenes, and you have a population large enough to afford the overheads of strategic thinkers, but in national terms, Fylde is a piddling little Council, and it simply can't afford to spend time on this sort of thing when crucial housekeeping issues are being missed.

At the heart of the current problem, we understand, is a new computer system called 'CIVICA' (You can bet one of the C's is for "computer" and the A is probably for "accounting", but we're not sure about the rest of the acronym)

Introduction of this system was to have been overseen by the Accountancy Services Manager but this person was absent from work between November and April when it needed to be set up.

Given what we know, (and you are about to learn), one can't help but wonder if this was a stress related absence. From the reports we have read, it sounds to us as though he might have been tearing his hair out.

Furthermore, at the beginning of December one of the accountants also left the authority. In fact, when you look back over the year, out of five staff accountants there had been a turnover of four.

By now, the words "rats" "ship" and "sinking" spring readily to mind, and anyone who understands management and had half a brain would be having a look at what's going on here. Clearly there was a problem that needed to be dealt with. 

So to set up the new computer, 'external resources were secured'. 

This means they borrowed someone from Wyre Council. 

But unfortunately, Wyre also found themselves with staffing difficulties in their Finance Department, and had to take him back. (The chances are they were also introducing the same new computer system there - these things tend to happen on a county-wide basis so the different council computers can talk finance to each other) 

The process here doesn't augur too well for extending the Commissar's joint working schemes with Councils like Wyre or Blackpool does it? First sign of 'trouble a't mill' and the hired help vanishes!

Anyway, in the absence of senior financial staff of their own, FBC looked around, and got some agency accountants in. 

Now, for anyone who knows Local Government, this is the financial equivalent of pressing the Big Red Panic Button. But none of the politicians seems to have noticed the klaxons blaring, and red lights flashing, from the middle of the report. 

Worse (and, entirely predictably), when they arrived, no-one from the agency knew how to work the new CIVICA computer.

(If our readers can recall the joke about the barrel and bricks going up and down on a rope at a building site, they will recognise more than a passing resemblance here.)

As Mr. White neatly put the situation in his report to the Councillors "This has led to difficulties in meeting the advanced national timetable for the closing and approval of accounts from the previous financial year. To help overcome these difficulties and in addition to bringing in external support, staff in the Accountancy section have been working overtime for the past few weeks."

Yes, really.

Actually, reports are reaching counbterbalance that all hell has broken loose internally. 

It is only gossip, but we are picking up stories about people having to order goods and services on the old system, and pay the bills for them on the new system because the new computer system was left only half implemented when Wyre 'recalled their ambassador'.

This being the case, if Fylde's accountants are trying to reconcile expenditure that has been recorded and input onto two completely different computer systems in different formats, it's no wonder they can't get the books to balance.

We are also hearing stories that spending departments were being asked how much they think they have spent, because their accountants can't get at the figures! 

And big spending departments, like Dim Tim's 'Streetscene' were not actually sure whether they were solvent or bankrupt because no one knew.

And in the middle of this, the Commissar has the nerve to believe he can predict a £100,050 shortfall on this year's budget. 

He couldn't even tell you what he spent last year, let alone make predictions!

We think the External Auditors are likely to issue yet another qualified opinion on Fylde's accounts (this is getting beyond a joke), and that Fylde might well lose a star from its performance rating because of it's financial incompetence. It was graded two stars last time, so it might go down to being a one-star Council now. We begin to wonder if transparent stars are available.

We are also hearing dark mutterings about an external Commissioner being appointed to take the Commissar's financial mismanagement out of his hands, though how accurate this is we can't say at present.

Whilst one might hope this would bring in some proper financial common-sense, readers of counterbalance will know we don't hold with unelected people being brought in by Government to run local Councils, so we have mixed views about this possibility. 

But the real tragedy in this are those good, but misguided, councillors who stayed silent when this appalling Cabinet System was voted through, wrongly believing they should put loyalty to their party before loyalty to their towns and their electorate. They have allowed the local government machine to be come highly politicised, and to operate without the breadth of experience, and skills that are available amongst the 52 people that we elect.

Only Saint Barbara Pagett had the balls to stand up and be counted for her principles when she voted against the party line. We can only hope others come to their senses soon and speak up for change.

counterbalance has long advocated the abandonment of this appalling Cabinet system, and a return to all decisions being overseen, (and if necessary changed), by a vote of the full Council, together with a committee system where membership does not depend on selection by an individual, but on a vote of the whole council. 

Having a breadth of experience in different committees, taking part in each one, and learning how things should work, equips Councillors with the ability see when things are going wrong, and when to take avoiding action before it's too late. 

Clearly, the Commissar did not spend long enough in the learning phase.

It is always the case: if you fail to act soon enough when things are getting out of hand, the medicine that ultimately arrives is always more bitter. Sadly the bitterness is likely to be tasted by Fylde's electorate rather than its political classes.

When you don't know how much you spent, how much you have left, and thus what you can spend today, you can pretty well say things are out of hand, and it's time for a change.

The question is, will enough of Fylde's Councillors see their Emperor and his acolytes as naked as they really are, and make that change, or will they again bottle out and leave it to someone else?

Dated: 12 August 2007


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