The Independent London Newspaper

THE MILLIONS ‘MISLAID IN SLOPPY’ ADMIN

Islington Town Hall

Independent inspectors find financial blunders at Town Hall

Published: 02 July, 2010
by RÓISÍN GADELRAB

INSPECTORS have uncovered a catalogue of “sloppy” blunders and irregularities over the handling of Islington Council’s finances, the Tribune can reveal.

Shocked visitors to Monday’s audit committee meeting heard how the same invoices were paid twice and in some cases three times over, £5.4million of council tax payments has been “mislaid” and officials are sitting on £1m of payments to the council because they don’t know which department they belong to.

Islington’s new finance chief Councillor Richard Greening has ordered an immediate  inquiry into the findings.

The report, by independent auditors PricewaterhouseCoopers (PWC), revealed: 

  • At least £55,000 was wasted as invoices to contractors were paid twice and three times over.
  • More than £1m has been sitting in a “suspense” account since 2006 because officers can’t work out which department it belongs to.
  • Records of £5.4m of council tax payments disappeared when the Town Hall changed systems.
  • Vital financial data was not backed up for seven months because of a ban on putting data on memory sticks.
  • Four out of 10 contractors employed by the council did not have any formal contract with the Town Hall. 
  • Invalid expense claims were authorised for payment in the environment department.

Under the heading of “anti-fraud” and “forensic investigations”, the report revealed how £1,500 went missing from a social services petty cash safe, and another £559 was spent on a misused mobile phone, but that the perpetrators were never caught.

An investigation has also been launched into allegations of fraud at Margaret MacMillan Nursery in Archway. 

The findings alarmed members of the public who attended Monday’s meeting.

Of a sample of 30 suppliers from the council’s top 500, inspectors found that 10 invoices had been paid twice over and another two paid three times – amounting to £55,000 in overpayments. The other 470 suppliers were not checked.

Dr Brian Potter, chairman of the Federation of Tenants Associations, who was at the meeting, said: “It’s disgraceful. Once again this is hoodwinking the public. They should have checked every single supplier. I’m surprised they only declared £55,000. I fully expect that if they checked the rest the figure would escalate exponentially.”

He added: “Islington Council has been misrun for the last 12 years and it’s to be hoped Labour will do better – but that remains to be seen.”

But a spokeswoman for PWC told Monday’s meeting: “For a council that spends over £1billion a year, £55,000 isn’t that much money.”

Cllr Greening said he was not happy that the report did not give assurances that the problem of duplicate invoicing wasn’t more widespread.

He added: “I’ve asked officers to look at this. I’m concerned about some of the things in the report, in particular that only four of the 10 suppliers had contracts.”

Cllr Greening said it was “not good” that financial data hadn’t been backed up for seven months but said this had now been fixed, adding: “The council needs to do better than this and give clear assurances that money is being looked after.”

Audit committee chairman, Labour councillor Phil Kelly, said it was “deplorable” that suppliers had no contract.

“The audit letter is entirely retrospective and refers to the previous administration,” he added. “We’ve spoken to officers and there won’t be any more work without contracts. It’s sloppy practice.”

He said a suspense account is when the council “can’t work out which bit of the council is owed what”, adding: “It betrays poor accounting practice when you can’t trace a debt to a specific service.”

Referring to the missing records of £5.4m in council tax payments, he said: “I’m pretty sure we’ve got it but we can’t trace who paid. I don’t think it went missing, mislaid yes, clearly not a good thing.”

Cllr Kelly said he has asked officers to do an internal audit into the duplicate invoices, adding: “It’s a very bad situation, it’s lax. Every effort will be made to make sure overpayments are paid back. We’ve got to get our internal auditors to look at more than 30 contracts.”

Since the auditors uncovered the duplicate payments, the council has tightened up the way invoices are paid.

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