Barnet’s Labour councillors are calling for audit firm, Grant Thornton, to publish their confidential report into financial control weaknesses in Barnet Council following the conclusion of a court case into a £2m fraud against the Council.

A former employee of Re Ltd – the Council’s joint venture with Capita – was jailed for 5 years after pleading guilty to the fraud at Harrow Crown Court on 31 July. Capita, who also run the Council’s finance department, have underwritten the financial loss to the Council.

The Council commissioned Grant Thornton to conduct an independent review of financial controls when the fraud came to light. Their report has not been published in order to allow time for Capita to respond to the issues raised. But Labour councillors believe that Capita have already had several weeks to respond to the issues and are dragging their feet. The report should now be published for full transparency.

The public report ‘Annual Internal Audit Opinion 2017/18′ which was discussed at the Audit Committee on 17 July states in the section on financial control and fraud risk that:

“Internal audits undertaken during the period, including audits of key financial systems, demonstrated a weakening of the financial control environment. This included a number of areas where evidence could not be provided to confirm that basic fraud prevention controls were operating including segregation of duties for transaction approvals and reconciliations, proactive review of areas with a high fraud risk due to value or known issues, and user access to the key financial system of Payroll.

“During 2017/18 the Council has been dealing with a significant financial fraud issue. This matter came to light late in December 2017 and the Council responded immediately with the following actions: a criminal investigation commenced immediately by the Corporate Anti-Fraud Team (with relevant support where required from the Police); the suspect was suspended from work immediately and shortly after dismissed; and stringent additional emergency financial controls were immediately put in place to safeguard the council’s finances until a full review could be undertaken. An independent review of financial control and financial forensic analysis was commissioned and Grant Thornton were appointed to undertake this review.”

Leader of the Barnet Labour Group, Cllr Barry Rawlings said: “It is vital this report is published. This appalling fraud raises serious concerns about the lack of financial controls under the Conservative’s massive outsourcing contracts with Capita.

“We need reassurance that there are no further frauds to uncover and that proper processes are in place to ensure this cannot happen again.

“The Council must restore residents’ confidence in the integrity of its finance operation, and full transparency is an important element of this. There has been a culture of this administration down-playing problems in the Council and Capita, and this has been raised as an issue by the Council’s auditors.

“Grant Thornton releasing this report will be an important first step in holding the administration and Capita to account for their actions and in-actions. I have written to Grant Thornton asking them to publish the report now that the court case has concluded.”



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