Thursday 29 September 2011

Culling the white elephants - an armchair auditor writes

Earlier this week the Carmarthen Journal reported that Carmarthenshire County Council has decided to pay a company from North Wales to take Garnant golf course off its hands. Details of the deal can be found here. Councillor Clive Scourfield, member of the executive board with responsibility for leisure services and generation, said he was delighted. Council tax payers who will have to keep forking out for the golf course for another three years may well see less reason to celebrate.

This latest piece of "good news" (because that's how this PR obsessed council is spinning it) comes in a week when the council leader, Meryl Gravell, has again been warning of the spiralling cost of social care, and after wielding the axe here, there and everywhere, she has run out of ideas and is seeking suggestions from Plaid Cymru and others she has hitherto refused to talk to. Until now. Cllr Peter Hughes Griffiths, the leader of the opposition Plaid group, which is also the largest political group on the council,  not long ago complained to the press that Mrs Gravell had not spoken to him once since the last council elections.

So resisting the temptation to use rude gestures, here are some helpful tips for Carmarthenshire's bewildered ruling Independent/Labour administration and the chief executive, the visionary Mark James, described by Labour leader Kevin Madge as "the best council chief executive in Wales". If not the universe.

Accounts can be quite boring and confusing, can't they? All those gobbledygook words and big numbers. What does it all mean? Well, helpful Mr Anthony Barrett, the man you appointed to audit your accounts, writes very clearly. Here's what he had to say about the way you account for all those big ticket capital items:

Last year we reported that the system for capital accounting and fixed assets required significant improvement. This year we have seen little improvement, the Council still needs to:

Improve joint working between property and finance staff to ensure that the asset register is kept up to date. Responsibility is currently confused and responses to our audit enquiries delayed. 
Improve asset verification arrangements. The Council undertook an asset verification exercise in 2010-11 but the response rate was poor and where issues were identified, the asset register was not updated.
Improve processes for ensuring that assets are revalued in line with accounting requirements and revaluations are better evidenced. 
Ensure capitalisation limits are complied with. A number of assets have been capitalised below the Council’s deminimus limit. 
Review capital reserves annually. Last year we reported a £448,000 balance within the Deferred Capital Receipts Reserve could not be substantiated. This was not reviewed in 2010-11 as agreed. 

In other words, he is telling you that you have not got a grip on what you own and what it is worth. Judging from what has happened in my neck of the woods over the last few years, it is fair to say that as a council, you do not always know what belongs to you and what belongs to other people - charging rent for properties owned by someone else, and taking land gifted to someone else. That sort of thing must play havoc with the asset registers.

But there are some assets which have Carmarthenshire written all over them, and others which thanks to the visionary and strategic decisions taken by you, we have ended up owning to varying degrees, as unpaid debt has been converted into equity. Garnant Golf Club has probably cost the council tax payer getting on for £3 million so far, and the Scarlets new stadium and the National Botanic Gardens are among other strategic investments which have become a permanent and massive drain on the council's finances. The former St Ivel creamery in Johnstown was another "strategic investment" made not so long ago and which is now being gifted to an American-style evangelical church. Another £1 million down the drain, except of course that the public is not allowed to know the true figures.