Wednesday, 3 June 2015

Internal audit airbrushes £2.3 million losses

A 12-page report by Scottish Borders Council's internal auditor makes no mention of the large sums of money lost in the local authority's ill-fated efforts to develop a multi-million pound waste treatment facility at Galashiels even though the audit covered waste and recycling services.

It has already been revealed that the council's ill-judged involvement with New Earth Solutions Group, the contractor selected to deliver the project at Easter Langlee, has cost local taxpayers at least £2.3 million which was lavished on consultants and specialist legal firms from outside the area.

But the ramifications following the unexpected decision by councillors to suddenly abandon the contract after the scheme encountered funding and technological issues could mean the substantial financial losses will escalate even further.

The publication this week of SBC's internal auditor's annual report for 2014/15 refers to "identified weaknesses" although no details concerning those weaknesses have been outlined in the public report.

All we are told is that 34 separate internal audit recommendations were made, twelve of them have been implemented, and six are overdue.

The report by Jill Stacey, Chief Officer, Audit & Risk, declares: "Where governance improvements were identified these were highlighted to management and actions were agreed to make improvements to manage the risks to the council."

But again there is no information relating to the governance improvements required or the actions agreed. The fiscal checks carried out during the last financial year covered 24 different topics and services ranging from waste and recycling to the council's proposed Culture Trust.

And the reason for the so-called governance audits?

According to the report: "To provide assurances in relation to the council's corporate governance framework that is a key component in underpinning delivery of the corporate priorities within the council's corporate plan". I'll leave you to work that one out for yourselves.

One financial expert who read the report told us: "It is hard to believe there is no reference to the failed contract with NES especially as waste and recycling was an area that was audited. Perhaps the issue was dealt with but has not been made public. We may never know.

"Given that SBC is breaking EU law with the amount of waste going to landfill and the potential for LAS (Landfill Allowance Scheme) fines, I find it difficult to understand why this has not been identified by the auditors.

"The auditors should also pick up the risk of increased costs due to higher gate fees for waste treatment in Scotland compared to those in the NES contract and therefore the need to make provision for this, plus the cost of procuring. Given SBC has admitted the failed waste project has cost the £2m+ I assume they will need to set aside a similar amount to re-procure".

Audit Scotland, the public spending watchdog, has said it will not carry out its own independent investigation into the Easter Langlee debacle.

Instead, SBC's external auditor (KPMG) will consider concerns expressed over the failure of the waste treatment project in planning their audit work for 2014/15. Should any significant issues be identified by the audit they will be reported in the annual report on the 2014/15 audit, due to be published on the council’s website by the end of 2015.

However, at least one senior councillor involved with the catastrophic contract has said he is confident SBC acted properly, and that the council will be vindicated by the external auditors.

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