Babsgate 3: Now it’s time for us to do the ‘We told you so dance’
Westminster City Council has finally approved the 2011/12 accounts for this year, all nicely published on its website for the residents and taxpayers of the borough to admire, and even ‘armchair audit’ if they so desire.
All this, after some terrible interruptions by Nutsville. We tried our best to show the council just how bad the accounts were, and how they simply didn’t add up (see Babsgate 1). We drew our concerns to Westminster Councils Audit & Performance Committee where the Chairman, Councillor Tim Mitchell dismissed us by not answering one single point that we had raised. Instead his reply back was to say that as far as he and his committee were concerned everything was OK.
So the final Westminster City Accounts have been signed off by Mike More (Chief Executive), Barbara ‘Babs’ Moorhouse (councils chief operating officer) and the councils Audit & Performance Committee headed by Cllr Tim Mitchell as giving a true and fair view of the financial position of Westminster City Councils accounts.
It’s just a pity that those accounts are only fit to light a fire with, as nothing in them can be relied upon.
Lets start with basic accountancy for beginners lesson 1
The Trial Balance for any accounts in any organisation should always come back to zero.
Now go to page 36 of Westminster Councils accounts with the page titled ‘COMPREHENSIVE INCOME AND EXPENDITURE STATEMENT’ where the Comprehensive Income & Expenditure Total is shown as 199,754k
Now go to page 38 (the balance sheet) to get the two balance sheet movements between 2011 and 2012, do a little bit of maths (Babs sweetie this is called subtracting or even taking away).
1,124,359 k (2012) -- 1,334,455 k (2011) = 210,096 k
Now a little bit more maths
210,096 k -- 199,754 k = 10,342 k
Or to put it plainly, the published accounts for 2011/12 are out of balance by £10.3 million.
Yep that’s right, by £10.3 million pounds, wow, that is huge, and all missed by Babs Moorehouse, Mike More, Cllr Tim Mitchell, and his fellow Audit & Performance Committee members, but not by Nutsville.
The complete failure of accounting can be backed up by any audit firm in London, and Nutsville suggests that Westminster City Council gets some auditors in as soon as possible.
Basic accounting lesson 2 Segmental Reporting
Depreciation for every Local Authority should always come back to Zero, the reason for this is that assets are funded by Capital Receipts and should not have any affect to the Council Tax Payer.
A Capital Receipt can be specific Capital (asset) funding or be generated from the sale of an asset. Accounting regulations are very strict that capital receipts can not be used to fund Revenue expenditure.
On page 40 of the accounts Babs’ accounts tell us that depreciation on the Segmental Reporting is minus £1m
Lesson 3 Officers pay
We are constantly being told of the pay freeze placed on public sector workers for all but the lowest paid workers. So it may come as a surprise to many that one of the highest paid public servants at Westminster City Council seems to have pulled off the impossible.
Westminster City Councils final published accounts for last year ( download here ) told us that the councils second in command, Chief Operating Officer (with responsibility for finance and performance), Barbara ‘Babs’ Moorhouse earnt the paltry sum of £192,617. But when the council published its last draft version of accounts for this year we are told that Babs is now being paid £216,481, an increase of £23,864.
Even more of a surprise was to learn from this years sparkly published final accounts (page 44) that the figure we were told Babs was paid in last years final accounts was not in fact £192,617 but had jumped to £ 217,620, an increase of £25,003.
Babs can’t even get her expenses right, as in the final accounts for 2010/11 her expenses were £332, but in this years final accounts she claims that for the same year (2010/11) they were £796.
Which set of final accounts were correct, last years or this years or neither? How much does Babs really get paid, because the public can’t put any trust in what’s written in Westminster City Councils final accounts?
These errors show enough money hiding in the accounts to have been able to keep on all those accountants and financial experts that Babs has sacked in the last year under her wonderfully named transformation programme ‘Finance Foundations’.
On page 4 of this years final accounts Babs tells us that “The 2011/12 year end process was delivered under the new “Finance Foundations” operating model. Overall the process has worked much better than in previous years.”
Worked better for who, herself? In the two previous years before she introduced her ‘Finance Foundations’ programme the draft and final accounts never showed all these obvious errors like they do this year.
The foundations are already crumbling in their first year, and we haven’t even mentioned the floating £5M that the District Auditor has in his report. Perhaps the council needs a time machine so they can really cook the books properly without anyone like us asking awkward questions.
So what could have happened, was this a case of crude accounting or a simple typo in the accounts and draft accounts. It could not possibly be a pay rise pushed through under the radar, could it? Well Babs has got form for doing things under the radar ( see Babsgate 2).
One explanation we didn’t expect would be that Babs had been paid a bonus of over £20,000 for each of the last two years. No, not after Westminster City Councils chief executive had said so many times that no one in the council would be getting a bonus. Even the relativly new leader of the council Philippa Roe is also against bonuses.
Remember this video from 2011 where the BBC exposes the culture of paying staff bonuses through its housing company City West Homes
During the video Westminster Councils states it had stopped paying staff bonus years ago.
Babs increase in pay cannot be a pay rise either, as the Local Government Association are keen to point out to us that senior council staff don’t set their own salaries, they are set by politically proportionate committees of elected councillors. “As a result, they are open to a high level of scrutiny and democratic accountability.”
There are no recorded meetings of committees’ discussing an increase in pay for Babs. Not even at the Audit & Performance Committee back in March 2012. Remember the one where we asked the committee to look in to some very serious points we had raised about the councils accounts. These points were all swept under the carpet by the councillors, instead they joined forces in a bizarre attack on a former member of staff who turned whistleblower.
The Audit & Performance Committee that doesn’t scrutinise.
An adjustment report was given into the Audit & Performance Committee on the 25th September 2012 by the finance team and Mike More. Now they have also only gone and signed the final statement of accounts with that adjustment missing. Opps!
So why would Babs hand to the A&P committee the adjustments from draft to final and just not put them in final statement of accounts? Why would Cllr Tim Mitchell sign off approving the Statement of Accounts?
What’s gone wrong
Isn’t Finance Foundations where Babs and her sidekick ‘Pete Burns’ got rid of all the really good accountants who were working at Westminster City Council for cost saving reasons. This hatchet job of all the talented people left the finance department with just managers who can’t really understand the work the true ‘grunts’ at the coalface actually did. We hear all this was done using a culture of fear where employees experienced victimisation and harassment from those at the top.
What about the councils chief executive Mike More, he was the one who hired Babs in the first place. He was the one who gave her a pay rise and a bonus for setting up ‘Finance Foundations’. Or was that for getting rid of all the real accountants Mr More?
Marvellous how local government works in a recession, Mike More has paid Babs a salary exceeding that as laid down in this report <view here> and that’s more than she should have got for doing a really crap job.
We knew the final accounts were going to be a work of fiction when we began to hear rumours that Babs had started to take things out on her right hand man Anna ‘Pete Burns’ D’Alessandro.
Funny how things turn out, as on a previous visit to City Hall Nutsville made to audit the accounts, we heard that Pete Burns was refusing to speak to us to answer any questions about the accounts, for fear that we would publish his photo on this blog.
Now we can do the ‘we told you so dance’.
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