PFI Advisers - Conflict of Interest

Megan Ingles made this Freedom of Information request to Hull City Council

This request has been closed to new correspondence from the public body. Contact us if you think it ought be re-opened.

The request was successful.

Dear Hull City Council,

I am writing to request the following information under the Freedom of Information Act.

Please confirm who your local authority has appointed as external auditor for the financial year 2016/17.

Please provide a list of all accounting firms which have advised or continue to advise the local authority on each of its PFI contracts. I am interested in companies which have provided legal, financial, governance and audit advice at any stage of the PFI project from initiation through procurement to operation.

Please provide documents showing the local authority’s current protocols around determining and declaring conflicts of interest in relation to its external auditors.

Have there been any incidences of potential or actual conflict of interest in relation to the local authority’s external auditors? If so please disclose all relevant documentation relating to this, which may include but not be restricted to emails, memos, reports and declarations of conflict of interest.

Yours faithfully,

Megan Ingles

Information Governance, Hull City Council

We acknowledge receipt of your request for information which we will
process in accordance with the appropriate legislation below:

Freedom of Information Act
This covers general recorded information that is held by the Council.
Examples: budget information, staff structures, details of contracts etc

From the next working day that the request is received we have 20 working
days to respond. This does not take in to account any clarification we may
require or if we need to consider the Public Interest Test which allows us
up to a maximum of 20 additional working days.

Environmental Information Regulation
This covers all environmental information held by the Council.
Examples: Planning Applications, details of proposed road works, flood
information, pollution information etc.

From the next working day that the request is received we have 20 working
days to respond.

Section 7 of the Data Protection Act (Subject Access Request)
This section of the Data Protection legislation only relates to requests
for information about the requester or a client if you are acting on their
behalf.
Examples: Personnel file, Housing file, Council Tax/Housing Benefit
information etc.

We have 40 days from the date of receipt to respond.

Information Governance Team
Town Clerk's Service
Hull City Council
The Guildhall

 

Information Governance, Hull City Council

Dear Ms Ingles

 

Freedom of Information Act 2000 – Information Request - 000963/17

 

With regard to your Freedom of Information request received on 05/06/2017,
please find our response below. 

 

We must inform you that, in accordance with Section 12 of the Freedom of
Information Act, we are unable to fully answer your enquiry without
exceeding the time/costs limits under the Act.  Where a local authority
reasonably estimates that it would cost more than £450 (or 18 hours of
staff time) to fulfil a request it is not required to do so.

 

 

Please confirm who your local authority has appointed as external auditor
for the financial year 2016/17.

 

Local authorities do not currently appoint external auditors: Pubic Sector
Audit Appointments (previously the Audit Commission) appoint auditors to
local authorities.  The appointed auditor for 2016/17 was Mazars LLP. 
Further details of all auditor appointments, fees, work programmes, etc
are in the public domain on the PSAA website: [1]www.psaa.co.uk

 

The Local Audit & Accountability Act 2014 made provision for local
authorities to appoint their own auditors, subject to certain conditions
to ensure independence.  However, the PSAA arrangements were later
extended until the end of 2017/18.  Hull City Council, together with the
vast majority of principal local authorities, has now opted to join a
collective procurement scheme provided by the PSAA, which mirrors the
current system.  The PSAA will therefore continue to appoint and regulate
our external auditors for the foreseeable future.

 

Please provide a list of all accounting firms which have advised or
continue to advise the local authority on each of its PFI contracts. I am
interested in companies which have provided legal, financial, governance
and audit advice at any stage of the PFI project from initiation through
procurement to operation.

 

o KPMG, in relation to advice on Building Schools for the Future
projects.

·         PWC and Deloitte, in relation to Extra Care PFI (supported
housing project).

·         Deloitte in relation to Orchard Park PFI housing scheme – scheme
did not progress, advice ceased 2014/15.

·         PWC in relation to a proposed Streetlighting PFI – scheme did
not progress, advice ceased 2009/10.

·         Grant Thornton in relation to Orchard Centre integrated service
centre PFI, later NHS Lift.

 

Please provide documents showing the local authority’s current protocols
around determining and declaring conflicts of interest in relation to its
external auditors.

 

This is governed by the PSAA regime – so please refer to their website as
mentioned in response to question 1.  In short, Councils and prospective
auditors are consulted on proposed appointments and the audit firms have a
duty to declare any potential conflicts at that stage.  If a firm wishes
to undertake non-audit work post-appointment, this has to be cleared with
PSAA, unless the fees are less than a prescribed threshold.  PSAA
undertakes quarterly and annual monitoring of auditor performance,
including compliance with the regulations that cover conflicts of
interest.  The reports from this monitoring are published on the PSAA
website.

 

The Council does not therefore have a protocol as such, since this topic
is adequately managed by the PSAA.  However, the fees in relation to any
non-audit work are reported to the Audit Committee: the auditor usually
undertakes a small amount of grant certification work each year, which is
permitted by the regulations because it does not conflict with the
external audit role.  Further assurance is provided through the Council’s
financial accounting procedures, which would identify any previously
undeclared fees to the auditor.  In addition, anyone who has suspicions of
inappropriate behaviour can report this through the Council’s confidential
reporting procedure.  We would refer any concerns for independent
investigation by the PSAA.

 

Have there been any incidences of potential or actual conflict of interest
in relation to the local authority’s external auditors? If so please
disclose all relevant documentation relating to this, which may include
but not be restricted to emails, memos, reports and declarations of
conflict of interest.

 

There have been no such instances in relation to the Council’s current
auditor.

 

Historically, there was one conflict event with a previous auditor, circa
2013.  The former Audit Commission had appointed KPMG LLP to undertake the
Council’s external audit but later determined that historical advisory
work by KPMG, in relation to the Building Schools for the Future
programme, created a conflict.  There was no evidence that this had
improperly influenced the outcomes of KPMG’s audit work, but it did breach
the Commission’s regulations.  The Commission replaced KPMG with Mazars
LLP following this event. This episode demonstrates that the PSAA (ex
Audit Commission) monitoring is effective. A comprehensive report on this
matter was discussed by the Council’s Audit Committee in June 2014.  This
report was published within the Committee papers, which can be accessed
via the Council’s website at [2]this link.  Further information regarding
the Commission’s investigation might be available within the Commission’s
records, which are now lodged with the National Archives.

 

 

It is estimated that to retrieve any other correspondence on this matter
will be above the £450 time/cost limit because it would require several
employees manually trawling their files for any words related to this
matter and some of the employees involved have now left the authority. We
estimate that such a task would exceed the time/cost limit described
above.

 

 

We hope that you will be satisfied with our response and should you
require any further information then please do not hesitate to contact
us. 

 

 

Should you wish to complain about our response in any way this must
initially be done by e-mailing [3][Hull City Council request email] or by
contacting us at The Information Governance Team, The Guildhall, Alfred
Gelder Street, Hull, HU1 2AA.

 

If you are not satisfied with the outcome of the internal review then you
may take your complaint to the Information Commissioner’s Office, the
government body established to enforce the legislation.

 

Information Commissioner’s Office, Wycliffe House Water Lane, Wilmslow,
Cheshire, SK9 5AF

Web site: [4]https://ico.org.uk

Report a concern: [5]https://ico.org.uk/concerns/

Email: [6][email address]

Tel: 0303 123 1113 (local rate) or 01625 545 745 (national rate)

 

ICO states that any emails you choose to send to them, or that they send
to you, are not secure as email messages can be intercepted.  ICO asks
that you include a contact telephone number on any emails you send to
them. 

 

The Council’s Freedom of Information Policy, which includes the charging
policy, is available on request and from the web site
[7]www.hullcc.gov.uk.  Also available is a booklet on ‘Accessing
Information from Hull City Council’ which explains how to request
information and your rights (according to the Data Protection Act 1998 and
The Freedom of Information Act 2000).

 

 

This information may be subject to copyright. The Freedom of Information
Act does not give you an automatic right to re-use this information in a
way that would infringe copyright, for example, by publishing it or
distributing copies.  You are free to use it for your own purposes
including any non-commercial research or private study or for the purposes
of news reporting.

If you wish to re-use this information and this was not specified in your
initial application please contact us to discuss conditions for re-use. In
most cases we will permit use and re-use in accordance with The Open
Government Licence which can be found at
[8]www.nationalarchives.gov.uk/doc/open-government-licence

 

 

Yours sincerely

 

 

 

 

Information Governance

Town Clerk's Service

Hull City Council

Tel: 01482 300300

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