Agenda item

Discussion:

The Monitoring Officer submitted a report advising Members of the internal audit work into Woodlands Primary School, Gillingham. This followed a report to the Committee on 28 September 2010 that identified potential procurement and other control issues arising from works at the school. A copy of the Internal audit report and its supporting appendices were included within the report.

The Chairman welcomed Mrs Mutter-Child (Chair of Governors), Mr Pugh (Vice Chair of Governors) and Mr Fiddaman (Head teacher) and advised that the intention was to understand the breakdown of the control mechanisms and that it was not within the remit of this Committee to discuss disciplinary matters.

The Monitoring Officer detailed the contents of the report, advising Members of the findings contained within the Internal Audit report, which included:

·        the lack of formal documentation, such as a contract with the Antrad Partnership (the main contractor),

·        disagreement as to who had been managing the project which had led to a lack of accountability,

·        payment of invoices through the school and the lack of supporting documents to enable analysis of the payments made.

Members were also given details of the control measures introduced to facilitate the scrutiny of such projects in the future. This consisted of changes to the procurement process for all Children and Adults capital projectsand the establishment of the new Children and Adults Capital Programme Cabinet Advisory Group.

Members of the Committee critically challenged the Director of Children and Adults Services and the representatives from the school in relation to a number of areas, and in doing so expressed their severe concerns as to the failings identified.

Specific questions and concerns related to the following areas:

·        How the failure could happen and whether lessons should have been learnt from other schools.

The Director of Children and Adults Services advised as to the atypical nature of this case, acknowledged that the necessary checks and balances had not been undertaken and that changes had since been made to systems, practices and processes.

·        Health and Safety duties relating to effective management of asbestos in schools.

It was confirmed that all Headteachers had now been provided with mandatory training on asbestos management. The Director of Children and Adults gave details of her conversation with Woodlands School when the suspicion of safety risks had been identified and that the school had been able to remain open. The Headteacher added that the Health and Safety Executive had cleared both the contractor and school in relation to asbestos, which had not been reflected in the report to Members. Officers undertook to seek clarification from the Health and Safety Executive on this issue. The school challenged the contents of the MACE report in respect of this aspect and the Monitoring Officer gave details of the health and safety findings listed in the report.

·        The risks of resources being allocated from the ‘borrowing pot’, which had lacked Member oversight and had not been suitably considered by the appropriate internal officer boards and documented.

It was clarified that this ‘borrowing pot’ had been removed, with the council’s processes now requiring clear funding streams and business cases.

·        Absence of Supporting documents.

Following concerns raised as to the payments made it was noted that additional financial information had been requested of the proprietor of Antrad, which remained unanswered according to the report. The Chair of Governors however advised that an offer had been made and the Monitoring Officer undertook to look into this offer to enable further review as to whether appropriate invoices had been paid.

·        Value for Money, specifically the Committee challenged whether the project represented value for money for Medway when considered against the original project and spend incurred.

It was noted that the Headteacher had commissioned a review of the works completed, which concluded that the project did represent Value for Money and this had been made available to the Council and MACE group.  Officers advised that they had not seen this report and referred to the Internal Audit report and annexed reports from the MACE group that questioned the achievement of Value for Money citing in particular the spend required for remedial works. Officers requested a copy of the school document and information as to its availability.

·        Role of the governing body in monitoring the project

The Committee questioned the statement contained within the report that the Chair of Governors had indicated a belief that the school was running the project. Members were advised that at this stage the Chair of Governors was relatively new to the post and the ‘build’ to the school was considered to be the sports centre and not the expansion of the school.

Responding to questions the Chair of Governors advised that they had thought the project was on track until asked to attend meetings at the Council. Increased costs had not been questioned as they did not perceive this to be their build and so were not reviewing the finances. They also referred to site inspections undertaken by the council and proposals for further work by the council.

·        Fiduciary Duty

Members expressed concern as to the process for approving payments and questioned whether the school was fulfilling its fiduciary duty; specifically the finding that the Headteacher had signed cheques to the contractor without checking the authenticity of the contractor’s invoices, which was a requirement of the Medway schools finance manual.

The Headteacher acknowledged the error and that there is a finance policy at the school. He contended that the school was not managing the project and that he was acting, with the council’s knowledge, as an agent on the council’s behalf following delays when invoices were submitted earlier in the project. The representatives from the school advised that the services had been provided and that cheques were signed to facilitate prompt payment and so not jeopardise the delivery of the project.

During the discussion on this aspect the school questioned the availability of information during the investigation to the school, such as the notes of discussions with Internal Audit.

·        Affordability

Members expressed concern that building works may not have been specified clearly and/or costed realistically and to the lack of supporting documentation concerning the original commissioning of this work and its affordability. Members also referred to the finding that the Headteacher had been defining work, which was disputed by the Headteacher.

·        Potential conflict of interest

Concern was raised as to whether the school considered the appointment of main contractor a conflict of interest and against the procurement process, in that a school employee was acting as both project manager and main contractor. They also questioned the payment of a management fee and the due diligence undertaken in recommending the appointment of Antrad. The Headteacher and Vice-Chair of Governors stated that the school’s position was that they had only made a recommendation concerning the appointment based upon the individual’s understanding of the school and skills and that the payment of the management fee had been paid by the Council. It was assumed others would be able to bid for the work. They stated that the proprietor of Antrad had been willing to undertake a tender process and that the school should have reported that the Council was not complying with due process.

·        Computer equipment

Members questioned the appropriateness of computer equipment being charged to the project with payments made to the main contractor. The Headteacher said he would review this further.

Following their consideration the Committee requested that a further report be brought to the Committee, providing an analysis of the further information that had been reported as available.

The Committee agreed to adjourn the meeting for 10 minutes at the end of this item.

Decision:

a)     The Audit Committee noted the control measures that the Council had put in place.

b)     The Audit Committee requested the Woodlands Primary School Governing Body to provide a copy of the letter from Antrad offering further financial information.

c)      The Audit Committee asked officers to request such further financial information in order that the Committee can seek assurance regarding Value for Money.

d)     The Audit Committee agreed that the Governing Body of Woodlands Primary School be advised that it has severe concerns over their part in the Woodland Project.

e)     The Audit Committee agreed that a further report be submitted to the Committee setting out details of the further information requested above.