Agenda item

This report sets out the breaches and waivers of Financial Regulations (the Regulations) which have occurred during the 2020/21 financial year (see table in the report).

The low number of breaches compared to previous years indicate that there was generally a good level of understanding of the Regulations.

The Chief Finance Officer, or formally delegated representatives, agreed 116 waivers totalling £12.6M.

The higher number of waivers compared to 2019/20 is materially due to the impact of COVID19 and the requirement to either directly award or run procurement processes with a select list of suppliers to be able to deliver goods, services and work, for both revenue and capital projects at speed in response to the pandemic and the emerging issues it presented.  BCP Council has followed Government issued advice and guidance in making procurement decisions during 2020/21 related to COVID19.

The advice and guidance state that sufficient documentation needs to exist to justify decisions taken in all stages of the procurement procedure in case of future challenge. BCP Council maintains Procurement Decision Records (PDR’s) which satisfy this requirement.

Whilst full compliance can never be guaranteed and ‘under-reporting’ of breaches, in particular, is an inherent possibility, arrangements were in place to detect instances of non-compliance. 

An effective and transparent breaches and waiver governance process maximises the chances of the Council achieving value for money and complying with UK Procurement Legislation (Public Contract Regulations 2015 (PCR15)) principles when procuring goods, services or works under PCR15 thresholds.

The Head of Audit and Management Assurance presented a report, a copy of which had been circulated to each Member and a copy of which appears as Appendix 'G' to these Minutes in the Minute Book.

This report set out the breaches and waivers of the Financial Regulations which had occurred during the 2020/21 financial year.

The Head of Audit and Management Assurance reported that there were five breaches totalling £871K as detailed in the report.  He reported that the explanation as to why these breaches occurred was detailed in paragraphs 4 & 5 of the report.  The Committee was informed that the circumstances of the breach does not highlight any fundamental governance issues, such as lack of awareness of Financial Regulations, as it was an administrative oversight, failure to approve and sign off a waiver in good time, which had now been corrected. 

The Head of Audit and Management Assurance reported on the waivers explaining that there were 116 waivers totalling £12.6M. The Committee was informed that to put that in context the Council spends about £400m a year, with third party suppliers, so the waivers represented approximately 2.5% - 3% of annual spend.  The Head of Audit and Management Assurance referred to paragraphs 13 to 15 which explained the two generalised reasons why there were more waivers in 2020/21 compared to the previous year.  He highlighted the impact of Covid relating to urgency and the limited availability of suppliers. The second issue was the Council’s transformation agenda and waivers to extend contracts for incumbent suppliers to allow time for redesign and to align contracts for legacy Councils. The Head of Audit and Management Assurance provided more detail on the higher value waivers.

Councillor Brooke referred to the number of breaches which had reduced but the value of the breaches had increased significantly. The Head of Audit and Management Assurance reported that the five beaches were initially produced as waivers but were not signed off in a timely manner hence being reported as breaches.

The Chairman indicated that the points highlighted by Councillor Brooke were critical to the Committee and two of the five breaches were substantial amounts.  He suggested that what would be of concern to the Committee was what steps had been taken to ensure that such breaches do not occur certainly of this magnitude in the future and that it was not acceptable not to comply with the requirements of Financial Regulations.  The Chairman indicated to save the Head of Audit and Management Assurance the difficulty of dealing with such breaches he asked if guidance had been put in place for Children’s Services or any other service.  The Head of Audit and Management Assurance reported that he was content that the Corporate Director had put arrangements in place which he had reviewed and was satisfied that this particular breach could not happen again as a result of the actions taken.  He also confirmed that breaches were of the Council’s financial regulations not a breach of the law.  The Chairman highlighted that it was for the Committee to hold the organisation to account around such governance issues and suggested that if the arrangements were being confirmed in writing to the service area that the sentiments expressed by the Committee were reflected in any advice and that it had been noticed and the Audit and Governance Committee would not want to see a repeat of this breach by Children’s services or any other service.  The Chairman highlighted that this was another tool for the Head of Audit and Management Assurance to use.

The Head of Audit and Management Assurance clarified the contract relating to dog kennelling which was for stray dogs and likely to cover more than one year.

RESOLVED that:-

(a)           the Audit & Governance Committee note the breaches & waivers of Financial Regulations that occurred during 2020/21.

(b)           when writing to Children’s services or any other service relating to breaches they be advised of the expectations of the Committee as detailed above.

Voting: Unanimous