Council misled auditor, but will they snitch on them to the appropriate regulator?

On the 22nd March 2021, the external auditor of Folkestone & Hythe District Council’s accounts – Grant Thornton – sent a letter to the Chair of the Council’s Audit & Governance Committee, Cllr Philip Martin. They were asked to respond by March 29th 2021.

The letter asked:

  • To comply with International Auditing Standards, we need to establish an understanding of the management processes in place to prevent and detect fraud and to ensure compliance with law and regulation.

On page 2 is Appendix 1: which sets out the Responses from the Committee. On page 3 are the external auditor’s questions and the committee’s responses regarding Law & Regulation.

ISA (UK) 250 (Part A & B) requires the external auditor Grant Thornton to consider the impact of laws and regulations in an audit of the financial statements. The auditor asked the Council the following questions:

Auditor – What arrangements does the Authority have in place to prevent and detect noncompliance with laws and regulations?

Council’s response – All legal officers follow high standards and are trained to identify and deal any issues that may arise. All legal officers regularly attend training courses to ensure that they are up to date with changes in the law.

Auditor – How does management gain assurance that all relevant laws and regulations have been complied with?

Council’s response – During the year various update reports are presented to the Corporate Leadership Team which provide management with confirmation that the laws and regulations have been complied with. Legal provide comments for management and cabinet papers.

Auditor – How is the Committee provided with assurance that all relevant laws and regulations have been complied with?

Council’s response – During the year various update reports are presented to the Audit and Governance Committee and other committees as deemed necessary which provide the relevant committee with confirmation that the laws and regulations have been complied with.

Auditor – Have there been any instances of noncompliance or suspected non-compliance with law and regulation since 1 April 2020?

Council’s response – No.

These responses are misleading and give the impression the Council has complied with its statutory obligations to following the law and regulation.

On March the 13th 2021, nine days before the auditor wrote to the Council, we made it clear the Council where in breach of their statutory obligations and breaching environmental law, as the council had failed to implement and collect monies for environmental permits as per the Environmental Permitting (England and Wales) Regulations 2016 , which came into effect on the 1st Jan 2017.

These Environmental permits are a key component of UK and local business regulation. They are designed to control and regulate activities which have the potential to cause pollution of the environment or harm to human health.

Just five days ago we made it clear the Council were not collecting money for these permits, nor had they kept a public register as per schedule 27 of the Regs. Nor had this Public Register as per s2(f)(i) and (ii) of Schedule 27 been followed.

For clarification s2(f)(i) and (ii) state:

(2) A public register must also contain—

details of—

(i) all fees and charges paid to a regulator within the meaning of regulation 66 pursuant to a scheme under that regulation, and

(ii) the total expenditure of that regulator in exercising its functions under these Regulations.

This and more has the Council failed to comply with regarding the 2016 Regs.

So with the evidence available it would appear the Council in its response to the external auditor Grant Thornton mislead them as the evidence is unequivocal.

According to ISA (UK) 250 Part A makes it clear “Non-compliance with laws and regulations may result in fines, litigation or other consequences for the entity that may have a material effect on the financial statements.”

Part A goes onto say “the auditor is not responsible for preventing non-compliance and cannot be expected to detect non-compliance with all laws and regulations and; the auditor is responsible for obtaining reasonable assurance that the financial statements, taken as a whole, are free from material misstatement, whether due to fraud or error”

According to ISA (UK) 250 Part B makes it clear  “the circumstances in which the auditor of an entity subject to statutory regulation (a “regulated entity”) is required to report direct to a regulator information which comes to the auditor’s attention in the course of the work undertaken in the auditor’s capacity as auditor of the regulated entity. This may include work undertaken to express an opinion on the entity’s financial statements, other financial information or on other matters specified by legislation or by a regulator.”

As such the Auditor must inform the regulator who controls environmental permitting. Let’s hope they do this and inform the Audit & Governance Committee when they convene on Thursday 27th May at 7pm to discuss Item 4 of the agenda . This states:

Grant Thornton are seeking confirmation from the Committee about how it gains assurance from management and from the S151 Officer (Charlotte Spendley – pictured) on the management processes in place. Their request includes a series of questions on fraud, laws and regulations. The proposed responses are enclosed.

Four years the Council have failed to comply with these regulations. It is high time they comply with them and we hope the external auditor Grant Thornton will follow its statutory duty to snitch on the council to the appropriate regulator.

The Shepway Vox Team

Dissent is NOT a Crime

 

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5 Comments on Council misled auditor, but will they snitch on them to the appropriate regulator?

  1. “Auditor – Have there been any instances of noncompliance or suspected non-compliance with law and regulation since 1 April 2020? Council’s response – No.”

    This is a barefaced lie as demonstrated in your article https://bit.ly/34ip2BT and the Council has admitted they are under investigation by a third party government agency.

  2. Is this the same Charlotte Spendley who was Head of Finance at the highly dysfunctional East Kent Housing?

    Yes!

    Aren’t Environmental Permits to do with air pollution?

    Yes!

    As such then Environmental Permits Part 1A and Part B are about air pollution. This is Cllr Lesley Whybrow’s portfolio. Previous to this it was Cllr Stuart Peall’s responsibility.

    And to cap it all off, the Lawyer to the Council, Amandeep Khroud, has missed this for 4 years.

    So those who lead the good ship FHDC, Dr Susan Priest and Council Leader David Monk, really aren’t bothering to make sure all those responsible in one way or another, are doing what they are supposed to do.

    As the Shepway Vox Team have said before, the Dunning Kruger Effect and the Peter Principle are alive and well at Folkestone & Hythe District Council

    Great reporting and keep up the good work.

  3. CS, when you state that Amandeep Khroud has missed this for four years I have to assume that you mean that she has mislead this for four years. More likely, given that her primary motive is to toe the Council line than to apply the law as given by government.

    It is no secret that Council employment comes with conditions, refer if you will to Wayne Fitter in the case of Kent Police versus Emily Arnold and statements he was caused to give to retain his employment irrespective of the truth.

    I, naturally, do not trust this Council, but it is what we have, we just need to keep an eye on them.

  4. I just wish you could cut out the “political speak jargon” and put it down in plain English. Or is it a case of lost in translation.
    Those of us who are really interested in what goes on behind closed doors in Shepway Council and the suspected corruption, do rather lose the will to live trying to make sense of what is really being said.

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