To whom is a private company of external auditors responsible when they are auditing the accounts of a local authority paying that auditor for that professional service There is a conflict of interest

5 June 2018

SUBMISSION TO LABOUR PARTY ENQUIRY INTO ACCOUNTANTS. 

I should mention that I am not a member of the Labour Party or any other political party. I work with and for the very poorest people in the UK because that is what is required by the Christian Faith.  Everything I am telling you is in the public domain.

The issue is; to whom is a private company of external auditors responsible when they are auditing the accounts of a local authority which is paying that auditor for that professional service. There is an inevitable conflict of interest.

I suggest the accountants must become accountable to the public in future legislation. One remedy has to do with objections to the accounts. At the moment the auditors have the discretion to decide whether to apply to the high court for a declaration that an account is unlawful or whether to issue a report in the public interest. I suggest that in the future the auditors are required in law to produce a report in the public interest about all statutory objections which on which they have made inquiries. There will be some frivolous or irrelevant objections about which they will not enquire and on which they ought not be required to produce a report in the public interest.     

A chronology of my case. 

April 2010. Haringey unlawfully amalgamates the council tax summons and liability order costs - unlike all other councils in UK. At that time there was a 100% council tax benefit (CTB). The poorest were therefore less affected because they were not required to pay council tax; unless they carried a council tax debt into unemployment, moved on to benefits and were late or non payers.  

April 2013. Haringey begins taxing unemployment benefit incomes by reducing the council tax benefit to 80%, due to the Local Government Finance Act 2012 which abolished the council tax benefit (CTB) and let councils decided whether to introduce their own CTB or not. I start refusing to pay my council tax on the grounds that taxing shredded benefit incomes creates hunger, unmanageable debt and ill health. 

2nd August 2013. I am summoned to appear before the Tottenham Magistrates and ask to see breakdown of the unlawfully amalgamated court costs. Both Haringey Council and the Tottenham Magistrates refuse to show them to me. 

7 October 2014. Helen Mountfield QC takes the case to the High Court pro bono where the Council and the Magistrates are ordered to reveal the breakdown of the costs. They look too high to me.  

19th September 2014. I send in my written objection to Haringey's 2013-14 accounts to Grant Thornton the external auditor seeking an audit of the unlawfully amalgamated council tax court costs and complaining that they are too high.  

6th June 2015 an accountant, a barrister and I meet with Grant Thornton.

August 2015. Haringey splits the unlawfully amalgamated costs and reduces them. The Magistrates agree to new costs. I learned about this only because I was helping someone who could not pay her council tax arrears let alone the court costs and the bailiffs fees.  She showed me her summons with the cost reduced from £125 to£102 - her liability order added £13 to make £115 - it had been the amalgamated £125.

12th October 2015.  Grant Thornton issues their report to me but not to the public.

3rd November 2016. I raise these ethical issues with the ICAEW.

My complaint is that Grant Thornton colluded with representatives of the council when acting as external auditors of the The London Borough of Haringey;  

A. To avoid issuing a shaming public interest report that the council had unlawfully amalgamated and overcharged the council tax costs to Haringey residents about 90,000 times from April 2013 to August 2015 and had refused to comment on an estimated 20,000 residents a year overcharged from 2010 to 2013, many of them by statutory definition poor and claiming benefits.

B. By failing to correct an untrue statement given to the High Court by the London Borough of Haringey  

  • before the high court hearing or 
  • at the hearing. 

This is the relevant text from the High Court judgement in Nicolson v Grant Thornton. Lord Justice Hamblen 38 – 39​ 

38. In relation to "amalgamation", the appellant relies on the fact that prior to around April 2009, the Council charged a sum for the Council Tax summons and a further sum in cases where a liability order was obtained. Thereafter, however, it charged a single sum, which he contends comprised both of those elements, until 2015, when it again began charging separate amounts. He submits that this is unlawful, because it means that those who paid before there was a liability order were being charged lump sum costs calculated on a basis that included liability order costs. It is also contrary to the clear distinction drawn between the costs recoverable in those two different situations as reflected in Regulation 34(5)(b) and Regulation 34(7)(b). 

39​. It appears, however, that this contention is factually incorrect. The evidence of Miss Grealish, the Council's head of services for revenues, as set out in the first witness statement she provided in the Nicolson case, is as follows: "24. Haringey ceased charging for the post-summons costs element in September 2008 as the majority of expenditure was incurred prior to this stage. As the Council had moved towards seeking a higher number of arrangements via telephone call by direct debit, the process was easier and required less manual intervention by officers if the repayment arrangement is not revised by an additional amount once a liability order was granted by the court. We therefore have decided to waive the costs incurred after summons in obtaining the liability order.” 

It is the statement of Miss Grealish that is factually incorrect and which ought to have been corrected by Grant Thornton, who never mentioned waiving "the costs incurred after the summons" in their report on my objection.   It was never the council's formal policy.   

 

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