A well known Liverpool building company was unable to provide detailed records of £226,890.70 it received from a community interest company.
Earlier this month the council published a number of audit reports into the Beautiful Ideas Company (BICo.) BICO, set up as a community interest company, was launched in 2014 to manage matchday car parks in north Liverpool used by Liverpool and Everton fans.
The money raised from car parks on Priory and Walton Breck Road was to be used to help communities across north Liverpool. The audit report from 2015 reveals that the Flanagan Group, operators of the car parks, received £226,890.70 from the company.
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But auditors were unable to access the bank account in which money was held because the password was not available because a member of staff was off sick.
The report states that the money was not kept in the company's main bank account. It reads: "Funds collected from car park activities are held in a separate bank account to the Flanagan Group's main bank account which is used for their principal activities. At the date of the site visit Internal Audit were not able to access the appropriate bank account as the password holder was absent due to illness."
The report states that the Flanagan Group was able to show a bank balance with figures which matched the expected revenue generated from the match day car parks. But there was no overall 'precise figure.'
The report reads: "Evidence was provided showing a bank balance in excess of the expected amount of funds generated for the seasons 2012/13, 2013/14 and 2014/15 (to date). The information from the financial system provided did not include a precise figure to match the supporting manual financial information."
The term reconciliation means a process where auditors attempt to ensure that figures match up. The report also found that expenditure by the Flanagans was supported by invoices.
It reads: "A review of 12 items of expenditure, selected from the Flanagan Group's financial system's records, found that all were supported by invoices and that their nature was considered appropriate for the management of the car park."
The publication of the reports follows a decision by the Information Commissioner who ruled that it was in the public interest to disclose the documents following a freedom of information request by freelance journalist Matt O'Donoghue.
The 2017 report made a series of recommendations including the need for regular financial and performance information, the introduction of formal records related to pay and expenses for staff and a need to introduce processes such as numbered tickets to demonstrate that all match day income had been collected.
The 2019 audit investigation found that the governance and monitoring relationship between the city council and BICo was 'limited.' It recommended new council procedures to improve on this area going forward.
The 2019 report found that some of the income - namely £53,347 - from the Walton Breck Road car park has not yet been invested in social enterprises by BICo as had been agreed with the council. The council was urged to consider whether it wanted to request the return of funds that have yet to be invested, and take appropriate legal advice should this be the case.
Following the publication of the reports the council issued a statement which read: "The Beautiful Ideas CIC is a separate entity to Liverpool City Council and we have never had any legal powers to intervene in its operation.
“Our Internal Audit Team worked alongside the organisation to look solely at the controls and compliance relating to the income and use of funds from car parks on land leased from Liverpool City Council.
"We found there were acceptable controls and compliance procedures in place, but a number of recommendations were made. In our final report produced in 2019 we found that the only outstanding issue was related to record keeping relating to the collection of match day income, but as the car parks are no longer operating it is no longer required.
“The findings and recommendations of these Internal Audit reports are indicative of general issues regarding how areas of the council were operating at the time, as highlighted by the Best Value Inspection in March 2021. Since this time the council has implemented an organisation-wide Strategic Improvement Plan and is taking significant steps to deliver the necessary improvements to strengthen governance and control arrangements.
“The matters raised in the reports are those that came to Internal Audit’s attention during the course of their work. While every care has been taken to make sure the information is as accurate as possible, Internal Audit can only base their findings on the information and documentation provided to them, and the sample evidence tested, at that time.
"In line with standard audit practice, Internal Audit undertakes sample testing and aims to provide reasonable assurance about risk management, governance and control processes. Its findings are not intended as a comprehensive statement of all the weaknesses that existed, or of all the improvements that may be needed. These reports were produced solely for the internal use and benefit of Liverpool City Council.”
The internal audit reports from 2015 and 2019 into the operation of match day car parks and the collection of charges. The ECHO approached the Flanagan Group for comment.
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