The detailed findings of the 27-page report by the Wales Audit Office are in Annex A towards the end of this report:
Report presented by the Auditor General to the National
Assembly on 17 March 2010
Plas Madoc Communities First is a company limited by guarantee and a
registered charity 5
A third party has raised concerns about the governance of PMCF 6
The audit investigation found a fundamental lack of financial control and
governance at PMCF 6
The Assembly Government took swift action to address the governance
weaknesses at PMCF as soon as the interim audit had been completed 7
Failings at PMCF had not been addressed for a number of years 7
The Assembly Government should have monitored the financial
management and governance of Communities First partnerships
more effectively 8
The Assembly Government should have responded more effectively to
concerns about PMCF brought to its attention by third parties 9
The Assembly Government is taking steps to minimise the risk of the
serious problems at PMCF being repeated and remaining undetected
at other Communities First partnerships 11
Appendix 1 - Assembly Government Internal Audit Services report:
investigation into allegations made against Plas Madoc Communities First 13
4 Plas Madoc Communities First
Contents
Plas Madoc Communities First 5
1 This report sets out the findings from an
investigation by the Assembly Government’s
Internal Audit Services into allegations made
against Plas Madoc Communities First
(PMCF). In carrying out its investigation, the
Internal Audit Service was supported
throughout by an experienced financial auditor
from the Wales Audit Office.
2 The detailed Internal Audit report is at
Appendix 1. The matters raised in the
Internal Audit report have been referred to the
North Wales Police for consideration.
Plas Madoc Communities First is
a company limited by guarantee
and a registered charity
3 Communities First is the Assembly
Government's flagship programme to tackle
deprivation and improve the living conditions
and prospects for people in the most
disadvantaged communities across Wales.
The programme was launched in 2001, since
when the Assembly Government has spent
over £220 million on the programme. There
are some 180 designated Communities First
areas throughout Wales.
4 Plas Madoc is a housing estate located seven
miles south west of Wrexham that is home to
approximately 1,800 people. The estate is
served by PMCF, a company limited by
guarantee and a registered charity. PMCF
was created in 2003 and took over
responsibility for delivering Communities First
in Plas Madoc from a partnership that had
been established and led by Wrexham County
Borough Council.
5 The directors of PMCF are also charity
trustees for the purposes of charity law and,
under the company’s Articles of Association,
are known as ‘Members of the Council of
Management’ of the company. Under the
requirements of the Memorandum and Articles
of Association, the Members of the Council of
Management are elected to serve until
required to retire by rotation every three
years. The day-to-day responsibility for the
management of PMCF rests with the
Co-ordinator, with responsibility for financial
control resting with the Finance and
Monitoring Officer. PMCF employs 21
members of staff, but it also receives support
from volunteers and from voluntary and
not-for-profit organisations.
6 PMCF’s principal source of income is from the
Assembly Government via its Communities
First programme. PMCF also receives grant
funding from other sources, including The Big
Lottery Fund, Waste Recycling Environmental
Limited, the Arts Council of Wales, The Youth
Charity, the Heritage Lottery Fund, Awards for
All and Wrexham County Borough Council (in
respect of the Little Sunflowers Playgroup and
Nursery). Annual income for the Partnership is
around £735,000, with grants from the
Assembly Government, at over £500,000 per
annum, representing the largest proportion.
6 Plas Madoc Communities First
A third party has raised
concerns about the governance
of PMCF
7 On 31 May 2009, an individual who had been
engaged by PMCF to provide support to
residents on the Plas Madoc estate wrote to
the Auditor General expressing concerns
about PMCF’s management and her
treatment as a contractor. The individual
alleged that there was ‘a clear manipulation
and misrepresentation of funds within this
[Assembly Government] funded project’. She
and a colleague, who at the time was also a
director and trustee of PMCF, explained that
they had written to the Assembly Government
Communities First Unit earlier in 2009 raising
a range of concerns, and that the Unit had
referred them back to PMCF to resolve the
issues of concern. The Assembly Government
told us that this was in accordance with their
usual practice for the initial handling of such
issues.
8 At around this time, the Wales Audit Office
was concluding an examination of whether
the Assembly Government was effectively
managing the Communities First programme
to deliver value for money, and published a
report in July 2009.1 The report did not focus
on the Assembly Government’s monitoring of
the financial management and governance of
individual Communities First partnerships,
although it did set out some of the inherent
risks to the effective financial management
and governance of partnerships.
9 In August 2009, senior officials at the
Assembly Government asked its Internal Audit
Service to carry out a detailed investigation of
PMCF. Given the nature and potential severity
of the allegations made against PMCF, the
(then) Auditor General decided that the Wales
Audit Office should support the Internal Audit
investigation.
The audit investigation found a
fundamental lack of financial
control and governance at PMCF
10 The audit was led by the Assembly
Government’s Internal Audit Services, with
support from an experienced financial auditor
from the Wales Audit Office. The Assembly
Government’s Communities First Unit,
responsible for the overall administration of
the programme, co-operated fully and
welcomed the review as an impartial means
of investigating the complaints received about
the governance and operations of PMCF.
11 An interim audit took place in September
2009, with the findings presented to senior
Assembly Government officials in November
2009. The interim report concluded that there
had been significant and fundamental failures
in the control and governance framework
within PMCF and recommended that
Assembly Government officials should take
immediate remedial action to safeguard the
assets within PMCF and improve the financial
control framework.
12 The Assembly Government’s Internal Audit
Services, with continued specialist support
from the Wales Audit Office, then carried out
a fuller and more detailed review of the
financial controls and associated governance
processes in place within PMCF. The report of
this review is at Appendix 1.
13 The Internal Audit report confirms the
fundamental failings in the governance of
PMCF identified by the interim audit. These
failings permeated the whole of the
operations of the Partnership and suggest
that those charged with responsibility for
governance had little regard to recognised
standards in public life or the need to achieve
value for money from public funds. The report
concluded that a significant change of culture
1 Communities First, a report presented by the Auditor General to the National Assembly on 9 July 2009
Plas Madoc Communities First 7
within the organisation is required, not least
because many of the PMCF representatives
interviewed during the audit continually
referred to the ‘culture of generosity’ that has
been created for staff and their associates.
This generosity with public funds applied to
PMCF trustees, employees and their families
and friends.
The Assembly Government took
swift action to address the
governance weaknesses at
PMCF as soon as the interim
audit had been completed
14 As soon as the interim audit report became
available in November 2009, Assembly
Government officials met the Chair of the
PMCF Board of Trustees to share the findings
of the investigation. Subsequently, the PMCF
Board decided that two members of staff (the
Co-ordinator and the Finance and Monitoring
Officer) should be suspended without
prejudice, pending the outcome of
subsequent investigations. The PMCF Board
also took action, including the engagement of
independent human resource consultants, to
remedy some of the weaknesses identified in
the interim report and also to safeguard
PMCF’s assets.
15 The Assembly Government also held urgent
discussions with PMCF and other local
agencies, including Wrexham County
Borough Council, with the aim of
safeguarding key services as far as possible
under strengthened or changed management
arrangements. Changes included the
provision of funding in monthly instalments
and the transfer of the operation of PMCF’s
payroll to the Association of Voluntary
Organisations in Wrexham.
Failings at PMCF had not been
addressed for a number of years
16 It is clear from the Internal Audit report that
the underlying failings in financial
management and governance at PMCF had
existed to varying degrees for a number of
years, and most likely ever since the
Partnership was formed in 2003. Over a
six-year period, the Assembly Government’s
monitoring arrangements failed to address
serious shortcomings at PMCF. This raises
the possibility that similar deficiencies may
have occurred at other Communities First
partnerships, and further Assembly
Government Internal Audit work to address
this risk is outlined in paragraph 36 of this
report.
17 The remainder of this report is concerned with
wider governance issues, including the
effectiveness of monitoring arrangements
established by the Assembly Government to
safeguard public funds entrusted to
Communities First partnerships. It also sets
out the actions taken by Assembly
Government officials to ensure that the
failings at PMCF do not happen again.
8 Plas Madoc Communities First
The Assembly Government should have
monitored the financial management and
governance of Communities First partnerships
more effectively
18 Before 2007, monitoring of Communities First
partnerships was based on quarterly reports
linked to payments and six-monthly progress
reports intended to provide a broader
overview of progress. The six-monthly reports
covered:
a the Community Vision;
b the Partnership;
c key achievements for the year;
d barriers to progress;
e support received; and
f programme bending (ensuring money and
support from various public programmes
and organisations are directed to
Communities First areas).
19 The quarterly reports covered progress
against targets, with direct reference to the
breakdown of funding (such as the work of
individual members of staff and the progress
of specific projects). All payments to
Communities First partnerships were made
quarterly, subject to receipt of a satisfactory
progress report.
20 In 2007, the monitoring arrangements were
changed, and there are now two key
elements:
a an Annual Monitoring Report submitted by
each partnership by 1 May, which triggers
an Annual Monitoring Visit from the
Assembly Government’s Regional
Implementation Team; and
b quarterly monitoring in relation to the
payment process.
21 In addition, where representations are made
to the Assembly Government about financial
and governance issues, these are referred to
the relevant Communities First regional
implementation team. The Assembly
Government told us that this had happened a
number of times and that the issues were
normally resolved locally.
22 As a registered charity with annual income
exceeding £500,000, PMCF is required to
have an annual external audit of its accounts.
PMCF engaged a local firm of accountants
and auditors to perform this function. The
external auditors, at the request of PMCF’s
Finance Officer, also maintained the
Partnership’s fixed asset register. We
understand that the external auditor identified
certain internal control weaknesses in PMCF’s
financial management and reported these
concerns in their Annual Audit Letter
addressed to the company. It has not been a
requirement for Communities First
partnerships to forward external audit reports
or letters to the Assembly Government,
although this possibility is now being
considered as part of the Assembly
Government’s wider Communities First
Governance Review.
Plas Madoc Communities First 9
23 The external auditor’s formal relationship is
with PMCF’s Board of Trustees (who are
designated as ‘those charged with
governance’), but in practice the auditor’s
actual relationship has only been with PMCF’s
Finance Officer. However, the Finance Officer
did not relay the auditors’ reports to the
trustees and the auditors did not make further
endeavours to report their findings directly to
those charged with governance. For their part,
the trustees failed to obtain an appropriate
level of financial reporting from their Finance
Officer or any assurances directly from their
external auditor.
24 The Assembly Government relies heavily
upon the grant certification work of reporting
accountants (these are usually the external
auditors), through their testing of a sample of
transactions, to confirm that expenditure has
been incurred on items eligible for
Communities First funding. In some cases, a
large proportion of grant funding is for the
salaries of employees. Some private sector
reporting accountants (as in the case of
PMCF) have therefore opted to restrict their
grant certification testing to cover salaries and
little else. As a result, the Assembly
Government was not made aware through the
grant certification process of any serious
concerns relating to failings in financial
management and control at PMCF, because
of the focus on salary costs as part of the
assurance process.
25 It is evident that the Assembly Government’s
routine monitoring arrangements for
Communities First partnerships were not
effective in identifying the financial
management and governance failings at
PMCF. Also, the external audit and grant
certification arrangements in respect of PMCF
were insufficiently robust, both in terms of
remit and reporting requirements, to provide
an appropriate level of assurance to the
Assembly Government that public funds were
being properly applied and value for money
obtained. The Assembly Government’s report
on the wider governance of Communities First
partnerships includes a recommendation that
‘the Audit Certification Instructions should be
strengthened to ensure that expenditure in
addition to salary costs should be covered
where possible by audit testing to ensure that
only costs eligible are incurred’. However,
there is considerable scope to improve
external audit and grant certification
assurances in other areas, for example in
areas such as the composition and
independence of the Board, ethical standards
and proper procurement policies and
procedures.
The Assembly Government should have
responded more effectively to concerns about
PMCF brought to its attention by third parties
26 PMCF was established as an independent
organisation in 2003, and in 2006 the
Partnership ended its reliance on the
governance processes previously provided by
Wrexham County Borough Council. Since
2006, with Grant Recipient Body status,
PMCF has been funded directly by the
Assembly Government.
27 Many of the weaknesses identified within the
Assembly Government’s Internal Audit report
at Appendix 1 had previously been revealed
by Wrexham County Borough Council’s own
internal auditors during a visit to PMCF in
April 2003, when the Council was the Grant
Recipient Body and therefore responsible for
exercising oversight of the Partnership.
However, most of the failings raised in a
report dated May 2003 were attributed by the
Wrexham County Borough Council internal
auditors to an administrator who had already
left the Partnership, and to a Treasurer who
had resigned during the course of the audit.
The Wrexham County Borough Council
Internal Audit report concluded that
10 Plas Madoc Communities First
‘a back-to-basics approach was required now
that a Co-ordinator and new Administrator
had been appointed, to ensure that records
are properly completed, payments are
appropriate and properly authorised and
equipment is identified and effectively
recorded in a suitable inventory’.
28 PMCF provided a response to the 2003
Internal Audit report, which endeavoured to
satisfy the Council’s internal auditors that
appropriate remedial action had been taken.
Both the internal audit report and the PMCF
response were forwarded to the Assembly
Government’s Community First Unit. The
Assembly Government has no evidence of
any subsequent follow-up work being
undertaken by the Council’s internal auditors.
29 Although there was some correspondence
from the new Co-ordinator and Company
Secretary clarifying some issues in respect of
governance arrangements, no action was
taken by the Assembly Government’s
Communities First Unit in respect of the
concerns raised in the Council’s Internal Audit
report. The Assembly Government told us that
during 2004 significant organisational and
personnel changes were taking place within
the Communities First team responsible for
overseeing the programme in North Wales. In
January 2005, Wrexham County Borough
Council (which was still then the Grant
Recipient Body) wrote again to the Assembly
Government’s Community First Unit,
expressing a range of concerns about
financial arrangements, recruitment
procedures, the Board structure, community
accountability, governance and insurance
issues. A further Council Internal Audit review
was mooted, but did not take place.
30 The Assembly Government told us that in
2006 there were extensive discussions
between its Communities First Unit and
Wrexham County Borough Council
representatives, regarding the establishment
of PMCF as a Grant Recipient Body in its own
right with effect from 1 April 2006. In February
2006, the Assembly Government had
requested a range of information from PMCF,
prior to the transfer of Grant Recipient Body
responsibility to the company. However, it is
unclear from Assembly Government records
how much information PMCF actually
provided and also the extent to which it was
scrutinised by Assembly Government officials.
31 The concerns raised by the third party in 2009
related in part to an employment dispute with
PMCF. Concerns had also been raised by one
of the Partnership’s trustees and also by the
Association of Voluntary Organisations in
Wrexham. These related to wider governance
issues within PMCF, including allegations
about the conduct of the Co-ordinator and
other senior managers.
32 It is understandable that officials within the
Assembly Government’s Communities First
Unit should not wish to become involved with
an employment dispute within the
Partnership, and it is clear that their actions
were in line with what was widely-established
practice across the Communities First
programme. It is also apparent that the Head
of the Communities First Unit had impressed
upon the Chairman of PMCF the importance
to the Partnership of being able to resolve
locally challenges of this nature. Assembly
Government officials told us that the
complainants did not initially follow the advice
that they provided on how best to progress
their concerns about the conduct and
governance of the Partnership, and that this
delayed further consideration by the Assembly
Government of their concerns. In the absence
of a published complaints policy, there is a
risk that concerns of this nature are not
resolved satisfactorily.
Plas Madoc Communities First 11
33 The third party approached the Auditor
General with concerns not only about the
Partnership, but also about wider governance
of the Communities First programme,
including that exercised by the Assembly
Government. A key aspect of any system of
governance and accountability is the
existence of arrangements whereby
complaints and allegations (including from
staff) are investigated in line with a published
complaints procedure including, if necessary,
recourse to an independent third party. Such
arrangements had not been effectively
established by the Assembly Government’s
Communities First Unit.
The Assembly Government is
taking steps to minimise the risk
of the serious problems at PMCF
being repeated and remaining
undetected at other
Communities First partnerships
34 In response to the interim Internal Audit
report, the Director of the Social Justice and
Local Government Department formally
commissioned a wider Governance Review of
the Communities First programme. The
review was undertaken by officials within the
Local Government Finance Division and was
overseen by a Review Group that has met
three times, most recently in February 2010.
Also, in response to the final Internal Audit
report, the Assembly Government’s
Director-General for Public Services and
Local Government Delivery wrote to his
counterparts across all Assembly Government
departments, highlighting the key issues
raised in the report and requesting an urgent
review of any implications for the appropriate
directorates.
35 The report of the Governance Review was
submitted to directors within the Assembly
Government’s Department for Public Services
and Local Government in January 2010. The
report includes 22 recommendations to
strengthen the overall governance framework
of the Communities First programme, and is
accompanied by the results of a mapping
exercise which summarises the funding
routes and management arrangements
currently in place for the Communities First
programme.
36 In response to the Governance Review, the
Communities First Unit has prepared a
management response and action plan. The
plan sets out actions to be delivered as part
of the planned second phase of the
Governance Review later this year. These will
include detailed Assembly Government
investigations of other ‘high-risk’ Communities
First partnerships, following the completion of
Internal Audit’s work in Plas Madoc.
37 The guidance published by the Assembly
Government in 2007 will also be updated in
response to the Governance Review. The
early stages of this work by the Communities
First Policy Team, is focusing on the most
critical elements of the guidance, particularly
those relating to finance and governance.
38 The Assembly Government told us that it
intends to benchmark the standards required
of stakeholders in the Communities First
programme against the ‘Seven Principles of
Public Life’ set out in the 2005 report of the
Committee on Standards in Public Life (the
‘Nolan principles’). The practical implications
of this will be considered further, for example
in respect to the revision of the programme
guidance and a review of roles within the
Communities First Unit. An important element
will be further training for Communities First
partnerships and staff on governance issues
12
and on the Nolan principles in particular. This
has already begun, via the Communities First
Training Service provided by the Wales
Council for Voluntary Action.
39 In addition to the Assembly Government’s
planned investigations into high-risk
partnerships, a rolling programme of due
diligence checks will be instituted across the
programme. Such checks are already carried
out for organisations applying to become
Grant Recipient Bodies for Communities First,
but these will be supplemented by
retrospective checks for existing Grant
Recipient Bodies. In the first instance, a
governance questionnaire has been sent to all
Grant Recipient Bodies for completion in
respect of every Communities First
partnership. These are due for return to the
Communities First Unit by 17 March 2010.
40 Hitherto there has been significant reliance
placed by Assembly Government officials on
the results of grant certification testing by
independent reporting accountants, which
must be carried out annually in respect of
each Communities First partnership, with
certificates submitted to the Assembly
Government alongside annual claims for
project funding. The majority of grants are
certified by the Wales Audit Office, whilst the
remainder (including PMCF) are certified by
private sector firms of accountants. All grants
testing is performed in accordance with
Certification Instructions, which are issued by
the Wales Audit Office to their auditors and
separately by the Assembly Government to
the private sector firms. The content of these
instructions has been reviewed in draft jointly
each year by the Wales Audit Office and
Assembly Government officials, with the
instructions for the private sector firms being
based closely on those agreed with the Wales
Audit Office. In light of the PMCF experience,
the Assembly Government’s Grant
Certification Instructions will now be further
reviewed, with increased stress placed on the
importance of reporting accountant reviews of
non-staff costs and management systems.
41 The Assembly Government also intends to
review the roles of Communities First Unit
staff in relation to the promotion of good
governance, with reference to the Nolan
principles. It also anticipates that the overall
structure of the Unit will need to be revised to
take account of any implications arising from
the review, with consideration needing to be
given to a clearer separation between the
officials with responsibility for day-to-day
programme management and monitoring and
those with responsibility for ensuring that
consistent standards of accountability are
being maintained. The Assembly Government
will also consider the need for additional
training.
Plas Madoc Communities First
Plas Madoc Communities First 13
Background
1. In November 2009 the Welsh Assembly Government’s Internal Auditors (IAS) and the Auditor
General for Wales issued a joint interim report on the investigation into allegations made against Plas
Madoc Communities First (PMCF). The claims made were wide-ranging and in some cases specific
in terms of detail. They related to governance, financial management and value for money with an
underlying concern that PMCF was being run in a manner in which some Board Members and senior
staff were benefitting directly from the way in which public monies were being applied.
Interim Report
2. The interim report concluded that there were significant and fundamental failures in the control and
governance framework within PMCF and recommended that Assembly Government officials should
take immediate remedial action to safeguard the assets within PMCF and improve the financial
control framework. Following the issue of the interim report to the Director General for Public
Services and Local Government Delivery, Welsh Assembly Government, officials met with the Chair
of the Board to share the findings of the investigation. Subsequently the PMCF Board of Trustees
decided that due to the nature of the findings, two members of staff (the Coordinator and
Finance/Monitoring Officer) should be suspended without prejudice, with immediate effect pending
the outcome of all appropriate subsequent investigations. Furthermore, we are aware that PMCF
officials also took action to remedy some of the weaknesses identified in the interim report (for
example several mobile phones were “blocked” as a result of the findings in the interim report).
3. In response to the interim report, the Welsh Assembly Government took immediate action to
safeguard the funding provided to PMCF by moving to a monthly grant payment profile instead of the
usual quarterly payments, and by ensuring that the payroll provision was no longer delivered by
PMCF; instead, the Association for Voluntary Action in Wrexham (AVOW) took responsibility for this
process and IAS has provided advice to PMCF staff on some aspects of the control framework. We
are also aware that more recently PMCF have engaged Human Resource (HR) specialists to provide
advice and support in respect of some specific HR matters.
Appendix 1 – Assembly Government Internal Audit
Services report: investigation into allegations made
against Plas Madoc Communities First
14
4. Following the issue of the interim report, it was also agreed that the Welsh Assembly Government’s
Internal Audit Services, with continuing support from an experienced financial auditor from the Wales
Audit Office, would conduct a full and detailed review of the financial controls and associated
governance processes in place within PMCF. This report outlines the findings of the review.
5. It should be noted that the findings contained within this report supersede all findings from the interim
report.
Approach
6. At the initial stage of the investigation, PMCF’s financial records dating from April 2006 to September
2009 were examined. Following an extensive review of the records, interviews were held with
current PMCF staff and Board Members to seek explanations for our initial findings.
7. The two officers suspended without prejudice were also interviewed and the findings put to them to
enable them to explain and clarify the issues which had been identified. These interviews have been
formally documented and agreed with the two interviewees.
8. It should be noted that in order to gain an understanding of the overall framework of financial control
operating within PMCF, our review was not restricted to Communities First funding.
9. During the course of our work we have regularly updated North Wales Police with our findings and
now that our fieldwork has concluded we have referred this matter to the Police for the consideration
of possible criminal activity. As PMCF is a registered charity we have also been liaising with the
Charity Commission over this matter and will continue to do so as the findings in the report are taken
forward.
10. The detailed section of the report includes matters relating to child support payments and taxation
issues. These matters have been brought to the attention of the relevant agencies and we are
currently liaising with the Child Support Agency and HM Revenue and Customs (HMRC) over these
issues.
11. We would like to record our thanks for the help and cooperation provided by all staff and Board
Members within PMCF during the course of our investigation, particularly the Chair of the Board, the
Acting Coordinator and Company Secretary.
Overall Conclusion
12. In summary, our audit work has shown that there has been a fundamental lack of control and
governance within Plas Madoc Communities First (PMCF). The Board within PMCF has not been
providing the necessary strategic direction and leadership for the organisation and they have failed to
undertake an appropriate scrutiny of the work of its paid officials. Managers and Board Members do
not understand their stewardship responsibilities and our findings have shown that there appears to
have been little regard for the Standards of Public Life or achieving Value for Money with public
funds. A significant change of culture within the organisation is required, particularly as it was
concerning to note that the people interviewed during the course of our review continually
commented on the “Culture of Generosity” that has been created for staff within PMCF.
This generosity within PMCF has, in our view, been at the detriment of those individuals in the local
community who were meant to benefit from the public funds allocated to the Communities First
programme.
Plas Madoc Communities First
Plas Madoc Communities First 15
13. Our review has shown that the Board has not effectively discharged its duties. As Trustees of PMCF
the Board has, and must accept, ultimate responsibility for directing the affairs of the organisation,
and ensuring that it is solvent, well-run, and meeting the needs for which it was set up. However we
found that the Board within PMCF has not provided sufficient leadership, direction or challenge,
particularly in respect of financial matters. They did not receive basic financial information about the
affairs of the partnership and there was a lack of financial expertise or skills amongst Board
Members combined with little appreciation of good governance. This undoubtedly contributed to the
failing control framework.
14. The Coordinator played a minimal role in the management of the financial processes within PMCF
and relied almost exclusively on the Finance Officer advising her if “something went wrong”. In her
view she was good at preparing bid submissions and securing funding and so long as the funding
was not exceeded she was content that the finances were being effectively managed. Placing
reliance on reactive rather than preventative controls does not represent good governance and
exposes the organisation to fundamental and significant risks. Furthermore, the Coordinator is, in
the opinion of those interviewed, a strong character who, due to the ineffectiveness of the Board, has
not been effectively managed. Many of the detailed findings show that the Coordinator acted with
complete autonomy from the Board which had little or no awareness of the actions that she was
taking, particularly in respect of the expenditure incurred by PMCF.
15. Similarly, the Finance Officer had almost complete autonomy for finance processes including the
payroll process, although he stated during the investigation that his role had no stewardship
responsibilities. (However, it should be noted that a review of his job description showed that there
are stewardship roles and responsibilities contained within it.) Furthermore, there was a complete
absence of segregation of duties in respect of the key financial systems such as the payment
process or payroll, with the Finance Officer having sole responsibility for these processes.
16. The issue with payroll has now been addressed with payroll provision being taken on by AVOW. In
addition, the Finance Officer has not attended Board meetings for some considerable time despite
repeated requests and invites by the Board. It was also of concern to note that Board Members and
the Coordinator appeared unsighted on the contents of the annual Management Letters, produced by
PMCF-appointed auditors. The Finance Officer claimed that he had shared the contents with the
Treasurer; however this was disputed by several Board Members, including the Treasurer himself.
Our findings show that no remedial action has ever been taken to address weaknesses identified in
the Management Letters.
17. It was also of concern to discover during the audit process that many of the weaknesses indentified
through our work had previously been identified by Wrexham County Borough Council’s (CBC)
Internal Auditors during a visit in April 2003, when Wrexham CBC were the Grant Recipient Body
(GRB). Plas Madoc provided a response to the internal audit report, however it is unclear if any
follow up action was ever taken. The internal audit report and associated response were forwarded
to the Welsh Assembly Government’s Community First Unit. However, it is uncertain if the contents
of the report were ever considered when PMCF was awarded Grant Recipient Body status by the
Welsh Assembly Government in 2006.
18. Whilst there are considerable weaknesses in the control framework it should also be recognised that
PMCF has achieved some success in delivering its Communities First objectives and the community
is benefiting from the programme and projects being delivered by PMCF. It should also be noted that
16
since the suspension of two key members of staff, staff within PMCF have strived to ensure the
continued delivery of the programmes and projects and have begun to remedy some of the control
weaknesses identified in our interim report.
19. With the exception of the governance failings at Board, Co-ordinator and Finance levels, it is our
opinion that PMCF has shown that at an operational level it can deliver its objectives and could
continue to do so if supported by a more effective Board and robust financial control framework.
20. Our detailed findings are contained within Annex A the report.
Future Considerations
21. We are aware that there are several options available in respect of the future of PMCF. Whilst it is
not within the scope of this review to determine what happens to PMCF funding from the Assembly
Government, we are of the opinion that PMCF should not retain its GRB status and continue to
receive Communities First Funding unless:
• A new Board is appointed. Whilst it may be impracticable to dissolve the entire Board, it is vital
that new members are appointed who are equipped with appropriate financial skills and expertise;
• A more robust financial control framework is implemented within PMCF. This should include:
o The effective segregation of duties between those staff involved in financial processes.
o More effective financial reporting to the Board including remuneration issues.
o Greater transparency of financial decision making.
o More effective financial management, particularly in respect of petty cash.
• The new Board will need to ensure that they undertake regular training to keep up to date with
governance issues and subjects relevant to PMCF’s work;
• The new Board will need to ensure that the operations of PMCF are conducted with due regard to
the Seven Principles of Public Life set out in the Nolan Report (1995)
o Public Service;
o Leadership;
o Selflessness;
o Integrity;
o Objectivity;
o Honesty;
o Accountability and Stewardship.
Plas Madoc Communities First
Plas Madoc Communities First 17
ANNEX A
DETAILED FINDINGS
Payments to Family Members
22. Our investigation revealed a number of payments to non-PMCF staff members. We sought
clarification of who these people are and many are related to the Coordinator. We are aware that
several of the Coordinator’s family members receive payments from PMCF for services provided,
with one being directly employed. The details of these costs are:
• Brother 1 received a mobile phone from PMCF, incurring costs of £1,460, the details of which are
outlined below in para. 28. We found no evidence that he provides any services to PMCF or any
reason why he should be in possession of this phone and be able to incur charges which are then
paid by the partnership.
• Brother 2 receives payments from PMCF to maintain the PMCF caravan sited in Rhyl. The details
of the caravan are outlined in para 56. Furthermore, this individual has a PMCF mobile phone
(para 28). We are aware that Brother 2 has undertaken some work for PMCF, primarily through
his involvement with the Plas Madoc’s Got Talent event for which he received a payment of
£2,000 in 2008 (jointly with his partner as outlined below). We are not aware of any other services
he has provided to PMCF, although we do know that he travelled to the Gambia as part of
PMCF’s Gunjur project. Discussions with staff within PMCF have shown it is unclear what Brother
2’s role was in respect of the Gunjur Project. The Coordinator stated that Brother 2 had fully
repaid the cost of the trip to PMCF, although our testing and discussions with the Finance
Manager showed no evidence of this.
• Brother 3 provides Brazilian Ju Jitsu training. Since March 2006 he has received £40,615 for the
delivery of this training. The invoices submitted for Ju Jitsu training also contain an element for
petrol/wear and tear of his vehicle, however our findings showed that he is also claiming fuel
through PMCF’s account with a local fuel supplier (Para 38).
• Brother 2’s partner is an actress and has been delivering drama classes within PMCF since
December 2006. During this period she has received £22,000 for the delivery of the classes.
She has also been paid for her appearance at Plas Madoc’s Got Talent (£499.00 in 2007 and
£2,000 in 2008, although the 2008 payment was for her and Brother 2’s appearance). Brother 2’s
partner has also been claiming fuel both through the Arval fuel card and the local fuel supplier
account as outlined in para 35. We also noted that during the same period that she was receiving
payment for delivery of the drama classes, another organisation was also providing drama
lessons within PMCF. This was explained by the Coordinator as one of the classes having a
greater focus on certain aspects of drama.
• The Coordinator’s Husband has also received a payment of £319.00 for comparing and singing at
two PMCF events. This is despite the Coordinator claiming both at interview and to the Board
that her Husband received no payment for his services. It was suggested that the payment
reflected the availability of the husband’s broadcasting equipment during the events. The
Coordinator’s Husband also had a PMCF mobile phone (para 28).
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23. We sought explanations for the appointment of the Coordinator’s family members and were informed
by the Coordinator that Brother 3 was the best possible supplier of Brazilian Ju Jitsu as he was
European Champion and no one else in the area would be able to supply these services. This sport,
in the view of the Coordinator, is more concerned with self control which was of benefit to the
attendees from the local community. Similarly by using Brother 2’s partner, a well known actress to
deliver drama classes it encouraged and inspired more young people to participate.
24. Whilst we accept that these individuals have delivered services to PMCF, we consider that the
payments made have been excessive. Also during the course of our review it became apparent that
the Board were not initially aware of the use of the Coordinator’s family members and they certainly
did not approve such appointments. Instead, Board Members became aware at a later stage of the
relationship between the individuals and the Coordinator. More significantly, the Board was
completely unsighted on the level of payments being made to the Coordinator’s family members.
25. Both of the Finance Officer’s daughters are employed by PMCF, enjoying considerable benefits in
kind such as driving lessons and the use of mobile phones (including call charges) as detailed in
para 30.
26. We are also aware that:
• Brother 3’s partner works within PMCF.
• The Chair’s son has worked for and received payment from PMCF.
• The Coordinator’s Personal Assistant and Company Secretary’s father is a Board Member.
• A Board Member’s wife is employed as a Play/Early Years Participation Officer by the partnership.
The same Board Member is also employed by PMCF.
• The Caretaker is married to a trainer who provided large numbers of courses to the partnership.
27. Whilst it is accepted that in small communities, friends and relatives are often employed by the same
organisation, it is of vital importance that there is transparency and openness when such
appointments are made. In the case of PMCF it is evident that the use of family members by the
Coordinator has not been fully disclosed to the Board and in particular the level of payments and
benefits which have been received by the individuals concerned.
Mobile Phones
28. Our review of invoices showed that a significant amount of expenditure has been incurred on mobile
phone bills by PMCF. Further testing of this area revealed that there was evidence of mobile phones
being allocated to non-PMCF staff. The following costs had been incurred by the Coordinator’s
family members:
• Husband - £800 (Feb 2008 – Sept 2009).
• Brother 1 - £1,460 (April 2007 – Sept 2009) - Av £50 pm.
• Brother 2 - £530. (Dec 2008 – Sept 2009).
Plas Madoc Communities First
Plas Madoc Communities First 19
29. This was queried with the Coordinator who admitted that she had given the phones to her family
members as handsets had been offered “free” by the phone companies. We indicated that whilst the
handset was free there was a cost incurred with line rental/calls. The Coordinator stated that PMCF
was given bundles of free minutes and with one exception she had not been made aware that any
other cost has been incurred. She did admit that on one occasion the Finance Officer had raised the
issue of Brother 2’s phone costs and she had asked that this phone be blocked. Our testing showed
that this phone had not been blocked. When discussing phone costs with the Finance Officer he
stated that he was aware that mobile phones had been allocated to the Coordinator’s family but as
she was his line manager he didn’t feel able to query it. He also stated that she had never
requested, nor had he provided, any information on phone costs. The Board Members were
unaware that non-PMCF staff had mobile phones.
30. Further testing of mobile phones held by PMCF staff demonstrated that considerable costs had been
incurred as outlined below:
• Staff member 1 – £3,611 (April 2008 – Oct 2009) - £116 pm.
• Staff member 2 - £3,202 (April 2008 – Oct 2009).
• Coordinator - £2,631 (April 2008 – Oct 2009) - £80pm.
• Finance Officer – £524 (Annual cost).
It should be noted that all mobile phones costs incurred within PMCF were reviewed and the ones
outlined above are the only ones considered excessive.
Staff member 1 and 2 are the Finance Officer’s daughters, who are both employed by PMCF.
31. The level of mobile phone bills was discussed with the Finance Officer. He stated that he was aware
that the costs were high but considered it to be a “perk of the job”. Similarly it was queried why
individuals who were office based, required a mobile phone. Again it was stated that this was a
“perk”. The Coordinator appeared unsighted on the high level of mobile phone costs and said that in
the past she had blocked phones when charges appeared high and could not be explained by
individuals. The Coordinator does not receive any information on the level of costs incurred by
PMCF on mobile phones. Similarly the Board were unsighted on the level of mobile phone charges.
Fuel/Petrol/Diesel
32. PMCF has three different methods for incurring expenditure on fuel (e.g. petrol and diesel).
• Staff can reclaim any amounts spent through Plas Madoc’s travel and subsistence systems;
• There are fuel “credit cards” used (Arval), which can be handed over at any garage to pay for fuel;
and
• There is an account set up with a local fuel supplier.
33. Our testing showed that staff used all three methods to obtain fuel; however there are no formal
procedures in place to outline how these systems should operate.
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34. Furthermore, our findings showed that there is no reconciliation to ensure that staff reclaiming money
through the T&S system are not also claiming through the local fuel supplier or using a fuel credit
card. We undertook testing in this area and found no evidence of staff “double claiming,” but it
should be noted that due to the lack of controls over the three mechanisms for claiming fuel we
cannot provide assurance that double claiming has not occurred.
35. Our testing showed that since April 2008 £6,102.14 has been incurred on Arval cards. The vast
amount of expenditure (£4,129.52) has been incurred by the Arval card held by the Coordinator.
Further review showed that the majority of the expenditure was incurred in the Manchester/Bolton
area by a vehicle owned by the Coordinator’s Brother 2’s partner. The Coordinator explained that
she had given her brother 2’s partner the card, to obtain fuel as she was delivering drama classes to
PMCF. This was despite our findings showing that an element of fuel had been included on the
invoices for drama lessons.
36. The Finance Officer also had a fuel card which had incurred costs of £1,300. This was put to the
Finance Officer who claimed that this was a “perk of the job.”
37. Our findings also showed that two PMCF company vehicles have also used a card for legitimate
business purposes.
38. It was very difficult to audit the invoices received from the local fuel supplier as the invoices includes
a statement showing a list of signatures of people who have signed for fuel which is difficult to
decipher. Since April 2006 £25,198 has been spent at the local fuel supplier and we were able to
determine that considerable amounts were being purchased by the Coordinator’s family. These
included
• Brother 3 - £1,633.98. This individual also claimed fuel costs through his invoices to PMCF.
• Husband - £1,365.19. All sorts of vehicles but mostly PMCF vehicles.
• Brother 2 and/or partner = £513.
39. Upon querying this with the Coordinator she stated that Brother 3 claimed fuel as he travelled in
excess of the amounts contained on his invoices. (The same explanation was offered for Brother 2
and partner).
40. We also queried with the Coordinator why the invoices were paid when they contained “blanks”
where people had taken fuel but had not signed for it. She said that she didn’t have sight of any of
the payments made for fuel and was not sure why this would have occurred. The Finance Officer
offered no explanation for this and the Board were unsighted on fuel costs.
41. During our site visit we were also informed by the Finance Manager that staff use the fuel card or the
account with the local fuel supplier to obtain fuel for personal use. We were told that everyone does
this and it is considered a “perk” of the job. The Coordinator disputes that this takes place and
assured us that staff are aware that they should not obtain fuel for personal use. As there is no
process or evidence of management review to confirm that the fuel costs incurred are only for official
business we can gain no assurance over this area.
Plas Madoc Communities First
Plas Madoc Communities First 21
Payroll
42. Prior to the transfer of the payroll function to AVOW, PMCF operated both a weekly and monthly
payroll for staff. Those on the weekly payroll submitted timesheets which were then processed by
the Finance Officer and those on the monthly payroll were paid a standard monthly sum.
43. Our findings showed that there was a complete absence of segregation of duties with regard to the
operation of the payroll with the Finance Officer having sole responsibility for administering and
managing the payroll.
44. Of more significant concern was our testing of the weekly payroll system which showed that the
Finance Officer paid staff even though the majority of timesheets were not authorised. Furthermore,
he processed and paid his own daughter’s timesheets. We also obtained evidence that he created
timesheets on behalf of his daughter or paid her without any timesheet. At interview he confirmed
that this had happened and stated the reason he paid other staff who had submitted unauthorised
timesheets was that people relied on the money and there was only a short window of opportunity for
processing the timesheets.
45. The Finance Officer by authorising his own daughter’s timesheets, has exposed himself to criticism
particularly as we are aware that he has created timesheets on behalf of his daughter before
processing and paying her wages. This represents a fundamental failure in the existence of
segregation of duties and exposes the organisation to significant criticism of nepotism and
preferential treatment.
46. We also found there was no clear and transparent audit trail demonstrating the hourly rates which
were applicable to staff. A review of timesheets and the corresponding payroll showed that various
rates were applied to various members of staff. Whilst we accept that staff are paid different rates for
different posts and at different times of the day, we consider that there should be far greater
transparency in the rates which are used.
47. We were informed that they use JNC pay scales for weekly and monthly paid staff although PMCF
pays above the average for the sector, as this encourages commitment and retention of staff.
48. We also found evidence of one member of staff being paid twice by submitting two timesheets which
indicated that she had been undertaking two jobs at the same time. This had not been detected by
any management checks.
49. It was also of concern to note that volunteers are paid an hourly rate. Our understanding is that
volunteers should only be paid sums to cover their expenses rather than a waged amount.
50. Our findings showed that the Chair of the Board’s Son has worked intermittently for PMCF. It was a
concern to note that he appeared to buy a laptop and software, for which he was then reimbursed
through payroll. He left PMCF shortly afterwards and we could find no evidence that the laptop was
returned.
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Child Support Agency Issues
51. During our visit we ascertained that the Finance Officer’s salary is paid part through the payroll and
then he invoices PMCF for the balancing amount via his own Company. When querying the
reasoning behind this, we were informed by the Finance Officer that he had done this to artificially
deflate his salary figures for Child Support Agency (CSA) assessment purposes. Furthermore, our
testing showed that since April 2008 £3046.41 worth of payments had been made directly to the CSA
from PMCF. We were informed by the Finance Officer that they related to his own CSA liability and
he was intending to repay the amounts back to PMCF in the future. He stated that some repayment
had already occurred. Our testing showed that £1,989.20 had been recovered from the Finance
Officer’s salary, leaving a shortfall £1,057.21. The Finance Officer stated that he was aware of the
shortfall and the CSA were re-assessing his payment levels and he was confident that this would
resolve the issue.
52. The Coordinator stated that she was aware of the new payment/payroll arrangements for the Finance
Officer’s salary however she was not aware of the issues regarding the CSA payments. IAS are
progressing this matter with the CSA, particularly in view of the apparent measures taken to
artificially deflate the salary figures.
Loans to staff
53. Our audit testing showed that staff within PMCF had been provided with interest-free loans from
PMCF, which were approved by the Coordinator. Whilst a schedule was maintained outlining who
owed loans and the repayments that had been made, there was no formal policy or agreement as to
how the lending of money to staff should be managed and administered. We saw evidence of loans
being repaid through the payroll although it was evident that some members of staff had not repaid
the amount owed and had left PMCF. The Finance Officer admitted that there were outstanding
debts which were unlikely to ever be recovered. We are unable to quantify the full amount of debt
outstanding due to the nominal amounts of money which are sometimes loaned to staff through petty
cash; however we believe the overall sum to be less than £2,000.
54. We asked the Coordinator what the purpose of these loans was and she said that loans were given,
with her agreement, to staff who were in need of them for various reasons. For example the
Coordinator had taken one of her loans from PMCF to pay for a holiday. The Coordinator stated that
she was unaware that some individuals had not repaid loans, as she undertook no review of the
loans process.
55. The provision of loans to staff, particularly when there is no formal policy, does not represent good
financial practice and moreover exposes PMCF to considerable criticism if the “loan scheme” is not
made available to all employees.
Plas Madoc Communities First
Plas Madoc Communities First 23
Caravan
56. PMCF has use of a caravan sited at Rhyl, which is rented out to residents of Plas Madoc to provide
an opportunity to the less fortunate members of the community to have a holiday. Our findings
showed that there is some uncertainty over who owns the caravan; although we found evidence that
a site fee and hire fee are paid annually by PMCF for the apparent rent of an eight berth caravan.
The Coordinator claims that the caravan is owned by PMCF, whilst the Finance Officer originally
asserted that the caravan was rented from the Coordinator’s brother. However, during the latter
stages of our investigation he stated that it appeared that PMCF owned the caravan and the
payments made to the Coordinator’s brother were to maintain the caravan.
57. Our findings showed that a £6,000 fee was paid to the Coordinator’s brother on an annual basis for
the caravan’s maintenance, although we found further evidence that repairs and the maintenance
costs were funded via petty cash, so we are unsure what the £6,000 payment was for. The payment
was made part cash and part cheque. It was observed that the site fees to the caravan park (of
around £2,800) were paid some two months in advance of the payment being made for the hire of
the caravan itself.
58. Whilst there is no direct risk to PMCF of paying cash to a supplier, this does not represent good
practice as cash payment may be requested by suppliers in order to avoid income tax liabilities
and/or VAT.
59. Of more significant concern were our findings relating to the banking of the income generated by the
caravan. Our testing showed that only £60 had ever been banked, although an analysis of the
caravan booking records showed that the following amounts had been receipted through letting the
caravan:
• 2007 - £1735
• 2008 - £1980
• 2009 - £1415
60. This issue was discussed with the PMCF Coordinator who informed us that the member of staff who
had been responsible for receipting the caravan takings during 2009 had been found to be stealing
the money. The member of staff involved was a resident who had been offered support by PMCF
through the opportunity of employment in order to provide her with a more stable lifestyle. The
individual had also received a loan from PMCF of £660; we believe this was to settle rent arrears
and the PMCF loan remains outstanding. The individual concerned had been dismissed the week
prior to our site visit; however the Coordinator stated that the Police had not been contacted as it
was considered to be detrimental to the continued rehabilitation of the individual concerned.
61. We asked both the Coordinator and the Finance Manager for an explanation of what had happened
to the caravan letting monies in previous years and were informed by the Coordinator that the
caravan money was used as an extension of the petty cash when it was needed. For example,
nominal amounts of money (£10-15) were given to residents if they were in financial difficulties and
were awaiting benefits.
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62. We also asked the Finance Officer what his role was in the operation of the caravan lettings and he
was adamant that he had no involvement in any aspect of the caravan hire, lettings or banking of
monies.
63. It should also be noted that during our visit we reviewed the caravan income cash box, which was
held in the PMCF safe and found it to be empty.
64. We have significant concerns over the entire operation of the caravan scheme and would
recommend that with immediate effect there are robust processes put in place to manage the
caravan-letting process. In particular, all income generated by the caravan should be promptly
banked and accounted for in PMCF’s finance system. PMCF are currently in the process of
establishing who has ownership of the caravan.
Petty Cash
65. We have fundamental concerns over the petty cash system in operation within PMCF. Large items
of expenditure are purchased through petty cash including a car that had been purchased for £2,500.
The car had been bought from a relative of the Finance Officer.
66. Furthermore, we found boxes of receipts which had been processed through petty cash but had not
been accounted for, and contained no explanation of why the expenditure had been incurred. We
are aware that the Treasurer had raised concerns over the level of pretty cash used by PMCF with
the Coordinator but no action was ever taken.
67. We also found evidence of receipts attached to petty cash vouchers being less than the amount
provided through petty cash. We were unable to obtain any explanation for this from the Finance
Officer.
68. Our findings also showed that petty cash payments were made to the Coordinator to reimburse her
for items she claimed to have bought even though no receipts were provided.
69. Good practice suggests that petty cash should only be used for items of minor business expenditure
and normally organisations set a financial limit on the value of items paid for through the petty cash
system (often around £50). It was evident from our limited testing that a significant amount of
transactions were processed through petty cash. This represents a significant risk for the following
reasons:
• normal payment authorisation procedures may be bypassed;
• duplicate payments may be made;
• petty cash could be used for the cashing of personal cheques; and
• petty cash may be stolen.
Plas Madoc Communities First
Plas Madoc Communities First 25
Other financial concerns
70. Our testing showed that invoices do not demonstrate that goods/services have been receipted (or by
whom). The Finance Officer stated that budget holders had responsibility for ordering what ever they
wanted as long as the budget exists. Similarly the Coordinator stated that as long as there was a
budget which was not exceeded, she didn’t undertake any review to ascertain what the funds had
been spent on or if value for money had been achieved.
71. We found evidence of several payments being made to the same supplier on the same day. Upon
querying this we were told that payments are split to fall under the bank mandate requirements so
that the Treasurer’s signature is not required. (Any cheque payment above £500 requires Board
approval).
72. During our review of cheque book stubs we also found blank cheque book stubs not completed. We
were unable to establish why this had occurred. The Finance Officer stated that the Treasurer had
been asked to sign blank cheque so that PMCF would be able to pay large sums in the event he was
away and not able to act as a counter signatory. However, the Treasurer asserted that he would
never sign any cheque without a corresponding invoice and he had certainly not been asked to sign
blank cheques prior to receipt of an invoice. It should also be noted that we found no evidence of
any of these cheques being presented at the bank.
73. The actions in paras 71 and 72 are concerning, particularly as the Treasurer visits PMCF almost
every day so therefore is regularly available to sign any cheques (or other documentation).
74. We also found poor accounting procedures in respect of income-generating activities. PMCF hold
events which generate income; however, the income is never quantified, accounted for and often is
not banked. Instead we were informed that this income is used to supplement petty cash and is
used for expenditure on other items within PMCF. We are therefore unable to determine how much
income is generated from these activities or more importantly what happen to the receipted monies.
75. We have already outlined our concerns over the lack of financial information received by PMCF’s
Board and in particular the lack of awareness Board Members had in respect of the annual
Management Letters produced by PMCF’s appointed auditors. We are aware that the Board have
requested more “user friendly” financial information from the Finance Officer, although this has not
been forthcoming. It appears that the relationship with the PMCF auditors was managed by the
Finance Officer and the Chair informed us at our end of audit fieldwork meeting, that he had been
contacted by the partner responsible for the PMCF audit who had informed him, that on an annual
basis the auditors offered to attend the AGM to present the accounts and audit report, as is normal
practice. The Finance Officer had apparently declined the offer on several occasions stating that he
was able to present the information to the Board himself. Subsequently the Finance Officer was
unavailable to attend the Board meeting; this happened on several occasions.
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Construction Work
76. Some of the original allegations claimed that construction works undertaken on the Coordinator’s
house were paid for by PMCF. Prior to our initial site visit we received specific evidence in respect of
this matter. However, we have not been able to corroborate any of these claims primarily because
PMCF’s Peris Road premises was being re-developed at the same time as the construction works on
the Coordinator’s own property, so we have no way of knowing whether the invoices paid through
PMCF’s finance system were for valid Peris Road works or for materials which were subsequently
used elsewhere. Furthermore, the invoices and delivery notes show no evidence of where the good
and services were to be delivered. The Coordinator states that these allegations are without
foundation. We are unable to substantiate any of the claims in this area.
Payments to Board Members
77. We saw evidence of a payment of £10,000 in respect of play area project management fees for one
Board Member who is also a Plasterer by trade. (His wife also works for PMCF as the PMCF
Play/Early Years Participation Officer). We saw no evidence that these services were procured
through open competition or the exact specification/purpose of these services. The Coordinator
stated that they had used this individual as he was a local man who had previously done work.
However, it appears that there was never any disclosure to the Board that work had been awarded to
a Board Member.
78. This Board Member also received payment for the “Get out and Play Scheme” and submitted weekly
timesheets to claim payment.
Driving Lessons
79. We found evidence that since March 2008 £3,080 has been spent on driving lessons for staff and not
for the community. The Finance Officer stated that this was a perk although he did indicate that he
believed this was eligible Communities First expenditure. We later established that this is not eligible
Communities First expenditure.
Mediafields
80. Our findings showed that there is a significant amount of expenditure made to a company called
Mediafields for IT hardware, software and support services. In addition there is also significant other
IT expenditure made through outlets such as Staples and through petty cash. We were informed that
when PMCF were initially set up Mediafields were recommended by AVOW as they offered an
excellent service and good value for money. Considering the level of payments to Mediafields, we
would suggest that PMCF need to test the market and obtain quotes to ensure that Mediafields
continues to offer the best value for money.
Plas Madoc Communities First
Plas Madoc Communities First 27
Asset Register
81. Our testing showed that the asset register is not complete or up to date. It is very difficult to
ascertain how many assets are within PMCF or their location. For example, we have been unable to
determine exactly how many laptops are currently in operation within PMCF. This was queried with
the Finance Officer who admitted that a number of laptops had gone missing and the asset register
was not up to date. Furthermore, he stated he leaves the asset register until the year end for the
Auditors to do as “he had been lazy”.
Other unusual items
Parking Fines
82. Our testing showed that parking fines incurred by PMCF staff had been paid for by PMCF. We
queried this practice with the Coordinator who could offer no explanation, even though her own fines
had been paid for by PMCF. The Finance Officer stated that he paid the fines as he was told to do
so by the Coordinator.
Accommodation Costs
83. We also identified that PMCF staff often attend courses and conferences. Our testing showed that
expensive hotel rooms are often booked, particularly in the case of the Coordinator. In one case the
Finance Officer had attended a digital photography course which was held over a weekend in
London; his partner also stayed at the hotel which was paid for by PMCF at a cost of £330. During a
period of bad weather, a local hotel was booked for the Coordinator to enable her to easily access
her place of work. The cost of this was £713.70. The Coordinator claims that the Board approved
this expenditure. Upon discussion of this issue with the Chair, he stated that whilst he had been
aware that the Coordinator had chosen to stay locally during a spell of bad weather, he certainly was
not aware that PMCF had paid for the accommodation.
Gifts to staff
84. We also found evidence that gifts are bought for staff for various occasions (birthdays, wedding etc)
through petty cash. On most occasions the petty cash is refunded through staff contributions but we
are unsure why PMCF monies are used for this purpose. We could obtain no explanation for this.
Christmas Party
85. Evidence was found of an invoice for the 2008 Christmas party totalling £2667.30. This party was for
staff within PMCF and there was evidence that many of the staff attending the event had contributed
to the cost via salary deductions, but not all staff made a contribution.
86. Furthermore, no contributions had been obtained from staff for Christmas parties held in previous
years, which were held in Manchester and therefore also incurred an overnight stay.
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