Decision details

Extension of the contract with PwC (CCS Call Off Contract RM6187 – Management Consultancy Framework to the value of £175k), to a maximum additional value of £50k, for the work to facilitate resolution and correction of the remaining cash reconciliation issues, including investigations of material items and effective handover to officers to ensure new processes are fully tested and effective handover.

The Council’s Contract Procedure Rules permit a waiver for extensions to existing contracts, outside the delegated threshold, under the existing contract terms and conditions where it is not practicable to reprocure.

PwC were appointed under Exec Director delegated authority to support the Council investigate and rectify a number of balance sheet cash balances, identified as part of the detailed balance sheet review, and which have had the potential materially impact on the Council’s financial position. Some of these have arisen from changes in feeder systems to the Council’s general ledger that should have been implemented in conjunction with changes to cash matching and reconciliation processes in the ledger – potentially duplicating perceived income receivable, along with other reconciliation issues which have not been processed properly leading to significant balances increasing on balance sheet suspense and control accounts.

As part of the work some 20,000 unmatched or incorrectly reconciled transactions (valuing over £20m) have been identified and need review and (primarily manual) correction.

This contract award was urgent as there was not sufficient capacity within the Finance Team to identify, investigate and rectify such a large volume of transactions, and correction of all material items is required in order for us to finalise production of the 2022/23 Statement of Accounts, and make significant inroads into completion of the 2023/24 Statement of Accounts, the deadlines for which have been prescribed by Government.

The complexity of some of the issues identified has meant there are still a number of material items to investigate and the contract value is now about to reach its limit. Recognising additional support is still required will take the contract over current contract value.

Reasons for taking decision

There is a statutory requirement to publish backlog Statement of Accounts for those up to 2022/23 by December 2024 and 2023/24 by February 2025.

For financial years 2022/23 and 2023/24 the accounts cannot be finalised without material reconciliations and corrections to the accounts finalised.
The Council received a letter from MHCLG on the 28 October seeking an update position on the accounts for 2021/22 and 2022/23 recognising the requirement to comply with the 30-working day public inspection period prior to issue of the audit opinion.

Finalisation of a comprehensive balance sheet review exercise is also a requirement of MHCLG prior to confirmation of ongoing “Exceptional Financial Support” for Slough through Capitalisation Directions.

The investigations could potentially materially impact on the Councils Comprehensive Income and Expenditure Accounts for the previous two financial years – which will impact on the level of available useable reserves held by the Council, and hence increasing the risk of financial sustainability.

1. PwC were appointed under Exec Director delegated authority to support the Council investigate and rectify a number of balance sheet cash balances, identified as part of the detailed balance sheet review, and which have had the potential materially impact on the Council’s financial position. Some of these have arisen from changes in feeder systems to the Council’s general ledger that should have been implemented in conjunction with changes to cash matching and reconciliation processes in the ledger – potentially duplicating perceived income receivable, along with other reconciliation issues which have not been processed properly leading to significant balances increasing on balance sheet suspense and control accounts.

2. As part of the work some 20,000 unmatched or incorrectly reconciled transactions have been identified and need review and (primarily manual) correction. This contract award was urgent as there was not sufficient capacity within the Finance Team to identify, investigate and rectify such a large volume of transactions, and correction of all material items is required in order for us to finalise production of the 2022/23 Statement of Accounts, and make significant inroads into completion of the 2023/24 Statement of Accounts, the deadlines for which have been prescribed by Government.

3. The appointment of PwC was executed in accordance with the Council’s Contract Procedure Rules (CPRs), which for those under £214.9K to be delegated to the appropriate Executive Director. Appointment was via a recognised (CCS) framework. Furthermore, contracts can be extended or varied so long as the overall contract value does not exceed the £214.9K threshold.

4. Since appointment PwC have supported us reviewing a number of processes and ensure the errors identified are replicated through tested change processes, with clear documented procedures for officers to follow. PwC were appointed because their expertise in dealing with these types of financial investigations, and capacity to mobilise quickly – recognising the urgency of the work required.

5. However, the complexity of some of the issues identified has meant there are still a number of material items to investigate and at a run rate of approximately £35k per week, the contract value is about to reach its limit. Recognising additional support is still required will take the contract over current contract value. Under CPRs delegation to extend the contract can only be up to the limit of the threshold.

6 It would not represent value for money to reprocure, via competitive process, further work at this juncture as time would be lost in procurement process and knowledge building of any new team to commence the detailed work (familiarisation with financial systems, processes and historical reconciliations).

7. This decision is therefore to extend the contract to a maximum additional value of £50k to facilitate closure with regard to the remaining investigations of material items and effective handover to officers to ensure new processes are fully tested and effective handover.

8. Because of the urgency of the work required this officer delegated decision is to extend the contract with PwC up to a maximum additional £50,000.

The appointment of PwC was executed in accordance with the Council’s Contract Procedure Rules (CPRs), which for those under £214.9K to be delegated to the appropriate Executive Director. Appointment was via a recognised framework.

The work has required immediate mobilisation and rapid familiarisation with the Council’s financial systems (incl feeder systems to the GL) and reconciliation processes.

There is limited capacity within the current Finance Team to undertake this work without additional support and would mean other aspects of the accounts finalisation process would have to be deprioritised. This would adversely impact on our ability to meet the statutory deadlines for publication of all of the outstanding Statements of Accounts.

Whilst we could reprocure the outstanding work from a national framework, we do not consider that to represent value for money at this juncture, as time would be lost in procurement process and knowledge building of any new team to commence the detailed work (familiarisation with financial systems, processes and historical reconciliations).