Criticisms of the Role Played by the Head of Audit Services

Criticisms of the Role Played by the Head of Audit Services

THE INTERNAL AUDIT REPORT

On the basis of the detailed and extensive evidence marshalled here, any notion that this report is thorough, comprehensive and independent seems fanciful in the extreme. The credibility and even, it has to be said, the very integrity of this report has been seriously impaired by a number of very serious criticisms.

CRITICISM NO : 1 The inaccuracy of the concerns which were imputed to me on Page 55 of the report.

In order to show why these concerns were inaccurate, it will be necessary first to present some background to my dealings with Internal Audit.

Disillusioned initially by the evasiveness of the Director of P.T. and E. and finally by the Chief Executive's failure both to acknowledge and to act on the serious position, reflected in the content of my three letters to the Director of P.T. and E., which were copied to him in August and early September, 2002, [To follow], I approached the Portfolio Holder for Corporate Affairs. On the advice of Councillor Biscoe who assured me that, in the light of the very serious problems which I had identified, I could be confident of a very thorough investigation, if I approached the Head of Audit Services. After the Councillor made an initial approach, I visited this officer on 30 September, 2002, when I explained at length the nature of the problems, which caused me such concern and the reasons why I had approached him.

To ensure, that he was in NO POSSIBLE DOUBT about these concerns, I left with him a six page document, [Click here to view] which referred in varying degrees of detail with each of the following important issues :

i] the INTEGRITY of the construction of the developer's section of the Sandy Lane by-pass,

ii] developments on the adjacent residential estates, where dwellings which should NOT have been BUILT, in flagrant contravention of the requirements of the Highway Act 1980, which required that surety should have been secured before construction work began, were actually being OCCUPIED, despite the requirement of Council policy that important safety conditions had NOT been met,

iii] the IDENTITY of the officer, who had authorised such irresponsibility and irregularity or at least had taken the decision not to take appropriate remedial action,

iv] the way in which management reacted to these matters by EVASION AND OBFUSCATORY BEHAVIOUR, which was in my view tantamount to DECEPTION. This reached an apogee in the manner in which the departmental report by the Head of Structures, which the Director of P.T. and E. assured me in his letter of 14 June 2002 would "ANSWER MY QUESTIONS" and deal thoroughly with a consideration of "ACTIONS AND INACTIONS" relating to the construction of the Sandy Lane by-pass. Unsurprisingly, perhaps, neither of these assurances was fulfilled,

v] the implications of the unacceptable management behaviour for the state of MEMBER-OFFICER relations, upon which the well-being of a democratic institution depends,

vi] in effect, the ETHICAL STANDARDS and the MODUS-OPERANDI of the council and

vii] the implication that the general environment might have conducive to FRAUDULENT activity.

These important issues were augmented and explored at much greater length in my own report on the Sandy Lane area, which included one volume of text [53 pages, including 4 pages of references to source material] and five volumes of supportive evidence [drawn from my copious correspondence with management, official documents, internal e-mails between staff in the P.T. and E and legal departments and records, including those relating to road inspection, abstracted form the files at Scorrier]. The Head of Audit Services was even supplied, at his urgent request, with 'provisional' copies of the individual chapters of my report as they became available, so that he could pass them on to Volker Glover, the specialist Deloitte Touche auditor, before he came to Cornwall at the end of October, when the investigation began. Internal Audit received a draft copy of my report, promptly after it became available on 5 November, 2002 and the final version followed, when it was available on 28 November, 2002.

Therefore, the Head of Audit Services was FULLY aware of the issues with which I was concerned and, because of their importance, he was also aware of my firm determination not to be content until all the issues had been THOROUGHLY explored. This is unmistakably clear from the concluding comments on Pages 46-49 of my Sandy Lane report, with which he had been provided in provisional, draft and final forms.

Furthermore, he could have been in NO conceivable doubt what I was looking for and it was only when I had received his CATEGORICAL ASSURANCE that the investigation would be THOROUGHLY COMPREHENSIVE and would explore ALL my concerns, that he would not hesitate to call in the fraud squad and the district auditor if it proved necessary and that his investigation would be COMPLETELY INDEPENDENT and free from ALL internal pressures that I AGREED to his conducting an investigation. He gave me NO indication that any of these matters lay beyond his capacity to investigate, NOR did he inform me that he would have first have to obtain the approval of the Chief Executive Officer. The first I learnt of this officer's involvement was on perusing the Internal Audit report in January 2003. Without the categorical assurance, which I had been given, I would NOT have touched Internal Audit even with the traditional barge pole!

YET, in spite of all this, it is stated on page 55 of the Internal Audit report that " You [i.e. the Chief Executive ] have informed us that a Councillor of Cornwall County Council has questioned the way Development Control has been handled in the western part of the County"and "the accuracy and the completeness of the report on Sandy Lane .......by the Chief Engineer [structures] ".

Not only had the Head of Audit Services been informed by me precisely what my concerns really were but he also must have known that what he has been allegedly told by the Chief Executive was far from an accurate representation of those concerns.

Furthermore, his statement to the Community Life Scrutiny Committee, which is recorded in Agenda NO. 4 prepared for its meeting on 6 February, 2003, might be thought to be difficult to reconcile with this situation. It is as follows :

"The areas of concern raised by Mr Hicks formed the basis of the Internal Audit brief and we endeavoured to ensure that ALL areas of concern to Mr Hicks were addressed."

Having regard for the aforementioned considerations, one would have to seriously question the credibility of this sweeping claim.

CRITICISM NO : 2 The implausibility of the claim that is apparent in the following statement, which has been taken from Page 6 of the Internal Audit report :

"As part of our review and in discussions with officers, we were informed that the east part of the County would have a higher compliance rate with Council policies and procedures and that the matters brought up by Councillor Hicks would be restricted to the west of the County. Our review has,therefore, REDUCED the amount of the work originally envisaged in respect of Sandy Lane, THIS HAVING BEEN WELL DOCUMENTED and INSTEAD HAVE CONCENTRATED ON on reviewing a greater breadth of schemes across the County to determine how widespread any of Mr Hicks concerns may be.",

Thus internal audit disingenuously excused itself from pursuing the task, which I had assured at my meeting on 30 September would be undertaken. However, well documented the Sandy Lane fiasco was, the fact remained that the documentation related to the PROBLEMS which existed and NOT to the supply of ANSWERS, posed by those problems. The spurious nature of this excuse is reinforced by the fact that not only was it a contravention of the solemn assurance I had been given on 30 September, 2002 but it was also a violation of the terms of reference, which are stated on Pages 55-58 of the Internal Audit report and to which Audit, when it apparently suits it, attaches such importance as the determinant of its investigations.

CRITICISM NO : 3 The lack of credibility which attaches to the fact that my own extensive and comprehensive report on Sandy Lane, which consisted of I volume of text and 5 volumes of corroborative documentary evidence [based on officers' correspondence, internal e-mails between officers, officer's reports, council documents and inspection records obtained from official files] and which was considered so important as to justify the Head of Audit Services' request that he should be given the individual chapters as soon as they were available so that they could be handed to Volker Glover in London and that Internal Audit itself could digest its contents [To follow], was NOT even listed in the Internal Audit report as part of the 'Evidence Relied Upon'.

In contrast, the two cursory 'reports', by the Chief Engineer [Structures] on 'Sandy Lane, Redruth with respect to the Harrison Development's Section 278 Agreement and the Resolution of Defective Workmanship' and the report by Mark Stevenson on 'Road Adoption Procedures', both of which exemplify, as my following remarks testify, the P.T.and E. predilection for concealment rather than revelation, ARE included.

The Chief Engineer's report, which the Director described as an "independent and comprehensive review" was commissioned expressly to answer the serious questions, which the Director had failed to answer in relation to the construction of the Sandy Lane by-pass and the adjacent residential estates. Its UTTER FAILURE to answer the overwhelming majority of my questions, together with the GROSS MISREPRESENTATION of the chronology of the construction of the developer's section of the by-pass and the failure to establish any CULPABILITY, were exposed in my detailed report.[To follow...... my " Response to the P.T. and E. Report on Sandy Lane", 28 November, 2002, which will appear later] In truth, it seemed pre-occupied with diverting attention to procedural modification when bizarrely most of the procedures which it recommended, as I was able to demonstrate at some length, were already in place!![vide Section C, Pages 31 to 34 of my report, dated 28 November, 2002]

The Mark Stephenson 'report' was actually the result of MY conducting the Network Manager on a tour of sites in the Camborne-Redruth area to point out the serious shortcomings in the Council's record. What is significant is NOT what was INCLUDED but what was EXCLUDED. It was, I'm afraid, NOT a genuine effort to corroborate the full nature of the shortcomings that I had identified.

As the Network Manager and Internal Audit well knows, reference to the serving of an APC notice, even when a cash deposit has eventually been forthcoming, or to the existence of a Section 38 Agreement, even when supported by a cash deposit, is of absolutely NO significance UNLESS surety was in place BEFORE the construction of dwellings commenced. This is essential if the requirement of the law is to be met. In NO CASE, is there any indication of whether or not the Council has behaved LAWFULLY and met the requirements of the 1980 Highway Act.

Again, if the safety requirements, which are laid down in Council policy, are NOT fulfilled, a Part 1 Certificate CANNOT be issued and dwellings CANNOT be occupied. There are many examples from the estates examined where dwellings ARE occupied BUT where carriageways and footways have NOT been made up to base course level, where drains have been set NOT at but ABOVE the surface level, where there is NO reference to the availability of street lighting or to the provision of street name plates. While it is true that in this respect the situation has been accurately reported, it is also true to say that the seriousness of the contravention of Council policy has NOT been pointed out.

CRITICISM NO : 4 The sheer INCOMPATIBILITY of the statements in the Internal Audit report with those in the oral report submitted in Agenda No 4 to the C.L.S.C. on 6 February, 2003.

In the former, it would appear that I was airbrushed from proceedings to such an extent that I am mentioned in effect only once and that was on 6 November when I was interviewed by three members of the Audit panel. The emphasis is ENTIRELY on the action of the C.E.O. , who initiated matters and even "informed us that a Councillor of the Cornwall County Council had questioned...."[ vide Pages 4 and 55 of the Internal Audit report]. The impression would seem to be created that it was largely the result of the cooperative effort between the Chief Executive and Internal Audit that the problems were identified and finally resolved.

On the other hand, in the latter, a completely different picture is presented. Apparently it was I who initiated action by raising the matters with the Head of Audit Services on 30 September, 2003, though it would appear that contrary to the impression of independence, which I had been given to understand would exist, the Chief Executive's consent was necessary. Nevertheless, I "provided Internal Audit with a draft of his own detailed report on this site" and I "further visited the Internal Audit section on a number of occasions." Furthermore, "The areas of concern raised by Mr Hicks formed the basis of the Internal Audit brief and we endeavoured to ensure that ALL areas of concern to Mr Hicks were addressed. However, as the problems encountered at Sandy Lane were documented by Mr Hicks, the Internal Audit review included sample testing across the whole of the County to establish whether the practices identified were localised or wide-spread."

However, it has to be pointed out that even this more comprehensive explanation has certain shortcomings.

Firstly, it is incorrect to say that I provided him with a draft copy of my report, which I could not have done since it was not available before 5 November. What, however, I did supply was a six page document, to which I referred in Criticism No. 1 and I suspect that it was on a later visit that, on his request, I produced the first chapter to be followed by succeeding chapters as they became available.

Secondly, if the areas of my concern really did form the basis of the Internal audit brief and every effort was made to include them, one wonders why only two, of the many aspects identified, were included in that brief. [Vide Criticism NO. 1].

Thirdly, if the problems at Sandy Lane were really so well documented by myself at Sandy Lane, then it is difficult to see why my report was not included in the list of 'Evidence Relied Upon' on Pages 26 and 27 of the Internal Audit report.

Fourthly, if every effort was made to include ALL my concerns and these related almost entirely to the Sandy Lane area, it is not unreasonable to question why, if the problems were well documented in the expectation of securing ANSWERS, for going off on an entirely different and irrelevant tack. Whether the practices existed in other parts of the County were NOT my concern but an explanation of why they existed HERE in the Sandy Lane area was of immediate concern to me and the people I represent.

CRITICISM NO : 5 The 12 Key Findings revealed by Internal Testing [in Agenda No: 4 supplied to the C.L.S.C. for its meeting on 6 February, 2003] did NOT specifically mention that any were a contravention of Council policy or of a statutory duty.

This lapse was most surprising in view of my extensive discussions with Internal Audit and the content of the documents which I supplied. It is even more surprising in view of the 13th item of the Internal Audit Protocol which states that :

"The Head of Audit Services shall report any matters indicating contravention or likely contravention of any enactment or rule of law, or maladministration to the Monitoring Officer or the County Solicitor."

Equally surprising is the fact that both the Monitoring Officer and the County Treasurer have declined to give me a categorical assurance that the Head of Audit Services has fulfilled this requirement of his protocol. But, perhaps, most surprising of all was the fact that this apparent lapse did NOT prevent the Monitoring Officer from claiming that the Internal Audit report was an appropriate mechanism for reporting, what one suspects was 'maladministration', to each member of the Council.

CRITICISM NO : 6 No member of the Council was interviewed by Internal Audit despite the resolution passed at the meeting of the C.L.S.C.that one of the conditions attached to its investigation was that "local members [would be given] the opportunity to be consulted by the Auditor":

CRITICISM NO : 7 The absence of any explanation as to WHY the circumstances, which relate to the contravention of council policies and a statutory duty, should be regarded as being NORMAL rather than EXCEPTIONAL.

The 18th item of the protocol of the Head of Audit Services clearly states that :

"In NORMAL circumstances, the Head of Audit Services will AGREE or discuss conclusions or recommendations WITH the relevant Chief Officer. In EXCEPTIONAL circumstances, the Head of Audit Services shall have UNFETTERED discretion in reaching and reporting on conclusions and recommendations in Audit reports. In such circumstances, Chief Officers may NOT intervene in the production of audit reports unless invited to do so by the Head of Audit Services."

If serious matters such as the failure to implement policy, which has been approved by members and is the duty of officers to discharge, and the failure to implement a statutory duty, which Parliament itself has enacted, do NOT qualify as 'exceptional', one wonders what irregularities would!!.

CRITICISM NO : 8 The inability to explain the RATIONALE for the 31 recommendations of Internal Audit.

This serious weakness of the Internal Audit report was concealed by its lack of organisation and structure.

Logically, one would expect an analysis of the situation to take place at the outset and then for the conclusions, or recommendations, derived from that analysis to be developed. Incredibly, the logical progression is reversed and one finds that the conclusions, which are presented at the outset, are followed by the analysis which appears in rather lengthy appendices. The result is that there is no apparent justification for each of the 31 recommendations, which take on the character of tablets of stone dispensed from on high by some omniscient authority.

Frankly, the view that procedural change alone, without disciplinary action, is a sufficient response to the situation in which this Council is placed, stretches credulity to its limits.

It seems strange that a Chief Officer - and it needs to be emphasised it was an officer of this status, whose unsatisfactory performance led to changes in the protocol -could not be expected to know that it is important in a democratic institution for him to respond promptly, accurately and unequivocally to a member's questions and that, when setting up a departmental review to provide an explanation of departmental failure, it is no less important for the senior manager to understand what it is that he is supposed to be investigating. That it is necessary, by way of clarification, for the County Solicitor/Monitoring Officer to draw up a simple checklist to negotiate what is hardly a minefield seems, if I might say so, to have more in common with the kindergarten than with the premier institution of local government in this county.

Furthermore, it is the duty of officers to discharge the policy decisions made by the Council. Procedures are established by officers to ensure that policy is then implemented. In SOME cases, such procedures were unquestionably drawn up but, like those relating to inspection, they were just NOT being implemented. In other cases, such as those relating to enforcement measures and liaison with the District Councils, procedures simply did NOT exist. When account is taken of the facts that these failures had existed for years and that it is expected of senior management that reviews of the system are undertaken periodically to determine whether or not it is functioning effectively, it is difficult to avoid the conclusion that there has been a massive managerial failure.

The notion that the provision of an elementary procedural road map is a prerequisite for senior officers of this council, equipped presumably with a measure of intelligence and initiative, to design procedures, which are essential for the effective implementation of council policy and a statutory duty, is BIZARRE in the extreme.

It no less difficult to understand how inspection and enforcement procedures could be in such an utterly shambolic state. Nor is it comprehensible why the taxpayer has been apparently subsidising developers by an inspection system which was NOT self-financing, with the fee structure not reflecting market conditions and the rate of inflation. Neither is it clear why, when a District Council has not submitted crucial information, the County Council, which has the statutory duty of protecting house holders against the possibility of street works charges, has not insisted that the information be made available instead of abdicating all sense of responsibility, by doing absolutely nothing for some years.

In all these cases, an efficiently organised system of management would have insisted that officers a long time ago were using the same common-sense measures, which Audit is now recommending. It should be clearly understood that by not raising the issue of disciplinary action and by concentrating on procedural recommendations, management were to all intents and purposes being let off a very serious hook. This is NOT difficult to understand in view of the protocol, which requires Internal Audit's conclusions and recommendations to be AGREED with the relevant Chief Officer. It is also not difficult to grasp why senior management accepted them all with ALACRITY!!

Unfortunately experience has shown that, since 26 June, 2003 when the new protocol on addressing members questions was accepted by the Standards Committee, the futility of the recommendations 29 to 31 have been amply demonstrated. Not only has the same Chief Officer ignored the new protocol by continuing not to answer a member's questions effectively but even the Chief Officer, who, having been given the responsibility of adding flesh to the bare bones of Internal Audit's proposals, had actually commended them to the committee, has also apparently failed to heed his own recommendations. Alas, even the Chief Executive does not seem to have been immune from this failure and the fact that a senior member of his own department has disclaimed all knowledge of the recent changes in this protocol exemplifies only too clearly the importance which is really attached by some officers to Internal Audit's recommendations.

CRITICISM NO : 9 Insufficient attention seems to have been given to the possibility of fraudulent activity in an environment where it could have flourished.

Is it NOT strange that, though the question of fraudulent practices had been a particular concern of mine and there was NO mention of this question in its terms of reference, this apparently was NO obstacle to the inclusion, in section 1.5 of the Management Summary of the report, of the conclusion that "We confirm that no evidence of any fraudulent practices within the Development Control process has been identified as a result of the testing undertaken"? To my knowledge there is no reference elsewhere in the report to the extent of the efforts, which were made to detect such practices, or to the evidence, upon which such a conclusion was based. Therefore, in these circumstances, it is difficult to avoid the conclusion that this firm, but unsubstantiated, statement, has appeared only because its presence might not have been unattractive to senior management.

CRITICISM NO : 10 The Financial Implications of its failure to :

a] institute a realistic estimate of street works costs which, because the inspection fee was strangely not regarded as a self-financing operation and was set at only 5% of the estimate of street work costs, resulted in the taxpayer bizarrely subsidising the developer and placing the Council, and hence taxpayers, in a position where it - and they- would have to have met the shortfall should the developer defaulted and not completed the streets.

b] operate an efficient system of road inspection procedures, backed by an effective Quality Assurance control mechanism in the form of Q.A. audits, the absence of which must cast serious doubts on the integrity of the estate roads constructed by developers.

Legitimate concern will hardly be allayed by the testing of P.T. and E., which revealed that there was no reason for concern over the standards of the estate roads adopted over the last ten years. In view of Internal Audit's own judgement that "we have deep reservations about the timing and quality of inspection schemes" and that "in our discussions with officers, we have not been informed of any case where the Authority has initiated proceeding against the developers for offences against Section 219 (2) of the Act", it stretches credulity to its limits to give any credence to the results of P.T. and E.' testing measures,

c] insist on the use of a UKAS accredited laboratory or an approved consultant for the determination of C.B .R. values, which could have increased the work opportunities for the County Council's own specialist facilities and

CRITICISM NO 11 : The failure to interview and question KEY personnel, of which the following are very significant.

a] Officers who had important responsibilities, during the period when many of the irregularities occurred, seem to have escaped attention.

Firstly, the Network Manager who had held a prominent position when many of the irregularities took place but who retired om 31 October 2002 was not questioned while his successor who began his duties only on 1 November 2002 was interviewed 6 days later.

Secondly, the Chief Executive was not interviewed. This is surprising for three reasons :

i] as the former County Surveyor, he was in control of the system when much of the failure occurred,

ii] in his role of Chief Executive, he was noticeably reluctant to investigate matters when I brought these matters to his attention in mid 2002, and

iii] he may have had a decisive influence in determining the direction in which the Internal Audit investigation would proceed and in ensuring that the assurances, which I had been given by Internal Audit on 30 September 2002, were not fulfilled.

Thirdly, the present County Surveyor, who clearly was not responsible for the irregularities prior to his appointment but whose subsequent behaviour in terms of evasion and obfuscation raises a number of questions, was interviewed. However, his appearance at top of the list of interviewees, even before the person who had compiled such an extensive dossier of criticism and the absence of any record of questioning, to which some other officers were subjected, seems to tell its own story. Whether his uncharacteristic behaviour, surprising in a man generally respected for his integrity, could be explained by a desire not to compromise the position of his predecessor, it is impossible to say.

Fourthly, Legal Services Officers do not appear to have been interviewed though they might have asked to explain why they might not have been too familiar with all the requirements of the Highways Act 1980, whether they were ever requested to institute any enforcement action in the face of serious breaches of Council policy and a statutory duty and why officers in Planning, Transportation and Estates were not disabused of the notion that, in the absence of a bond or deposit associated with the Advanced Payment Code or a Section 38 Road Adoption Agreement, it was contrary to the law to allow house construction to commence.

Fifthly, the Monitoring Officer does not appear to have been interviewed. In view of the acknowledgement that the contravention of council policies and a statutory duty was a long standing feature [May be inferred from the nature of the 31 recommendations of the Internal Audit report] it is understandable that the Monitoring Officer during that period, who has now moved on, was not interviewed. But it is surprising that the present Monitoring Officer, who had been informed through copied correspondence on three occasions in mid-2002, and who does not appear to have reported the results of his investigations to the full Council, was not interrogated.

b] Members, such as Amorel Carlyon, Rachel Hewer, James Currie, Ron Godolphin, Harry Heywood, Mark Kaczmarek, David Roberts and Ken Yeo, who could have made a valuable contribution to the investigation, were not consulted, in spite of a specific resolution of the Community Life Scrutiny Committee on 9 October 2002.

CRITICISM No 12 : In spite of the engagement of a specialist Deloitte Touche auditor, with a knowledge of the engineering problems associated with the construction of the Sandy Lane by-pass, his specialist skills were NOT utilised, as I had been assured on 30 September, 2002 that they would.

Not only were the Sandy Lane issues, which originally prompted the investigation, conveniently lost sight of but there is no evidence at all, in spite of the massive evidence that estate roads inspection procedures were lackadaisical and that the much vaunted Quality Assurance audits, designed to ensure that those inspection procedures were functioning effectively, were in a state of complete disarray, that the condition of estate roads was actually examined in the field.

An opportunity of independently establishing the condition of these roads was lost and instead the results of a Transportation, Planning and Estates Survey which incredibly came up with the remarkable conclusion that their condition was comparable with what would have been expected had they been subject to strict inspection! Of course, this survey was based on a 10% sample, but there has been no indication of the highly significant statistical fact of whether this sample was randomly selected or not.

CRITICISM NO 13 Criticism cannot simply be dismissed by the claim that Audit has operated within its terms of reference and it represents a misunderstanding of the role of Audit.

Firstly, Audit has NOT operated within its terms of reference.

The terms, to which I originally subscribed, at my initial meeting with the Head of Audit Services on 30 September 2002, as a prerequisite for my assenting to this investigation, have been set down previously on Page 1 and the top of Page 2. Though in his oral report to the C.L.S.C. on 6 February 2003 the Head of Audit Services states that " The areas of concern raised by Mr Hicks formed the bases of the Internal Audit brief and we endeavoured to ensure that ALL areas of concern to Mr Hicks were addressed ", the terms of reference were subsequently restricted, presumably under the influence of the Chief Executive, to the two considerations, which are listed on pages 55-57 and on Pages 4-6 of the Internal Audit report and are as follows :

a] "The way development control has been handled in respect of Section 38 and 278 Agreements and

b] "The accuracy and completeness of the [Head of Structures'] report on Sandy Lane, Redruth, with respect to Harrison Developments' Section 278 Agreement." Even if the terms of reference are considered merely in this restricted sense, it can hardly be contended that they have meticulously been followed. The ultimate paragraph in 2.2 which deals with the terms of reference on Page 6 states :

"As part of our review and in discussions with officers, we were informed that the east part of the County would have a higher compliance rate with Council policies and procedures and that the matters brought up by Councillor Hicks would be restricted to the western part of the County. Our review has therefore reduced the amount of work envisaged therefore in respect of Sandy Lane, this having been well documented and instead has concentrated on reviewing a greater breadth of schemes across the County to determine how widespread any of Councillor Hicks concerns may be."

It is perfectly true that Sandy Lane had been well documented, but I had merely identified the PROBLEMS. My purpose in approaching Internal Audit was that it would provide the answers. My concern was not with the geographical distribution of incompetence but with the incompetence per se. It is difficult not to see the previous paragraph as being a crude pretext by Internal Audit to excuse itself from not adhering to its own terms of reference. The treatment of possible fraudulent activity was similarly NOT included in its terms of reference but this did NOT prevent its consideration in the report. It even, in marked contrast to the contravention of council policy and a statutory duty, appears, albeit without a smidgeon of supporting evidence, as a solitary statement, in a very prominent position on Page 3 of the Report [i.e. that part of the report which was made available to the public in contrast to that part which, including the catalogue of incompetence, was hidden in the lengthy Appendices from public scrutiny] :

"We confirm that no evidence of fraudulent practices within the Development Control process has been identified as a result of the testing undertaken"

It would appear, therefore, as though terms of reference can be USED by Audit as a convenient tool when it suits it [and no doubt senior officers], and can be DISREGARDED when it does not.

Secondly, if I have misunderstood the role of Internal Audit, the FAULT is attributable solely to Internal Audit itself. If any of the matters which concerned me lay beyond its function to investigate, then this should have been pointed out at the outset. Then I would NOT have willingly consented to what in the circumstances has proved to be a waste of £25,000 of the taxpayers' money.

CRITICISM NO 14 Internal Audit has not adopted a sufficiently rigorous and inquisitive attitude in some instances and even seems to have a penchant for accepting implicitly statements made by Officers, without checking them with the statements of other people. Three instances may be given

Firstly, at Sandy Lane, officers claimed that the absence of a bond could be explained through the procedural weakness whereby there was a three year gap between the signing of the Section 278 Agreement and the construction of the road, immediately before which a bond was required. Their response, when I questioned whether a bond was in place to cover the rectification of the faulty work , was to admit that it was not, but excused their the failure on the interval of time that had elapsed between the signing of the Section 278 Agreement and the construction of the road. Their immediate reaction was to change the procedures so that the bond would be secured when the Section 278 Agreement was drawn up, irrespective of when road construction began. This was indeed a sensible arrangement but it concealed the fact that in this case there was irrefutable evidence in the files at Scorrier that within 3 weeks of the beginning of road construction, of which notification had been received from the developer, officers were aware of the absence of a bond. This is revealed in internal e-mails, which clearly show that the legal section were refusing to accept an offer which the developer had made to an officer in the Department of Planning,Transportation and Estates to pay a deposit in Euros.!!

Secondly, officers, when questioned by Internal Audit, excused their failure to obtain surety before the construction of buildings on new residential estates began by blaming the District Councils, who were the Planning Authorities, for not notifying them immediately when building regulations were passed. If Advanced Code Payment notices, on which the estimated cost of the provision of street works were included, were not sent out within 6 weeks of the approval of building regulations, the whole system was undermined and the County Council as the Highway Authority, and hence the taxpayer, would be expected to complete the streets, were they not to bne completed. While some District Councils may have been slack in their submission of their returns to the County Council, others were not. However, one would have thought that were such slackness to have occurred, the County Council, whose statutory duty it was to protect residents, would have insisted that the District Councils fulfilled their role properly. The fact that they did not, implies an incredible degree of irresponsibility and one is amazed that in this situation Internal Audit did not see fit to check with District Councils and meekly accept officers statements.

Thirdly, the Director of Planning, transportation and Estates stated quite clearly in Agenda 6 to the Community Life Scrutiny Committee on 6 February, 2003 that the Internal Report "clearly indicates a systemic failure in the highway development control procedures" If he correctly attributes these failures - and their can be no reasonable doubt as to their enormity since they are unmistakably identified on page after page of Appendix 2 of the Internal Audit report, which is not available for public scrutiny - to the financial problems of the 1990s, why has Internal Audit NOT asked some very searching questions in these matters?

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