Agenda item - Cash collection contract

Report of the Interim Director Finance & Resources (copy attached).

1)           The Audit & Standards Committee note the report.

36.1      The Committee considered a report of the Head of Internal Audit that summarised the lessons for the council following the cash collector contractor Coin Co International Plc (CCI) entering administration owing the council £3.243 million.

36.2      Councillor Chapman noted that at the previous meeting, Members had been informed that other parties had used the company and had incurred losses. Councillor Chapman asked if information could be given on who these were.

36.3      The Head of Financial Services clarified that five other local authorities had incurred losses and similar to Brighton & Hove City Council, this had been discovered at the point of CCI entering administration.

36.4      Councillor Robins stated that he found it odd that the money collected by CCI had completely disappeared as it was physical currency.

36.5      The Head of Internal Audit stated that this specific case was very unusual and it was difficult to speculate on detailed proceedings particularly as the matter was subject to criminal investigation.

36.6      The Head of Financial Services added that any new provider would be mandated to use a bullion centre, ensuring that any money collected could not be mixed with the contractor’s business accounts.

36.7      The Interim Executive Director of Finance and Resources brought Members attention to paragraph 4.4 of the report that set out normal accounting procedures and that criminal investigation was underway.

36.8      Councillor Druitt commented that whilst he appreciated that CCI appeared a viable operation, it concerned him that the council took so long to discover improper practices by the company.

36.9      The Head of Internal Audit stated that a risk management assessment was made at the procurement stage and periodic risk assessment and monitoring was also undertaken during operation.

36.10   The Head of Legal & Democratic Services added that the council’s contract standing orders had been amended and there was now a mandatory obligation that a proper financial appraisal be conducted before the award of any contract.

36.11   Councillor Taylor asked if the council had consulted with other local authorities that had been affected.

36.12   The Head of Financial Services clarified that there had been two meetings with the Administrators and creditors amongst whom were other local authorities and outside creditors. The course of action would not be established until the process of liquidation of CCI had formally begun.

36.13   Councillor Druitt noted that the council’s previous collection company had also entered administration and asked if there was a connection between that incident and this.

36.14   The Head of Internal Audit clarified that there was no connection between the two companies and it was his understanding that cash held by the previous company had been fully recovered as it was held in a separate bullion account.

36.15   RESOLVED- The Audit & Standards Committee note the report.