SWAP deal sees Herefordshire Council making savings on making savings

SWAP deal sees Herefordshire Council making savings on making servings

SWAP deal sees Herefordshire Council making savings on making servings

First published in News
Last updated
Hereford Times: Photograph of the Author by , Reporter

A SWAP deal sees cash-strapped Herefordshire Council making savings on where savings could be made.

Cabinet this week backed the contract for the council’s internal audit services going to the South West Audit Partnership (SWAP).

Members were recommended to select SWAP  over present provider KPMG – one of the biggest firms of its kind in the UK – that charged the council £236k for 300 days work.

SWAP would charge around £225k a year.

Cabinet delegated authority to  finalise contractual  arrangements - within the council’s approved budget - to the council’s Chief Finance Officer.

Also backed were recommendations that the council joined SWAP to become part owners of the local authority owned company at no cost, subject to approval by the SWAP Board and delegating authority to the CFO to be the council’s  representative on the SWAP board and to exercise the council’s vote at  shareholder meetings.

Internal audit is an essential backroom function for the council assessing the effectiveness and efficiency of operations, reliability of financial and management reporting, compliance with laws and regulations and the safeguarding of assets.

Cabinet was told that SWAP had a “proven track record” for delivering internal  audit services to 12 local councils on a not  for profit basis .

SWAP was selected as the preferred provider in February  after a market test that took in private and public sector providers as well as partnering  opportunities.

The council has separated from the shared services arrangement in has had with primary health providers in the county since 2010 when KPMG were appointed.

KPMG had a contract for three years from 2012/13 – 2014/15 but with an option to terminate on 30 days notice.

The council was charged £236k a year for 300 days work.

In reviewing the budget, the council felt that better value for money could be delivered from the contract and a £100k - or 40% - efficiency saving for the same level of service was proposed.

This was backed by the council as part of the  2014/15 – 2016/17 budget and market testing conducted into an approach offering the best value for money.

SWAP is a Teckal compliant company. That means it is exempt from UK procurement regulations  as outlined in the 2006 Public Contracting Regulations.

As a principle, Teckal  promotes greater collaboration between councils and the establishment of shared-services arrangements.

The principle can apply where a contracting authority can exercise the same  level of control over a wholly-owned entity that is similar to the control it  has over its own “in house” departments, with the  entity carrying out  the essential part of its  activities for that authority.

The control test can be satisfied even where the entity is covered by several authorities.

A Teckal exemption confirms that an authority does not need to run a procurement procedure where the exemption applies.

SWAP was started in 2005 with two initial partners and now has a membership including nine district, two county and one unitary council across five counties. It has  been Teckal compliant for just over a year.

The cost of the council’s contract with SWAP is expected to be around £225k a year - including  the in-house team – representing a saving of £100k saving on the current arrangement.

For this, the council gets  900 deliverable audit days compared to the current 850.

Comments (8)

Please log in to enable comment sorting

3:39pm Mon 14 Apr 14

TwoWheelsGood says...

SWAP were advertising for auditors to do this work weeks ago - 'no previous experience necessary' - so it's fair to say they were expecting to get the contract. As for the council becoming 'part owners' - have they learnt nothing from the Hereford Futures debacle? Conflict of interest?
SWAP were advertising for auditors to do this work weeks ago - 'no previous experience necessary' - so it's fair to say they were expecting to get the contract. As for the council becoming 'part owners' - have they learnt nothing from the Hereford Futures debacle? Conflict of interest? TwoWheelsGood
  • Score: 6

4:17pm Mon 14 Apr 14

AylestoneVoice says...

It seems that the Cabinet were persuaded by the author of the report. Is there no longer any detailed scrutiny of these things by Councillors. I suspect that we will get an annual audit saying just exactly what the Cabinet want it to say rather than being independent. Perhaps that what they are looking for???
It seems that the Cabinet were persuaded by the author of the report. Is there no longer any detailed scrutiny of these things by Councillors. I suspect that we will get an annual audit saying just exactly what the Cabinet want it to say rather than being independent. Perhaps that what they are looking for??? AylestoneVoice
  • Score: 4

6:45pm Mon 14 Apr 14

saidflo says...

"Cabinet was told that SWAP had a “proven track record” for delivering internal audit services to 12 local councils on a not for profit basis ."
Gullible cabinet or a done deal behind closed doors?

Who is behind this change and why?

Any one else notice £236K less £225K does not equal £100K savings?
Is it a typo or what? No explanation given - difference is £11K - maybe the in- house part explains the difference?
"Cabinet was told that SWAP had a “proven track record” for delivering internal audit services to 12 local councils on a not for profit basis ." Gullible cabinet or a done deal behind closed doors? Who is behind this change and why? Any one else notice £236K less £225K does not equal £100K savings? Is it a typo or what? No explanation given - difference is £11K - maybe the in- house part explains the difference? saidflo
  • Score: 3

7:14pm Mon 14 Apr 14

TwoWheelsGood says...

Perhaps the sums were checked by auditors with no previous experience ...
Perhaps the sums were checked by auditors with no previous experience ... TwoWheelsGood
  • Score: 11

10:14pm Mon 14 Apr 14

AylestoneVoice says...

The change was recommended by Peter Robinson the head of finance who moved here from the south west. What a surprise!
Just Google him and/or SWAP and you might find interesting stuff.
The change was recommended by Peter Robinson the head of finance who moved here from the south west. What a surprise! Just Google him and/or SWAP and you might find interesting stuff. AylestoneVoice
  • Score: 0

3:22am Tue 15 Apr 14

WYSIATI says...

In principle this sort of arrangement makes perfect sense. A not for profit organisation that has a public service ethos with strong internal systems should be a better way to spend money than a premium priced international audit company whose primary aim is to make as large a profit as possible for its owners.

Needless to say I have no knowledge of the organisation, their qualifications, approach or cost base.

I would say that if KPMG were only making £11k on the contract I would be astonished so I'd hope to see larger savings in future years.
In principle this sort of arrangement makes perfect sense. A not for profit organisation that has a public service ethos with strong internal systems should be a better way to spend money than a premium priced international audit company whose primary aim is to make as large a profit as possible for its owners. Needless to say I have no knowledge of the organisation, their qualifications, approach or cost base. I would say that if KPMG were only making £11k on the contract I would be astonished so I'd hope to see larger savings in future years. WYSIATI
  • Score: 5

8:08am Tue 15 Apr 14

dippyhippy says...

Oh the joys of "council maths!"

We mere mortals think the sums don't add up....but we aren't trained in "council maths".

Here, the council choose the correct answer, and any "working out" is skewed to ensure they get the answer they want!

Simple!
Oh the joys of "council maths!" We mere mortals think the sums don't add up....but we aren't trained in "council maths". Here, the council choose the correct answer, and any "working out" is skewed to ensure they get the answer they want! Simple! dippyhippy
  • Score: 3

3:17pm Thu 1 May 14

PJRobinson says...

saidflo wrote:
"Cabinet was told that SWAP had a “proven track record” for delivering internal audit services to 12 local councils on a not for profit basis .The report to Cabinet on 10th April says:

KPMG charged the council £236k pa for 300 days work, the equivalent of 1.2fte in addition to the cost of the 2.6fte in-house staff of approximately £90k.

Cost = £336k pa

The cost of the contract with SWAP is anticipated to be £225k per annum, including the cost of the in-house team.

Annual Saving = £101k pa
[quote][p][bold]saidflo[/bold] wrote: "Cabinet was told that SWAP had a “proven track record” for delivering internal audit services to 12 local councils on a not for profit basis .The report to Cabinet on 10th April says: KPMG charged the council £236k pa for 300 days work, the equivalent of 1.2fte in addition to the cost of the 2.6fte in-house staff of approximately £90k. Cost = £336k pa The cost of the contract with SWAP is anticipated to be £225k per annum, including the cost of the in-house team. Annual Saving = £101k pa PJRobinson
  • Score: 0

Comments are closed on this article.

Send us your news, pictures and videos

Most read stories

Local Info

Enter your postcode, town or place name

About cookies

We want you to enjoy your visit to our website. That's why we use cookies to enhance your experience. By staying on our website you agree to our use of cookies. Find out more about the cookies we use.

I agree