Showing posts with label accounts. Show all posts
Showing posts with label accounts. Show all posts

Monday 22 January 2024

Cllr Lorber presses case on Barham Park Trust accounts despite CEO's 'high level' review

 Both the Barham Park Trust Committee and the Resources and Public Realm Scrutiny Committee meet on Wednesday January 24th.  The former includes the 'High Level Review' of the Barham Park accounts promised by Kim Wright, Brent's new CEO at the special call-in Scrutiny Commitee held on October 26th  to consider issues around the accounts (Minutes of the meeting).

 

Extract from CEO's Report LINK:

 

I am satisfied that the objectives and scope which I set for the review have been met. Furthermore, I am satisfied that the review did not identify any material issues relating to the accuracy of the accounts. However, there have been areas identified where the accounts could be presented in a more clear and transparent way moving forward. This is particularly in the way rental income is presented and how the netting off of income and expenditure is shown.

 

3.9 There were also some helpful observations made regarding operational practices concerning the running of the Trust which could impair, or be perceived to impair, the Council’s arm’s length relationship with the Trust. In particular:

1. The trust not having its own bank account (up until recently);

2. The award and management of NCIL funds for park improvements being managed by the Council;

3. A lack of rent reviews undertaken by the Trust owing to the ongoing feasibility study commissioned by the Council;

4. Cash advances being paid to the Trust for rents overdue.

 

3.10 I have discussed these actions and observations with the appropriate officers, and all have agreed to implement the actions. In addition, whilst the rationale for the practices set out at 3.9 is clear existing practices are neither improper nor have any impact on the accuracy of the accounts, I have asked officers to review its management of the Trust to ensure that appropriate segregation and separation is in place where appropriate to clearly distinguish between activities of the Council and activities of the Trust,

 

Cllr Paul Lorber, one of the councillors instigating the Call-in is not satisfied and requested to speak at the Barham Park Trust meeting. The chair of the Trust, and leader of the Council, Muhammed Butt refused his request.

 

Cllr Lorber then wrote to all Brent councillors making his case:

 

Dear Colleagues

 

If you see mistakes and wrong doing you should never be afraid to speak up. You should also not allow yourself to be fobbed off.

 

At successive meetings of the Barham Park Trust I highlighted the errors in the presented 2022/23 Accounts. The 1st version of the accounts went to a meeting on 5 September and had to be withdrawn at the last minute. The revised accounts presented to a reconvened meeting on 26 September did not make much sense either.

 

At a subsequent meeting of the Scrutiny Meeting I made the point that those misleading and inaccurate accounts hide the truth of how the Barham Park Trust Charity financial affairs have been mismanaged - making the point that the mismanagement has cost the Charity around £100,000 - with on going losses going forward.

 

You will see from the Agenda of a reconvened Barham Park Trust Meeting that the Chief Executive commissioned a “high-level consultancy based review” relating to the concerns and issues raised.

 

The Chief Executive then explains that the review was NOT intended to do - it “was only ever limited to a narrow scope…”

 

The aim of “high level reviews” “of limited scope” should be obvious - not to uncover anything embarrassing and to protect senior Councillors and officers of the Council at all costs.

 

The Barham Park Trust Charity exists because 87 years ago a resident of Sudbury donated his home and gardens for the enjoyment of local people in our area.

 

He entrusted the management of his gift to the local Council - first Wembley BC and later it’s successor - Brent.

 

We all - Councillors and Officers - have a joint duty to look after and protect the bequest from Titus Barham.

 

I take my duty seriously and have tried to engage both with the Trust Committee and Council Officers to help to highlight the mistakes they made so that correct Accounts are prepared and ongoing losses being sustained by the Charity are stopped.

 

I requested the right to speak at the meeting on 24 January. The Chair has refused my request to speak.

 

Prior to that refusal I prepared a written submission to assist the Committee in their deliberations on the 24th and ask some searching questions of the officers.

 

Mistakes can happen. I will not criticise Councillors or Officers for making mistakes as long as they correct them when they are pointed out to them.

 

I will not however accept or tolerate mistakes which those in power and authority then try to cover up.

 

Cllr Lorber sent two documents with his email that are embedded below:

 

 

 

 

 

 


Saturday 28 October 2023

Barham Park accounts: Cllr Lorber provides evidence for claim of £100k combined loss to the Trust

Following the Scrutiny Committee hearing of the call-in over the Barham Park Trust accounts, Paul Lorber has given me permission to reproduce his letter to Kim Wright, Chief Executive of Brent Council:

 

I am writing to summarise my continuing concerns about the losses suffered by the Barham Park Charity as a result failures of the Councillor Trustees and by Officers of Brent Council.

I will deal with the saga of the ‘changes template/style of the 2022/23 under separate cover.
 
One Cabinet member and two other Labour Councillors expressed the view that yesterday’s scrutiny meeting was a "waste of time and money". Since the system of Scrutiny was set up by a Labour Government with the aim of holding decision makers to account these views are surprising and undermine the democratic process and bring it into disrepute.

You told me a while back, in response to my numerous concerns about the Barham Park Trust (BPT) Accounts and loss of income, that an independent audit was to be carried out. I had asked a while back about the scope of that audit and who would undertake it. I was interested because I would wish to make a detailed submission to that person.

As you know I have been expressing my concerns for some time and engaged with officers to get proper answers to my concerns. Sadly these have not been forthcoming. I also made an in advance request to speak at 26 September meeting of the Barham Park Trust which dealt with the accounts deferred from the meeting of 5 September on the grounds that a wrong form was used. I was denied the right to speak and the ability to point out numerous mistakes made by various units of the Council.

The revised accounts - supposedly on the better "received and paid" basis were approved without any questions or review by the Trustees I had no choice but to initiate a call in to Scrutiny.

At Scrutiny one of your officers intervened every time any member wished to ask about figures in the accounts on the grounds that Scrutiny Members could not ask "any operational questions". This seemed bizarre as all numbers in those accounts were the direct result of "operational" decisions many of which could be the wrong decisions.

A mention was made that you had initiated a review of the Accounts but no one present (not even the Operational Director with oversight over Barham Park Trust) was able to provide any details as to the scope of that review and who would to conduct it or the timescale. It sounds a Sir Humphrey Appleby type of review. Scrutiny then expressed a  rather forlorn wish that the findings of that mystical review might possibly be reported to them.

I tried to explain the problems to Scrutiny and made a claim that in my view that through bad practices - "operational" decisions - the Barham Park Trust has lost around £100,000 income and therefore that its cash balances  and reserves are understated by at least £100,000. Action is needed to stop the ongoing losses to arise in future years. This is the list:

1. £22,000 architects charges to the Trust. The BPT agreed to undertake the architects study into redevelopment and income generation on the basis that the estimated cost of up to £25,000 would be met by the Council from its Capital program. That is the only decision BPT as an independent endorsed. At the meeting Councillor Tatler, present as one of the Trustees claimed that the Council was advised that the fees could not be paid out of the Councils Capital Fund and "therefore we agreed to charge it to BPT". I think Councillor Tatler forgot the role she was serving - as a Trustee her sole responsibility is to the Trust and NOT to the Council.
 
Irrespective of Cllr Tatler's confusion there is no record of a decision or authority in place from the BPT Trustees to charge £22,000 to the Trust 2022/23 Accounts.
 
2. The largest tenant occupying space in the Barham buildings signed a lease in 2014 at a rent, inclusive of service charges, of £43,000. The rent was due an upward review linked to CPI in 2019. The Property Unit who do not seem to keep a record of when rent reviews are due overlooked this. As a result the increase in rent from 2019 of around £4,800p.a. was not implemented. The loss to BPT between 2019 to 2023 therefore amounts to around £19,000.
 
3. The Children Centre is leased to Brent Council. A Report to the Executive a few years ago reported that the agreed market rent would be £11,000 plus a service charge. No service charges have ever been calculated or charged and definitely not paid. While without a calculation the exact loss is unknown I estimate it at £10,000.
 
4. Service charges have not been charged to other tenants in the complex either - once again the exact figure is unknown but another loss of £10,000 is a reasonable estimate.

5. The Accounts for many years have been showing an insurance cost relating to the Barham Park buildings of £2,500. A large proportion of this cost should have been recharged to the tenants in line with normal lease agreements. Once again as the Councilor Officers supposedly supporting the trust have never calculated the recharge the exact figure is also unknown - but I estimate the loss to BPT as another £10,000 to date.
 
6. For a number of years the Council has used the BPT cash balances of around £500,000 or more within its funds. The Council only pays BPT interest of 2%. Interest for some time.  rates started rising a while back and charities could get a rate above 2%. I estimate that BPT could have achieved an average interest rate at 3% in 2021/22 and  probably as much as 4% in 2022/23 if making independent decisions the loss of interest income would therefore be around £5,000 in 2021/22 and £10,000 in 2022/23 - a total of £15,000 over those two years.
 
7. The rent paid by the Council to BPT for the use of the Children Centre should be based on market rents determined by an independent valuer. This has not been done for some time and the £11,000p.a agreed some 10 years ago is clearly out of date. Even if the market rent had risen in line with CPI it should be around £13,000p.a. by now which means that over the last 5 years BPT has lost around £10,000 in extra rent income.
 
8. Letting of Unit 7. This was agreed in over 4 years and Heads of terms issued in February 2019. Council Officers suspended the process while the long winded review of the buildings etc is carried out. Had the matter been dealt with efficiently the Unit would have been modernised and been serving people with Dementia from at least 1 April 2021. BPT has therefore lost 2 years worth of rent worth £4,000. 
 
9. Unit 7 sustained extensive damage through water penetration and wet rot. Some of the repairs required where suspended while Unit 7 was modernised - the cost of this could have been paid for out of the NCIL Grant awarded to Friends of Barham Library. The work will now need to be carried out at some point by BPT and will cost a minimum of £5,000. (as this is a future cost this is not included in the £10,000 at this point). 
 
10. The charges for use of Barham Park for annual Funfairs are covered by a Council wide agreement negotiated by the Parks Department. This was renewed from 13 January 2022 and covers 5 parks including Barham Park. The daily licence fee  was set at £978.16 per operating day in year 1 plus RPIX as determined by the average for the preceeding period from September and August. This suggests a day fee of over £1,000 per operating day in Barham Park in 2022/23. Paragraph 2.2g then refers to "annual 41 day operational fees etc" to be paid in April with and fees for additional operational dates to be payable in September. 
 
This implies that BPT should have received a payment of 41 x £1,000 = £41,000 in 2022/23. As only £36,000 is shown as received (accounts on cash received basis) there is a shortfall of £5,000. It is possible and probably likely that BPT has been underpaid in many of the previous years too. The Licence to Occupy agreement for the Funfairs is poorly written but irrespective of this a detailed review of this needs to be carried as the Funfair Operator may have been under charged not just for using Barham Park but all the other parks in Brent.
 
11. As you know one of the tenants, brought to the table and espoused as being ideal by Council Officers in 2013 built up rent arrears of a staggering £79,000. The Lease terms state that interest on rent arrears would be charged. While there was an 'amnesty' for this for a while during the Covid lockdowns this came to end a long time ago. Officers responsible for managing BPT failed to impose any interest charges on this substantial debt which will not be settled until 31 March 2024. To cover this up and to ensure that BPT had enough cash to meet its operating needs the Council was forced to make an 'advance' to BPT which is some what secretly reflected in the 2022/23 accounts as the £39,000 figure was netted off against the balance of £12k of architects which was charged to BPT without BPT approval. The loss of interest lost needs to be calculated but could be up to £5,000. 

In conclusion the combination of the above issues suggest a combined loss of around £100,000 to the Trust. I have attended many of the BPT meetings over the years. I have tried to express my concerns but was frequently denied the right to speak. I have reviewed most of the Reports and Minutes of BPT meetings since at least 2013 and cannot find and decisions which authorise the following:

1. The payment of £22,000 Architects Fees
2. The forgoing of Rent Reviews and the charging a rent in line with the mutually agreed Lease Terms.
3. Failure to charge service charges in respect of the Children Centre (and to other tenants)
4. Not recharging insurance costs for many years
5. Not to to pay the market rate of interest on BPT cash balances after interest rates started rising substantially.
6. Not to revalue revalue and pay a proper market rent for the Children Centre
7. to accept the loss of rental income by failing  to complete the letting of Unit 7.
8. Not to charge interest on rent arears.
9. Not to charge correct operational fees for use of Barham Park for Funfairs. In fact the issue of funfair fees and impact of using the land in Barham Park is hardly mentioned.

BPT is a charity and Councillors and Officers have a very special duty of care to a Charity under its control. As Trustees and as responsible Officers the duty is to the charity only. This duty includes a fiduciary duty to ensure that the Charity receives all income that is due to it, that it does not incur expenditure that it is not responsible for and has not authorised and that its assets are protected.

In my view, and the evidence presented above I am concerned that the Trustees and the officers tasked to serve the Charity have not fully met that duty.


Wednesday 25 October 2023

Call-in on Thursday to hold Brent Council accountable for alleged errors in the Barham Park Trust accounts

The saga of the Barham Park Trust accounts continues on Thursday when the Public Realm and Resources Scrutiny Committee considers a call-in of the Council decision to approve the accounts because of alleged inaccuracies which could lead to reputational damage.

The call-in follows attempts by councillors to query and correct the accounts at meetings of the Trust Committee which is headed by Brent Council leader Muhammed Butt and composed solely of members of his Cabinet. LINK

 

The call-in has been made by opposition members. 

 

Tuesday 26 September 2023

Barham Park Trust accounts rubber stamped despite detailed anaylsis revealing many problems with them

 Paul Lorber was refused permission to present this paper on the Barham Park Trust accounts at today's meeting. The meeting lasted less than 10 minutes. Officers said that representations had been dealt with in previous correspondence and the accounts were fine. Cabinet members in the guise of trustees asked no questions and then rubber stamped them.

 

PAUL LORBER'S PRESENTATION

 

The revised accounts for the year 2022/23 are fundamentally wrong and should not be approved. They are inconsistent with previous years, do not reflect the correct income due to the Charity, overstate the Charity expenses and do not provide information in an understandable and clear way that makes review and scrutiny of those accounts easy.

 

I deal with some of the key issue in detail below and summarise the other issues in need of investigation.

 

Rental Income presentation problem (the income is not confidential and can be easily ascertained from past public reports)

 

Excluding the £11,300 rental income from the Children centre, £6,500 from Virgin Media, casual rentals and income from the funfair the Rental Income due from the four tenants occupying the Barham Park buildings is as follows:

ACAVA                                    £43,000

Friends of Barham Library         £7,000

Barham Veterans Club                £3,000

Tamu Samaj                                 £1,500

TOTAL                                       £54,500

 

This income has remained unchanged for some years. According the Officers the Accounts are presented on a Cash “received” basis rather than on the more usual” arrears” basis.

 

This income is shown in the accounts on the line described as “Rental Income – other”

The amounts shown are:

17/18               £50,373

18/19               £52,500

19/20               £51,500

20/21               £51,500

21/22               £50,009

22/23                 £1,625

 

None of the years 17/18 to 21/22 agree with the expected income suggesting that some rents were not collected. The officers may want to explain which tenant did not pay and why or what the discrepancy with the expected £54,500 p.a. is for each of the years.

 

The amount for the year 2022/23 looks very odd compared to all the previous years. The officers claim that the Accounts for the Trust are prepared on a cash basis (i.e. they show income in terms of cash received and payments in terms of cash paid rather than on the traditional accruals basis of showing the income expected to be received in the year with any amount not received shown in debtors.)

 

This explanation does not stand up to scrutiny when you look at the extracts from the minutes dealing with the 2020/21 accounts. Minute 3.5 clearly states “the majority of the rental income for 2020/21 is still outstanding”. If this is so why is the supposedly “cash received” figure for the year showing £51,500 when most of the rental income “has not yet been paid”.

 

The rental income for 2019/20 of £51,500 too is clearly also NOT the “cash received” as note 3.6 below states that at 31 March 2021 …..£76k of the rental income has not yet been received. As ACAVA’s annual rent is £43,000 this means that £33,000 (£76,000 less £43,000) of the amount outstanding as unpaid must relate to 2019/20 – which in turn means that the £51,500 clearly cannot possibly represent the “cash received” in respect of rent in that year.


Extract from 2020/21 Accounts


3.4 During 2020/21 the Trust incurred expenditure of £96,283 on maintenance of the building complex and the park. This is made up of £60,383 of unrestricted funds expenditure and £35,900 of restricted funds. The Trust generated £81,300 receipts from rental income and interest earned.


3.5 This includes rental income that is due but has not yet been paid. The majority of rental income for 2020/21 is still outstanding. The cumulative rental income due but not paid as at 31 March 2021 was £76,291.


3.6 This means that as at 31 March 2021, the Trust had assets of: (i) £58k unrestricted funds cash (ii) £353k restricted funds cash (iii) £76k rental income due but not yet received (unrestricted funds) (iv) £939k valuation of Barham Park Building Complex


3.7 This means that if the rental income arrears are not received, the Trust would have only £58k of unrestricted cash. If the arrears continue building up, the £58k would be enough to cover around 12 months of maintenance and wardens costs.

 

CONCLUSION

 

The Accounts for all years to 2021/22 have been produced on an accruals basis (they show the rent due and not the cash income received).

 

The revised 2022/23 Accounts presented to you on Tuesday 25 September 2023 are wrong as they are being presented on an inconsistent and a totally incomprehensible basis.

 

The 2022/23 figures are attempting to show some form of ‘cash basis’ whereas the comparative figures for 2021/22 are clearly on the correct accruals basis.

 

Even if officers were correct to present the 2022/23 on a cash received basis to make the accounts consistent and for them to make sense they would have to revise the 2021/22 comparatives to a cash basis too.

 

IT MAKES NO SENSE

 

In terms of the size of its transactions the Barham Park Charity should prepare its accounts on an accruals basis as in relation to rental income the accounts would show the rents due in the year and any amounts uncollected/owing would be shown as a debtor and any rents paid in advance/prepaid would be shown as a creditor.

 

This makes it straight forward to make comparisons between the years in respect of both income and expenditure figures making it easy for Trustees and 3rd party observer to see the trends between years and ask questions if unusual variations arise.

 

OTHER ISSUES

 

Various reports claim that the Council provides the Barham Park Charity with a subsidy. This cannot be substantiated because none of this is reflected in the Barham Park Trust Accounts.

 

Charity Commission Guidance covers this issue:

 

CHARITIES SORP (FRS 102)

 

Accounting and Reporting by Charities: Statement of Recommended Practice applicable to charities preparing their accounts in accordance with the Financial Reporting Standard applicable in the UK

 

Accounting for donated facilities and services, including volunteers


6.13. If a charity is given facilities and services for its own use which it would otherwise have purchased, these must be included in the charity’s accounts when received, provided the value of the gift can be measured reliably.


6.14. Measuring donated services using fair value would not be practical as such services cannot be resold and the use of fair value may result in an overstatement of the value of the donation to the charity. Donated facilities and services are therefore measured and included in accounts on the basis of the value of the gift to the charity.


 6.15. Value to the charity is the amount that the charity would pay in the open market for an alternative item that would provide a benefit to the charity equivalent to the donated item. Value to the charity may be lower than, but cannot exceed, the price the charity would pay in the open market for the item. Accounting and Reporting by Charities Page 62


6.16. Donated facilities and services that are consumed immediately must be recognised as income, with an equivalent amount recognised as an expense under the appropriate heading in the statement of financial activities (SoFA).


6.17. Facilities such as office accommodation or services supplied by an individual or an entity as part of their trade or profession can usually be reasonably quantified and must be included in a charity’s accounts.


6.18. Charities often rely on the contribution of unpaid general volunteers in carrying out their activities. However, placing a monetary value on their contribution presents significant difficulties. For example, charities might not employ additional staff were volunteers not available, or volunteers might complement the work of paid staff rather than replace them. These factors, together with the lack of a market comparator price for general volunteers, make it impractical for their contribution to be measured reliably for accounting purposes. Given the absence of a reliable measurement basis, the contribution of general volunteers must not be included as income in charity accounts.


6.19. However, it is important that the user of the accounts understands the nature and scale of the role played by general volunteers. Charities must include a description of the role played by general volunteers and provide an indication of the nature of their contribution in a note to the accounts

 

WHAT DOES THIS MEAN?

 

If substantial – and the Council implies this by always refering to providing the Barham Park Charity with a subsidy – the services provided by the Council to the Charity must be valued and shown both as Donated Income on one side and ‘deemed’ expense on the other.

 

While the net impact is £0 any reader of the accounts become aware of the true cost of managing the Charity.

 

NETTING OFF OF INCOME AND EXPENDITURE?

 

Do the trustees know or understand what the figure described as cash advance” of £27,092 represents?

 

According to the report the £27,092 is actually a net figure made up of the remaining balance of rent owed by one of the tenants of £39k offset by an unpaid consultancy fees of £12k due to the Architects for their recent work on the ‘hypothetical’ project.

 

It is described this way in the Report:


3.11 As at 31 March 2023, the Trust had a rental debtor of £39,625 and a £12,533 payment that was due but not yet paid. These have been recognised as debtors and creditors on the Council’s side and the Council gave a net £27,092 cash advance to the Trust in order to aid the Trust’s cashflow position and avoid a detrimental effect of outstanding debt on the Trust’s financial position. In 2022/23 the cash advance has been reported on a separate line in the income section to aid transparency. The Council has also paid interest to the Trust on the cash advance. The Trust continues liaising with tenants and expects all arrears to be cleared by March 2024.

 

In my view the netting off of these two figures and their presentation is wrong. Income should be shown in the Income section and the Expense in the Expense section. More importantly it hides the fact that £12,533 of consultancy costs on top of the £8,711 already shown in the accounts (Total £21,244) – and there may be more paid and charged in 2023/24 to the Barham Park Charity when they should NOT be.

 

The treatment of the estimated costs of £25,000 for the architects working on the recent Barham Park vision study was agreed and confirmed at the Trust Meeting of 27 January 2022. This is what the minutes say:


Having authorised officers (in September 21) to prepare a financial strategy in respect of the Trust, approval was now being sought to the appointment of an architect in order to lead development of a more holistic options appraisal relating to the feasibility of improvements to the buildings comprising the Estate and impact on current occupation uses and tenancies.  The cost identified for the architectural services required had been £25,000 which it was proposed to fund from the Council’s Capital Programme rather than directly by the Trust, given the existing commitments on its available restricted and unrestricted funds.

 

CLEARLY AN ERROR IN THE 2022/23 ACCOUNTS

 

If it was agreed to charge the Architects cost to the “Council’s Capital Programme” why are £21,244 of the costs charged to the Barham Park Charity in its 2022/23 accounts.

 

The Charity’s surplus for the year and its unrestricted funds are clearly being reduced by this substantial amount.

 

The 2022/23 Accounts are therefore materially wrong on this point alone and need to be corrected.

 

OTHER CUMULATIVE ERRORS IN THESE ACCOUNTS

 

I will just list a few issues here that need investigation, should concern the Trustees and should lead to more questions.

1.      The Barham Park Charity has been deprived of correct Interest Income. The amount paid to it by Brent Council for the use of over £500,000 of cash balances does not represent a fair arms length price. I estimate that in the current year The Charity has been deprived of at least £5,000 of extra income and the amount will be at least double that if this is allowed to continue.

 

2.     The so called ‘arms length’ rent paid by the Council to the Charity for the use of the former Children Centre has not changed for years. As the sub lease has expired a true market rent should be charged each year. The Council has failed to follow correct procedures in ensuring that an ‘arms length rent’ is paid.

 

3.      It is also not clear why the Children Centre is not paying service charges for services such as refuse collection, water etc that it receives. There is no reason why the Charity should be paying for this.

 

4.     There has been a failure to implement rent reviews due some years ago. The cumulative cost of this failure runs into tens of thousands of pounds in lost rental income to the Charity.

 

5.      The Charity has had a benefit of NCIL Grants to upgrade the QE II Silver Jubilee Gardens and the Pond in the Park. The value of these Grant is well in excess of £100,000. The accounts for the current and previous years for failing to reflect both the Grant Income received and the expenditure on which the Grant was spent on.

 

6.     The Accounts fail to show enough detail in relation to the expenditure line of “maintenance and wardens”. This heading includes some expenditures which have nothing to do with maintenance and include items which should be included in the lines – including utilities, waste disposal etc. Without this information the Trustees and others cannot be certain if some of these costs should not have been recharged.

7.      

Why is the Charity incurring an insurance charge of £2,500 – should not some or all of this have been recharged?

 

Conclusion:

 

I have tried to engage with Council officers to highlight these issues. My views and concerns have been ignored. As a result the revised Accounts as presented are fundamentally wrong.

 

1.     They are prepared on the wrong and inconsistent basis.

 

2.     They do not comply with acceptable accounting policies as advised by the Charity commission.

 

3.     The figures are wrong.

 

4.     They understate the Charity’s Income

 

5.     They overstate the Charity’s expenses

 

6.     As a result of 4 & 5 above they understate the net worth of the charity (its net assets).

 

These accounts should NOT be approved or submitted to the Charity Commission in their current state.

 

Councillor Paul Lorber

25 September 2023

 

 

Tuesday 5 September 2023

Barham Park Trust accounts 'fundamentally flawed'

A member's enquiry by Cllr Paul Lorber has revealed errors in the Barham Park Trust accounts as published on the Brent Council website. Lorber reacted with the following comment to Brent Council officers:

It is clear from this reply that the Barham Park Trust was being presented with  Accounts and supporting report which were fundamentally flawed.

 

Had questions not been asked the Accounts would have been rubber stamped and sent to the Charity Commission.

 

Although the Accounts may have been corrected and the numbers may now agree with what is in the books the Accounts (and past Accounts) do not give a ‘True and Fair’ view of the state of affairs of the Barham Park Trust.

 

In my view there are fundamental errors in the way the finances and assets of the Trust are dealt with and a proper ‘arms length’ arrangements are not in place.

 

The scope of the ‘Independent Review’ is clearly not sufficient to have identified these arrows and the much bigger problem and failure to properly represent the financial arrangements between the Trust and Brent Council.

 

A more fundamental review is therefore needed to correct past errors and to properly reflect the correct income that is due to the Trust as a result of its relationship with the Council.

 

For a start the cost of providing a Public Park in the Sudbury/Wembley are should be paid for by the Council and the Trust - in the same way that the Council pays for all the Parks in Brent.

 

If the Trust’s position was properly reflected in Financial Statements and its accounts showed the correct level of income then the wasteful approach of spending money on consultants to presenting pie in the sky proposals which cannot be delivered in for many years anyway would not be necessary.

 

Cllr Lorber's Questions and Officer's Answers (in red)

 

1. There is an inconsistency between the Annual report and the Accounts. In Section E it is stated that of the £575,183 the sum of £222,031 relates to restricted funds and £353,152 to unrestricted funds. This is wrong as the Accounts themselves show the correct designation as £222,031 as unrestricted and £353,152 as restricted.

This needs to be corrected and the trustees advised.
 

Section E of the Charity Commission template updated with correct figures as per the accounts - £222,031 unrestricted funds and £ 353,152 restricted funds (attached).


2. The Receipts and Payments accounts fail to show the Fun Fair income on the correct line. We know that Funfairs were held during the year because the Trustee Report says so. Where is that income and can it be put in the correct place. Once again the Trustees need to be advised.

Funfairs income for 2022/23 was £36,337, which was included under the ‘Property Rental Income’ heading.  This has now been reclassified under the ‘Fun Fair’ income line. 

 

3. Can you confirm whether you carried out any checks to ensure that the Barham Park Trust received the correct amount of income due to it from the Fairs? The Fairs are arranged by the Park Department and the charges are set out in a Licence Agreement. there was an agreement for the period 2017 to 2022 and a new one from 2022. The daily fee should be adjusted upwards in line with RPI.
 

The daily fee is to be based on the new 2022 agreement and reflecting for inflation.   There was a daily rate agreed in the licence doc agreed between the parties.  The calculation is daily rate x number of operating days. For each ongoing year in an agreement, the RPIX rate is added to the daily rate charge for the duration of the agreement.


Can you confirm the number of days the Funfair was in Barham Park (actual days of the Fairs and the days of set up and dismantling), the daily rate charged (correctly adjusted for RPI), calculation of the charges should have been applied (number of days multiplied by the day rate) and the charges actually paid by the Funfair and included in the accounts. If the amount received is not correct please advise the relevant officer to ensure that a further recovery is made. The accounts may need to be amended to reflect the correct income and the year end debtor.

The reported 2022 funfair dates were: 

Fun fairs: Irvin’s Fun Fair were at Barham Park:
Operating days between the 20th May to 5th June 2022 (on site 12th May to 6th June);
Operating days between the 19th August to 4th September 2022 (and will be on site until a few days later). 

For reference the 2023 operating days were / are expected to be:

Fun fairs: Irvin’s Fun Fair were at Barham Park:
Operating between 26th May to 4th June (10 days); and onsite from 20th May 2023.
Operating days between 18 Aug to 3rd September (17 days); and onsite from 7th August 2023.

Note that the arrival and departure dates may be amended in practice to enable the funfair to access and egress the site during better weather conditions.

I would like to be satisfied that the Barham Park Trust received the correct income form the let of its land for the Funfairs in 2022/23 and all previous years.
 

The invoices are calculated and issued reflecting the agreements. 


4. As you may be aware the another report to the trustee Meeting makes the point that the trust is not generating enough income. You may be aware that the Funfair obtains its water via a long hose pipe from a water point near the Harrow frontage . This water point was damaged as a result of this use and repaired. There are two issues here:

a. who paid for the repair, how much was it and was it recharged to the Operator?
 

It should be said that while a recent leak became apparent at the same time as use by the FunFair; attributing the cause of the leak, for example to that use or to a longer-term infrastructure issue, was not practical. Arrangements for the repair were managed by the Parks Service and the cost of the repair was paid by the Parks Service from their revenue budget.  The cost of the repairs that was met by the Parks Service from their revenue budget was £795.


b. the normal Council Police of letting Parks for events states that should the renter require water supplies these would be available for a charge. Can you check and confirm that the Funfair is being charged and pays for all the water that they consume. If they are not then the Trust is incurring costs which it should not do.
 

While there may be provision for the separate assessment of water used by the visiting FunFair, the measurement of water use would involve resources and the recent practice has been to assume that water is included in the overall charge. To be fair and accurate, the water meter would need to be read at the start and end of the funfair’s use – and the water use for the Walled Garden, which is on the same mains and meter, netted-off from the sub-total.


5. Paragraph 3.4 to Agenda item 6 refers to unpaid rental income of £29,625 as at 31 March 2023. Why is this amount shown in the Accounts within the Cash balance rather than as a Debtor? This is incorrect and misleading. Can this be corrected.

This will be communicated to the Trust members separately, but it has been identified that an incorrect Charity Commission template has been used to prepare the accounts, which will require a small change to the Trust’s debtors and creditors.  In order to rectify this issue, a corrective exercise needs to be carried out to recognise transactions on a cash basis rather than an accruals basis.

6. In relation to the above para 3.4 refers to "tenants". Last year there was discussion about rent owed by ACAVA which they agreed to settle over two years. Can you please confirm if all of the £29,625 related to ACAVA or which of the other tenants also owed money as at 31 march 2023,

 

The total debt is £29,625.   Information on individual tenant debt is commercially sensitive and is not disclosable in the public domain.  As you will be aware, we are also not able to share commercially sensitive information to Members unless the information is pertinent to their ward and even when we do share the information, the information remains non-disclosable in the public domain.


7. In relation to para 3.9 of Agenda item 6 refers rental income of £19,459 being reflected in the wrong year. Can you please explain what this relates to and how it arose.
 

In 2021/22 we have received a payment in advance.  This income should have been recognised as a ‘receipt in advance’ and deferred to 22/23, however this has not been reflected. In essence, this means that 21/22 income was overstated by this amount, and 22/23 income was understated.

 

This doesn’t have an impact on the Trust’s funds overall.


8. Can you please confirm how much income was received in 2022/23 from parking charges in the car park and where this income is shown in the Trust Accounts.
 

There is no parking charges income reflected in the accounts.  Parking Charges income is managed centrally by the parking provider and not by the Parks Service nor the Barham Park Trust.


9. According to para 3.7 of Agenda item 7 during the 2002/23 year Thames Water used part of the Park for a works depot while working on the embankment. How much were they charged for rental of the Park land and where is this income reflected in the Trust Accounts?
 

The Thames Water work and that by their contractors was at intervals and spread over more than one financial year. (We have not had time to trace the figures and deposits at this stage. Some of the information may be commercially confidential).


10. The 2011/22 Accounts show "ad-hoc lettings" of £14,625. There is no similar income shown in the 2022/23 accounts. What did the £14,625 relate to?
 

The £14,625 represents a reversal of a manual accrual done in 2020/21 to recognise commercial property receipts in advance. This is a misclassification and it should have been recorded under ‘Rental Income – Other’.


11. Para 3. 3 of Agenda item 8 refers to various Religious and cultural festivals being held in the Park. Can you confirm the type and dates of these vents, the amount of the income charged & received and where this is shown in the Accounts.
 

There were three events during 2022/23. The individual charging for each event is not provided here.


12. Although amount of Cash Balances have increased and there has been a rise in interest rates the amount interest income received by the Trust has only risen by a relatively small amount.

Can you explain what investigation you carried out to ensure that the trust is receiving the correct amount of interest or has lost out because of the current arrangements of holding its cash balances with the Council itself. What interest could the trust have earned had it made its won arrangements and placed the money on deposit directly with 3rd parties in either instant or term accounts?
 

Every year, an interest charge is calculated on the average cash balance and credited to the Trust’s account. In 2017 is has been agreed by the Trust that interest will be based on 2% of average reserve balances. At the time this was higher than the Council obtained. It is now lower, however the arrangement has not changed.


13. Paragraph 3.15 of Agenda Item 15 refers to extra work relating to surface drainage using Verti drainage. What was the cost of this work and who paid for it?
 

To date verti-draining has been trialled on two occasions at £304.56 per occasion, which has been paid by the Barham Park Trust.  


The current License for lets requires a deposit and allows for recovery of costs arising from damage. Have the above costs been met or recovered from the Fair operator?
 

We do not tend to take a deposit as we are able to use ongoing bookings across the borough as leverage if required.  As we don’t have in house grounds maintenance, we raise works required with the fair and they have in the past used our external contractor for resolution (payments would have been between those companies). 


14. As you know the arrangements between the Council and the trust have to be at arms length. The Council uses Barham Park every year for the Annual Remembrance Service when Marquees and seating is arranged etc, Has the Council been charged a normal hire fee for this, has it been paid and where is it shown in the Accounts?
 

Income for the Remembrance Day is charged via internal recharge, though low amounts are not normally charged between services.  It would simply be £65 - £72 in recent years.