Crown Commercial Service Annual Report – More Challenges and Audit Questions

We have been looking at the Crown Commercial Services Annual Report this week. The page that genuinely made my jaw drop was what is usually a pretty boring part of any government organisation's report - the "Head of Internal Audit" section. I had to re-read the first sentence to make sure I understood it.

"The Head of Internal Audit’s annual report concludes that the Crown Commercial Service’s framework of governance, risk management, and control is limited in its overall adequacy and effectiveness. His opinion is based on:

  • Delivery of the agreed risk-based internal audit plan – overall, 64% of the assurances reflect limited assurance or below;
  • Only one review (out of 14) was provided with substantial assurance; and
  • An assessment of the findings identified by internal audit – 22% of the findings identified were rated high for this year, with a further 45% rated as medium".

It is very rare to see an audit opinion that says "control is limited in its overall adequacy". Now things do pick up a bit after that, and there are signs that matters are improving.

"While a number of reviews have been provided with limited assurance (or below), the later reviews in the year show improvement in assurance levels. This may not be indicative of a longer term trend, but provides a positive direction from which CCS can strengthen the control environment in 2015/16. It was recognised that 2014/15 has been a period of significant change for the organisation and that it has faced stringent challenges in transitioning to a new target operating model".

So things are getting better, we hope, and there is no doubt (as the Auditor says) that the organisation has gone through considerable change in the last year. The Finance Director left recently - who knows if that is linked to the audit concerns? And we know that in terms of operational risk, there have been a lot of CCS frameworks extended and major delays or cancellations in some of the high-profile cases - including FM, mobile telephony, digital services, etc.

Another interesting point, hidden away in a table, shows that CCS failed to hit their target for MOD, achieving savings of £86 million versus the £100 million target. I could not understand the reference to the Department of Health savings target - the baseline changed and it all seemed very complicated.

What about customer satisfaction? CCS does track that, we believe, but they haven't shared any of the findings with us. Similarly, there are a few warm words about the internal staff survey but no data. And the figures that we reported on here a few months ago seemed somewhat less positive than you might assume from reading this Report.

We also reported a while ago that McKinsey were working with CCS. The Annual Report says this.

As part of the work to deliver savings from common goods and services, CCS has established an innovative Commercial Accelerator Programme with an industry partner, which is designed to accelerate savings in specific categories of spend and help to exceed the level of savings already planned.

I think this in some ways is the most upsetting* of all the CCS developments. To go through such a major recruitment programme, with so many senior people joining the organisation, and to have used a whole range of consultants over the last couple of years (Proxima, PWC, EY, Xchanging ...) and then to end up paying McKinsey goodness knows what to try and "accelerate savings"... words fail me to be honest.

Anyway, this week we have largely just played back what the Annual Report says. Next week we will try and be more constructive, and offer some thoughts on CCS - what can the organisation do to make sure next year's Report is more positive than this one? That is an even more interesting question following the news yesterday about Bill Crothers.

 

* Except perhaps the continued use of the totally misleading words around SME spend - "Government Spend with small businesses" was NOT 26.1% as the Report claims. Government spend with small business directly was around 10%. If you add second-order spend via larger suppliers it was 26.1%.

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