So the year of the momentous Tees Valley Review drifted towards its anti-climax. This being the publication of an update from Mazars, former external auditors of the South Tees Development Corporation (STDC). Snappily entitled the ‘Update/Conclusion of pending matters – Audit Completion Report January 2023’, it’ll struggle for a book deal. Mazars’ update can be found in ‘Further Reading’ at the end of this article.
Stop the meeting madness
The update had to be agreed by two separate Audit and Governance committees, both of which met at Teesside Airport in the first week of December. I attended both of these so you didn’t have to. Both meetings lasted less than half an hour, and Mazars’ update was noted. Now that the boxes have been ticked, it’s worth flicking through the update to see what has been agreed. However, those unfamiliar with accounting practices and terminology could be daunted by this 57-page tome. But fear not, I’m here to guide you through the worst of it, with a lexicon of jargon-busters in plain(ish) English.
Glossary of terms (Caution: Not approved by the Institute of Chartered Accountants)
Angie Ridgwell – Selected by Michael Gove to lead the Tees Valley Independent Review, usually referred to as the Tees Valley Review. But don’t mention corruption.
Audit & Governance Committee – There are now four of these under the aegis of the TVCA. They’re pretty harmless, and it keeps people off the streets.
Backstop – The date by which all of this nonsense really must stop. Unless you issue disclaimers (See link for further information).
Chief Financial Officer (CFO) – In public authorities, the buck stops with the CFO. So if there’s been any wrongdoing, they’ll be the first one to fall on their sword. Or keep their job and their £126K salary. Whichever.
Chartered Institute of Public Finance and Accountancy (CIPFA) – The Tees Valley Review recommended that CIPFA assess the STDC/TVCA’s internal audit arrangements because they were an utter shambles (Recommendation #27. See ‘Tees Valley Review’ in ‘Further Reading’ below.)
Code of Audit Practice – People sometimes read it.
Conflicts of Interest – The sine qua non of the STDC’s modus operandi. Pretentious, moi?
Disclaimers – See ‘Backstop’ above, or refer to this link.
Double-Entry Book-keeping – System of two-sided accounting entry, first introduced in Florence in the 13th Century.
Double-Speak Book-keeping – When you get given land for nothing then, when you get busted, say that you paid £15 million for it, but then when somebody checks later on, they discover that you’ve actually only paid £5 million to date.
Ernst & Young – The present-day STDC external auditors. There’ll be no more shenanigans, no siree Bob.
External Auditors – They’ll go through your accounts with a fine tooth comb. If they can get the staff.
Forvis Mazars – The artist formerly known as Mazars.
Governance – There wasn’t any until the Tees Valley Review was published and there was a mad scramble to rectify wrong-doing that was identified; the outcome remains to be seen.
Improving economy, efficiency and effectiveness – Well, it’s an idea.
Industrial-scale corruption – Description of Teesworks Ltd activities by Middlesbrough and Thornaby East MP Andy McDonald in the House of Commons. (Corruption was NOT mentioned in the Tees Valley Review, and the word does NOT appear in any external audits, nor in the Mazars update, but people are free to draw their own conclusions).
Inspection of Accounts – Tees Valley residents (known as electors) are entitled to ask the auditor questions about the STDC accounts, and object to them. However, external auditors keep quiet about these rights, and very few people are aware of them. But now you know.
Internal Audit – Prior to the Tees Valley Review, a relatively unknown concept to the STDC and the TVCA. Sample, as per CIPFA review: “We would particularly draw attention to the non-receipt of internal audit reports for the previous 15 months by the audit and governance committees, engagement with audit reviews, the lack of a self-assessment by TVCA and structural issues around the assessment of risk and internal audit coverage of the TVCA group.”
Internal Auditors – Internal auditors usually work in-house (the clue is in the title) unless you outsource your internal auditing to a firm who usually do external audits. Which the STDC have chosen to do. The current internal auditor is Azets, based at the Wynyard Business Park near Billingham. Coincidentally, this business park was built by one of the Teesworks Joint Venture partners Chris Musgrave.
Joint Venture – It was bound to end in tears. Victoria Derbyshire explains.
Mazars – High tech external auditor which uses AI generated holograms to appear at TVCA committee meetings via Zoom from London. The latest version is known as ‘Suresh’. Think of Rimmer from ‘Red Dwarf’ but with spreadsheets. They’re based in London and probably don’t know the difference between Deeside and Teesside. Mazars’ total fee for the external audit and subsequent updates was £42K.
Michael Gove – Chemically enhanced Brexit slug who commissioned the Tees Valley Review instead of a proper investigation, or even sending in the National Audit Office (NAO), as requested by his good friend and Mayor Ben Houchen.
National Audit Office – Will they ever visit Teesside? Well, some of their staffers are Sunderland supporters, and the Boro are at home to the Mackems in February.
Open and Fair Recruitment Process – The lack of which was a weakness identified by the Tees Valley Review and the external auditor. But times have changed.
Property, Plant and Equipment (PPE) – Not THAT PPE (phew) but revaluation of these assets presents a significant risk to the TVCA, even beyond the backstop date of 13 December 2024. See Page 7 of Mazars’ update in ‘Further Reading’ below.
Significant Weaknesses – 13 of them. See Page 12 of Mazars’ update.
South Tees Development Corporation Board – Some people sat in a room for an hour listening to a ‘chair’ and agreeing with practically everything. Unless the ‘chair’ goes rogue.
Tees Valley Review – similar to a National Audit Office investigation. Apart from being nothing like a National Audit Office investigation. See Michael Gove. Or don’t – I wouldn’t blame you.
Teesworks Limited – the ‘new ICI’ if you like to play make believe.
Value for Money – Is identified as ‘the practice of using public resources to achieve policy objectives and create public value. It’s a key tool for ensuring public spending is accountable.’ The jury is still out on this when it comes to the STDC.
So why does this matter?
At the end of a tumultuous year, including the Tees Valley Review, external audits/updates and staff shuffling at the TVCA and STDC, where has it taken us? I would argue that the key reform suggested by the Tees Valley Review was a complete overhaul of the Teesworks Joint Venture, but this has remained relatively unscathed. And the joint ventures keep coming, with another one announced only weeks ago. The TVCA has been the recipient of unusually generous UK government largesse since 2017, including £500 million in grants and £450 in permitted borrowing, and there’s little to show for it right now, apart from the SeAH monopile factory, due to open next month. 750 people will eventually work there if the contracts start rolling in. But Ben Houchen promised 20,000 jobs at Teesworks alone seven years ago. They’re still not here.
Thanks to James Waterson for contributing to this article.
Further Reading:
- Mazars update
- Tees Valley Review
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