Audit report highlights system flaws

Audit report highlights system flaws

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The Community Fund has been cleared of wrong-doing but the NAO has found plenty to criticise. Jane Taylor reports

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The National Audit Office has cleared the Community Fund of any breach of its own rules and procedures in making two awards to the controversial National Coalition of Anti-Deportation Campaigns, but has issued trenchant criticisms of those same rules and procedures and made recommendations for change that raise more questions than they answer.

The NAO’s report found that the CF made no serious deviation from its standard policy and practice when it awarded the NCADC £191,516 in 1998 and a further £336,261 last year. But it said the distributor’s processes were too narrow and formulaic, preventing officers and the grant-making committee from forming rounded judgements in possession of relevant information.

The report highlighted several significant weaknesses, including:

overly narrow assessment criteria (‘the current review of objects and constitution to assess eligibility is insufficient to adequately inform the decision to recommend a grant’)
inadequate approach to campaigning or political groups (‘it is clear that Community Fund policies and procedures did not take adequate and explicit account of [political and doctrinaire] activity and that grant assessment officers had no explicit responsibility, or related guidance’) l poor-quality end-of-grant assessment (‘We found the standard of the report to be poor. While concluding that the terms and conditions of the grant were met, and that the grant was extremely successful and the outcome satisfactory, no evidence was provided to support this judgement’)
Slackness in examining the NCADC’s sustainability during the second application (‘its ability to continue in operation without Community Fund support should have been questioned together with proposals for its continuing viability should Community Fund funding not be forthcoming’)
Grant committees reduced to rubber-stamping decisions (‘Board and committee members feel that there has been an over-reliance on the points system with not enough questioning’)
The absence of any risk-profiling (‘High-level risk awareness across the spectrum of the Fund’s work now needs to be cascaded to all the activities of the fund’)
Sloppy monitoring (‘a dissolution clause was omitted in the NCADC’s original submission’; ‘NCADC reported an underspend of approximately £9,000… this had not been followed up or resolved’)

Thirteen recommendations for change emphasise the need to have risk-assessment and risk-profiling procedures, the need to rely much less on scoring systems and more on professional judgement; and the need for the CF to sharpen up the quality of its work in several respects.

Chris Bedford, director of the study at the NAO, sad: ‘All I want them to be is a bit more aware of the risks they are undertaking, because they clearly weren’t in this case.’ On the issue of the end-of-review report, Bedford said: ‘The value for money aspect of it is open to question, and we’ve questioned it before. Measuring the outcomes of some of these grants is a bit like the holy grail, but that’s the area I would like to be involved in.’ The NAO was also unhappy about what went on in the period between the CF deciding – against legal counsel’s advice – to impose extra terms and conditions on the NCADC in October 2002 and then spending the next four months in effect negotiating these with the organisation, further delaying grant payment.

And Bedford criticised the CF’s ambiguity over whether an organisation is demonstrating sustainability in line with the fund’s strategic plan approach. The report strongly suggested that the NCADC’s second application failed to show existing organisational sustainability or even had plans to move towards being sustainable. ‘From the information there, it’s quite clear that NCADC couldn’t exist without the CF grant,’ Bedford said. ‘I would like [the Community Fund] to be more explicit about what they’re prepared to give money for.’ Diana Brittan, CF chair, said the report ‘did demonstrate a clear systems failure. We have given much more power to our grant-making committees, to redress the balance. The current points system will be superseded by something else. We’re going to have to devise a system which deals with the various aspects of risk: outcomes, reputation and financial viability.’ Peter Widlinski, vice-chair of the NCADC said: ‘I do find it quite amazing that the NAO talks about not recognising the risks in supporting us. I don’t think there are any risks, personally.’ The Community Fund has said it will act on all of the NAO recommendations, and that it has already made several changes in anticipation of these. It has screened 1,500 websites of larger-award holders, and is putting in place a system to monitor all websites. It now has a draft form of its proposed new guidelines for staff on campaigning and political organisations, on which it is seeking feedback from NCVO, DCMS and the Charity Commission. These contain nine questions to help spot an unsuitable applicant, including: if the organisation does high-profile campaigning, is this doctrinaire? Does its website contain controversial material which is not directly relevant to its objects? Does it show party political bias? Does it organise direct action?