Europe's largest council could face £12M manual audit bill after Oracle project disaster
- Reference: 1721306585
- News link: https://www.theregister.co.uk/2024/07/18/europes_largest_council_could_face/
- Source link:
City council Oracle megaproject got a code red – and they went live anyway [1]READ MORE
The £3.2 billion ($4.1 billion) budget authority has become infamous for its ERP project disaster, which has seen its switch from legacy SAP software to cloud-based Oracle Fusion, a customer win co-founder and CTO Larry Ellison once flaunted to investors.
The delayed project left the council without auditable accounts, and with security features and costs climbing from around £20 million to as much as £131 million. The IT problems contributed to the [2]Birmingham City Council becoming effectively bankrupt in September last year.
A report from external auditors stated the council will [3]not have a fully functioning cash system until April next year , three years after it went live on an Oracle ERP, and will have to wait until September 2025 for a fully functioning finance system.
Yesterday, Mark Stocks, head of public sector practice at external auditors Grant Thornton, [4]told councillors that officials had told him the new accounting “out-of-the-box” system might not be ready until March 2026, nearly four years after the failing customized system first went live.
[5]
The lack of a functioning accounting system was making it costly and time consuming to produce a full audit, the auditors concluded after exploratory work.
[6]
[7]
“Our ability to get through those two audits —22/23 and 23/24 — and give you the surety that you would normally expect is severely limited now, because of the ERP system and because of the timetables that we're likely to be working to,” he said.
He told the Council’s audit committee that producing manual audits for these years would be a mammoth task.
[8]
“The audits would take a minimum of a year for a full team, full time [to complete] and I would have thought they would run into probably £3 million per audit, and you would have to match that with investment in your finance staff. It's an enormous undertaking to actually do those audits without an IT control environment and without a business process environment,” he said.
Even if the external auditors did the work, there was no guarantee they could sign off the books with an unqualified opinion.
“There's a there's a significant likelihood that we can do all that work, and you could still end up with a disclaimed opinion. It's a risk, and I am cautious about spending your public money in this way to end up in the same position,” he said.
[9]Oracle's examplar win over SAP for Birmingham City Council is 3 years late
[10]Europe's biggest city council faces £100M bill in Oracle ERP project disaster
[11]Europe's largest city council runs parallel systems to cover Oracle rollout mess
[12]Local governments aren't businesses – so why are they force-fed business software?
[13]Whether to move off Oracle is the $100M+ question for Europe's largest public body
Problems with the customized ERP system were multiple, but cash management, bank reconciliation and accounts receivable were of particular concern. The council has bought third-party software — CivicaPay/Civica Income Management — as the replacement for the banking system.
Stocks said officials had been working hard to improve the current Oracle system, and said he did not “lose that message.”
[14]
Nonetheless, serious issues continue. “You're not going to have a fully functioning finance system and cash system [until] April next year. The actual financial ledger could be April 2026. That's really difficult from a finance officer point of view [and] it's particularly difficult from an external audit point of view to draw a conclusion on your accounts,” he said.
Committee member Richard Parkin said the assessment was “sobering.”
Get our [15]Tech Resources
[1] https://www.theregister.com/2023/10/04/birmingham_city_council_oracle_project/
[2] https://www.theregister.com/2023/09/05/birmingham_city_council_oracle/
[3] https://www.theregister.com/2024/07/17/birminghams_oracle_system_cash_management/?td=rt-3a
[4] https://birmingham.public-i.tv/core/portal/webcast_interactive/890082
[5] https://pubads.g.doubleclick.net/gampad/jump?co=1&iu=/6978/reg_onprem/publicsector&sz=300x50%7C300x100%7C300x250%7C300x251%7C300x252%7C300x600%7C300x601&tile=2&c=2Zpk8HFMia3rX@daYBF9nhgAAAU4&t=ct%3Dns%26unitnum%3D2%26raptor%3Dcondor%26pos%3Dtop%26test%3D0
[6] https://pubads.g.doubleclick.net/gampad/jump?co=1&iu=/6978/reg_onprem/publicsector&sz=300x50%7C300x100%7C300x250%7C300x251%7C300x252%7C300x600%7C300x601&tile=4&c=44Zpk8HFMia3rX@daYBF9nhgAAAU4&t=ct%3Dns%26unitnum%3D4%26raptor%3Dfalcon%26pos%3Dmid%26test%3D0
[7] https://pubads.g.doubleclick.net/gampad/jump?co=1&iu=/6978/reg_onprem/publicsector&sz=300x50%7C300x100%7C300x250%7C300x251%7C300x252%7C300x600%7C300x601&tile=3&c=33Zpk8HFMia3rX@daYBF9nhgAAAU4&t=ct%3Dns%26unitnum%3D3%26raptor%3Deagle%26pos%3Dmid%26test%3D0
[8] https://pubads.g.doubleclick.net/gampad/jump?co=1&iu=/6978/reg_onprem/publicsector&sz=300x50%7C300x100%7C300x250%7C300x251%7C300x252%7C300x600%7C300x601&tile=4&c=44Zpk8HFMia3rX@daYBF9nhgAAAU4&t=ct%3Dns%26unitnum%3D4%26raptor%3Dfalcon%26pos%3Dmid%26test%3D0
[9] https://www.theregister.com/2023/04/26/ellisons_exemplar_oracle_win_over/
[10] https://www.theregister.com/2023/05/25/europes_biggest_council_faces_100m_erp_bill/
[11] https://www.theregister.com/2023/06/29/birmingham_city_council_running_parallel/
[12] https://www.theregister.com/2023/09/11/opinion_piece/
[13] https://www.theregister.com/2024/02/05/oracle_birmingham_chaos/
[14] https://pubads.g.doubleclick.net/gampad/jump?co=1&iu=/6978/reg_onprem/publicsector&sz=300x50%7C300x100%7C300x250%7C300x251%7C300x252%7C300x600%7C300x601&tile=3&c=33Zpk8HFMia3rX@daYBF9nhgAAAU4&t=ct%3Dns%26unitnum%3D3%26raptor%3Deagle%26pos%3Dmid%26test%3D0
[15] https://whitepapers.theregister.com/
Re: "a customer win [..] Larry Ellison once flaunted to investors"
Ehm, none of the above. I had my new Beautiful Big Boat By Birming Oracleham financed, paid, audited in tax-shelter and delivered ages ago.
how different can councils be
They all need multi-tens of millions of pounds custom solutions
Surely UK councils have enough commonality that the bulk can be done by one solution provided for and paid by central government and custom plugins bolted on at that council's expense for wanky vanity projects
I get the feeling the likes of oracle have cottoned on to this anyway but there's money to be made in reinventing the wheel every time
Re: how different can councils be
90% of council functions are wanky vanity projects. Our council has loads of harbours. Birmingham doesn't. Birmingham owns an airport, our council doesn't. Our council has - I think - 300+ parish councils. Birmingham has two. Our council interacts with, I think, four NHS CCGs. Birmingham: one. Our council is thousands of square miles of countryside, Birmingham is about 100 square miles of urban city. Two councils may provide identical services, but purchase them from two different suppliers with two different sets of billing and accounting procedures.
Re: how different can councils be
you do raise an interesting perspective i never realised the scope of actually.
for hundreds of millions though i'd hope 1 solution could load individual modules to handle a council on the moon and one in london with equal ease, i see so many high numbers in government IT spending they're beginning to lose all sense of size. (I think government accountants must have been hit by that a long time ago if they're still approving these things)
Re: how different can councils be
Two councils may provide identical services, but purchase them from two different suppliers with two different sets of billing and accounting procedures.
Only two? Our council seems to use several suppliers just for the services from that one council. Hence the 7 recycling bins, collected by 4 separate lorries, that we have to use.
Oracle the gift that keeps on giving:
To Ellison, Crapita and their ilk.
Ok, where are the job vacancies being advertised for all these interim manual computers?
"a customer win [..] Larry Ellison once flaunted to investors"
So, Larry, what are you flaunting now ? Projects costs multiplied by six and a half, or project delayed for four years ?