Largest UK council’s Oracle ERP system still not legally compliant…2 years after rollout

Largest UK council’s Oracle ERP system still not legally compliant…2 years after rollout

£131 million in, and Birmingham City Council has now missed its second deadline to get the system compliant ahead of the new financial year.

Published on 18th April 2024

Birmingham City Council has failed to enter the new financial year with auditable accounting software after a disastrous implementation of Oracle Fusion, which has seen its expected project costs mushroom from around £20 million ($26 million) to around £131 million ($163 million).

The council has now missed its second deadline to get the system fit for purpose in terms of its legal and statutory obligations, despite going live with the software two years ago. Independent auditors had warned the council about the risks of entering the 2024/2025 financial year — which began on 6 April – in this state.

In a council meeting yesterday, councillor Fred Grindrod, chair of the council’s audit committee, called for a public inquiry into the ERP implementation, as well as into the council’s failure to understand its equal pay obligations.

He said, “We need a clear investigation into what happened, what went wrong, and who is responsible. On Oracle: Why was it turned on when so many problems were known? Why did it take so long to admit there was a problem? Why are we still not safe and compliant? When did we really lose control of the finance ledger?”

The council leader has also spoken of the need for a public inquiry.

In September last year, the council — the largest local authority in Europe — declared itself in financial distress by publishing a legal Section 114 Notice, saying the £3.4 billion ($4.3 billion) revenue organization is unable to balance its books. It also said it faces a bill of up to £760 million ($954 million) to settle equal pay claims after pay discrimination probes found it was systematically paying female employees less than men in equivalent jobs. That figure has since been disputed.

In October, the council said it would miss a November deadline to be safe and compliant with its Oracle IT system, a deadline set by external auditors Grant Thornton.

In February 2024, the external auditors reported that the system was still not “safe and compliant” in terms of financial reporting and legal requirements.

At the time, Mark Stocks, Grant Thornton West Midlands public sector leader, told councillors that unless it could be demonstrated that manual workarounds for the Oracle system were safe and compliant for the (then) next financial year [2024/25] starting in April, the audit team would not be able to issue an unqualified audit for that year.

“Actually having a functioning finance system for 2024/2025, including budgets, is absolutely crucial,” he told councillors.

The council’s audit committee also produced a report yesterday claiming it had been kept in the dark about the problems with Oracle.

The report said that since May 2023, when the audit committee was first told about the seriousness of the problems with Oracle, it had consistently tried to seek reassurance about how the council was mitigating the problems arising from the failure.

“Members are of the opinion that they were not being given the full facts,” the report said.


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