LDA accounting risks 2012 legacy

The government agency charged with ensuring a legacy from the London Olympics has major short and long-term financial management problems, raising doubts about its ability to achieve its mission.

The stark warning comes after problems highlighted by the London Development Agency’s (LDA) auditors, audit committee and its new finance director.

In the LDA’s audit, risk and performance committee meeting last week, concerns were raised about its ability to file its next accounts on time, having been criticised by the Audit Commission for the last two years for the poor quality of its accounts.

It is struggling to reach the finishing line in time to close its books for the March 2010 year-end accounts, is lacking technical accounting ability, and needs deeper financial understanding embedded within its business, according to new FD Ian Grattidge.

“Getting people across the organisation... This is critical, otherwise
the central [finance] team will chase its tail.
“I want to see financially literate people across the business,” said Grattidge.

Committee members warned that previous promises by the LDA’s finance function to improve its accounting procedures produced little headway in the last year.

“We’ve only got a couple of months to get on top of this,” committee chairman Ian Barlow told Grattidge.

The new finance director told the committee that the finance function would be able to make “substantial improvement” in some areas, particularly around the year-end processes.

However, committee member Ann Humphries responded: “If you sense suspicion it’s because we were here a year before.”

Tory shadow minister for sport and the Olympics, Hugh Robertson, said of the financial management problems at the LDA: “I do think the legacy has been put at risk.”

The Olympic Park Legacy Company, headed by chief executive Andrew Altman and Labour peer Baroness Ford, was formed last year to handle the long-term management of the park – a move that had taken some of the games’ legacy responsibilities from the LDA.

“[Some of the legacy] has moved on to the new body. It’s a good thing that this has been taken away,” Robertson said.

Tom Brake, Lib Dem shadow minister of London and the Olympics, urged the LDA, as an important body in the games’ legacy, to better manage its finances.

“The LDA is a major player. I want assurances that the new FD will be able to put the house in order. We don’t want the legacy jeopardised as a result of an inability of the LDA to control its finances,” said Brake.

The LDA’s ongoing issues were initially highlighted last year when a root-and-branch review by new management, and further investigations by KPMG, found a £160m overspend in its finances for procuring land for the Olympics.

It immediately took action to improve the quality of its data, introduced a finance function forum to review the work of those in the department, plus peer reviews of its financial performance against other bodies. The Audit Commission has also noted recent improvements.

A spokesman for the LDA strongly refuted the possibility of the LDA putting the games’ legacy at risk.

“There are internal issues to make sure finance gets its structures [in place], but the legacy isn’t in doubt,” said the spokesman.

“We’re setting things up for a stronger focus on legacy.”