Europe's largest city council: Oracle ERP allocated £2B in transactions to wrong year

The Oracle finance system implemented by stricken Birmingham City Council allocated £2 billion ($2.65 billion) in cash to the wrong financial year, leaving public sector workers to unpick the errors manually.

Europe's largest local authority has been made effectively bankrupt by a combination of the self-inflicted messy ERP rollout and historic equal pay claims. In its latest report to the council's Audit Committee, external auditors Grant Thornton disclosed that Oracle's cloud-based Fusion ERP system, which has failed to produce auditable accounts since its implementation in 2022, continues to cause disruption to the council's financial management and operations.

The auditors found significant risks in cash management in the most recent financial years, for example. Cash allocations posted to Oracle were recorded as a transaction on the same day.

"If the transaction it relates to is from the prior year, this means the cash posting is sitting in the wrong year and the accounting records would be incorrect. In [the financial year] 23/24, £2 billion in transactions [were] posted in the wrong year which required correcting manually," the report says.

The Register already reported that expected project costs for the Oracle ERP project have mushroomed from around £20 million ($26.5 million) to around £131 million ($173 million).

Despite red warnings on its project review, the council went live with the replacement to its aging SAP finance system, highly customized software from 1999. The system went live with modifications, and problems emerged. The council now plans to reimplement an "out-of-the-box" version of Oracle while it does its best to fix the current system.

In their latest report, the auditors highlighted the struggle to retain skills and knowledge regarding the original implementation.

"Since the start of the program, there has been significant turnover of personnel," the report reveals. "Of the current staff, none of them were involved in the original implementation. The council's current focus is on fixing issues going forwards rather than addressing former problems.

"Birmingham City Council had a large team supporting SAP. The current Oracle team size is in flux as [the council] are not sure what a stable Oracle solution looks like and therefore what sort of support they would need in place."

The Reg previously reported that security and audit functions in the council's Oracle system were not initially implemented, leaving it unable to detect potential fraud for around 18 months.

The council has been contacted for a statement. It previously said it plans to go live with the reimplementation of Oracle in 2026. ®