A tough commission

The government has abolished the Audit Commission, the public spending
watchdog. The announcement, made last month, leaves interim chief executive
Eugene Sullivan pondering his next move.

What’s happened?

The Audit Commission is to close by 2013, with the loss of 2,000 jobs. The
Commission, which audits about £200bn in funds spent by 11,000 local public
bodies, will be replaced by a combination of volunteers and private auditors.

The closure of the financial watchdog for local authorities across England
and Wales is intended to save £50m a year, according to Eric Pickles, secretary
of state for communities and local government. The Commission is the most
high-profile quango to be axed so far in the government’s austerity drive. To
some Conservative politicians the Commission embodied the regulatory excess and
micro-management of the previous Labour government.

In an interview with The Daily Telegraph last month, Pickles claimed that the
Commission was no longer “fit for purpose” and guilty of wasting taxpayer’s
money on six-figure salaries for its executives and on “staff junkets”. The
Commission issued a detailed rebuttal of Pickles’ reported comments and defended
its record.

For Sullivan — who has worked in a number of government departments,
including the Treasury, and who was most recently a partner in the public
services division of accounting firm Robson Rhodes (now part of Grant Thornton)
– the closure of the Commission will be a disappointment but not a surprise.

Sullivan, 61, who is from Northern Ireland, joined the Commission as managing
director, corporate services, in 2008 from Robson Rhodes. In April, when
Sullivan was promoted from head of corporate services to interim chief executive
of the Commission, there was speculation about whether the public spending
watchdog would survive long under a Conservative government reported to be
planning a “bonfire of the quangos”.

In June, the search for a new chief executive at the Audit Commission was put
on hold after the government blocked the salary package of £240,000, according
to one press report.

The scrapping of the Commission could open up competition for auditing within
local government, although some advisers have suggested that the move will allow
the Big Four and other large firms to “low-ball” to win work. That would fly in
the face of plans to open up government contracts to smaller firms.

Others in the accountancy profession have warned that the Commission’s
abolition may lead to inconsistencies in local government finances and a
“postcode lottery” in public audit.

What happens next?

In an interview at the time of his appointment as interim chief executive
Sullivan, a CIPFA member, told Public Finance magazine: “It’s an important time

to be the interim chief executive,” and added: “I don’t think the board, my
management colleagues or I think this is a time just to sit and keep the chair
warm.”

That now seems unlikely, although the Commission’s chairman, Michael
O’Higgins, last month said it was looking at a range of options for the future
of audit practice, including a sale, a management buyout, and the setting up of
some sort of mutual organisation.

O’Higgins said. “The board of the AC mandated me last month to take soundings
of potential purchasers, which has revealed significant interest in acquiring
the Audit Commission’s business.

“I will be continuing with this process in the coming weeks, since the
effective audit of local public services will need to continue, whether carried
out by the Commission or by others.”

Still, with public sector bodies eager for expert advice on cutting costs and
improving efficiency, Sullivan is likely to be highly sought after should the
Commission fail to survive the government’s axe.

Asked about his career prospects Sullivan tells Accountancy Age: “I am
committed here for the time being. I am not ready to retire and will look for a
professional role in public service, which I’ve been doing for nearly
40 years.”