Audit Commission's glasnost revolution

LATE ON FRIDAY, the Audit Commission announced an about-turn in its expenses publishing policy. Formerly, out-of-pocket costs borne by the top dogs – coffees and taxis in the main – were public, while costs most would consider the meat of staff expenses – travel and accommodation – remained private.

For a body charged with keeping the accounts of the public sector in check, this seems woefully remiss. How are local authorities and businesses supposed to follow best practice if the lynchpin of fiscal prudence will not own up to its travel bill?

Hidden figures

A freedom of information (FoI) request by AccountancyAge.com revealed the gulf between the figures published as expenses and the true total of executives’ outgoings. Between October 2009 and March 2011 inclusive, chief executive Steve Bundred shelled out £1,933.73 on sundries according to published expenses. However, an interrogation of the FoI-obtained figures showed Bundred’s actual outgoings totalled £10,029.65, an augmentation of 419%.

Chairman Michael O’Higgins’ expenses also leapt spectacularly when revised after the FoI request, jumping from £430.06 to £6,007.87 during the period in question, a rise of more than 12,000%.

Experts are divided as to why the body slipped up so badly. David Vine, CEO of cost management consultancy Global Expense, said that an archaic system might be the problem: “This is what the MPs had but, now they have automated, they can publish anything and everything,” he mused.

Others were more critical, suggesting the commission has been “playing clever with expense figures” rather than just failing to keep up with the times.

Audit Commission on the pyre

The Audit Commission was earmarked for closure in August 2010. Much of the fuel for the pro-abolishment fire hanged on wasteful spending at the public body, with local government minister Grant Shapps famously accusing it of spending almost £1,000 on a fancy chair.

Against this backdrop, some commentators have suggested that pressure to appear thrifty pushed the commission into its unusual expenses publishing policy. A spokesman denied this, saying the system had been in place since 2008, well before Chairgate.

Aside from out-of-pocket costs, the commission separately published a breakdown of expenditure over £500. The data ostensibly made spending more transparent, yet is usefulness was undermined by a failure to properly breakdown the costs and explain how they were incurred.

Cost control

Vine said there is no shortage of programmes to help organisations control outgoings, while checks can be put in place at the point of purchase to prevent profligacy. Perhaps more importantly, such systems ratchet up the level of accountability, which is known to improve spending behaviour.

Some businesses fight to keep their expenses under wraps on the grounds that such data is commercially sensitive. However, as the Audit Commission is without competitors, this argument is moot. Vine concluded: “It is incongruous that the body established to review the standards of others appears to set such low standards itself.”

Last-minute changes

So why the sudden volte-face? In a body earmarked for closure, why punctuate its death throes with a time-consuming policy change?

Stakeholders were reluctant to comment on the unusual expenses policy. Richard Hardy, negotiations officer at union Prospect, dismissed the issue: “We have 13,000 people losing their jobs and 500 already gone; the whole thing is closing down so why bother?”

The Cabinet Office also refused to be drawn. Charged with making government work better, the body produced a document entitled Civil servants’ business expenses. It called for itemised expenses “irrespective of method of payment”, meaning that those purchased centrally, such as travel, should be publicised alongside minor out-of-pocket costs.

Despite the commission’s flouting of this rule, the Cabinet Office declined to comment, as did the body’s sponsor, the Department of Communities and Local Government.

Thankfully, they do not have anything to comment on any more because the public auditor changed its mind. A spokesman said: “We regularly review the information that we routinely publish and the commission’s management team recently agreed that the ‘hospitality and expenses’ pages will now include all centrally purchased travel and accommodation costs.”

Better late than never. Perhaps the commission’s successor – still a fiercely debated issue among stakeholders – will benefit from an improved fiscal reporting model that puts public accountability at the fore.