The price of freedom

The era of freedom of information is now upon us, thanks to the introduction
in January 2005 of the groundbreaking Act, allowing the public access to
information held by over 100,000 public bodies in the UK.

The idea is to open them up to much greater scrutiny and already there have
been some interesting requests — ranging from the possible marriage of Princess
Margaret in 1955 to the case for war in Iraq.

Most people support the need for transparency and the wider public benefits
that the Freedom of Information Act brings about. In theory, it means we are
able to see how key decisions are made in relation to how our money is being
spent. But what about potential areas where the provisions may jeopardise the
integrity and quality of the service and the process being followed?

The Act could affect accountants in a number of ways – and not just those who
work directly for public authorities. The implications for accountants dealing
with public authorities or where reports on private entities are held by a
public body must also be considered. Just how far the Act applies to information
held by public authorities will depend on the nature of the services provided.

Take, for example, a firm providing a contracted-out internal audit service
to a public authority. At all stages of their review, internal auditors will
document their work, including: details of the areas that are being reviewed;
internal controls and control weaknesses; audit processes; methodology; initial
judgements (which could include their gut feelings); and their draft and final

But should all these documents be open to the public? And if such information
were made more widely available, could it not seriously undermine the
authority’s key systems and subject them to potential abuse?

The Act even goes so far as to require public bodies to disclose information
that they hold but did not generate. This could include information that might
have been provided in confidence without realising the possibility of
disclosure. To make matters worse, it allows for retrospective application,
allowing requests for information that could date back years.

Exemptions are available but they do not all apply as of right, and they can
only be applied to information, not documents, so time will be needed to filter
out the truly exempt information. The judgement as to what information to
disclose and what exemptions to apply is one for the authority to make, so
accountants have very little power over what is revealed in the public interest.

Although there are only a limited number of cases where the provisions of the
Act apply directly to accountants, there are various other instances when
information provided to public authorities could be subject to the Act.

Where accountants have already entered into or are considering entering into
contracts with public authorities, they will need to think very carefully about
the information that is held and by whom. In some cases, contracts will detail
ownership of working papers created.

If the papers are owned by the authority, the public authority can then
demand copies and then disclose them. In others, ownership may rest with the
accountant. In this case, the public authority can request the accountant to
disclose the information, but the decision will rest with the accountant.

Confidentiality will be a key factor to consider. Accountants will need to
identify clearly whether or not clauses contained within contracts are
confidential and which are enforceable. The law of confidentiality may apply in
some instances, so it is worth checking contracts carefully. In the future,
authorities are unlikely to accept clauses that restrict their ability to
disclose information.

Although there is no legal obligation to do so, public bodies are encouraged
to consult with accountants prior to releasing information, but due to the tight
timescales within which they have to respond, consultation could easily be
overlooked. Therefore, accountants may want to remind them to consult if
information provided by them is likely to be disclosed.

Accountants will need proper procedures in place for creating, collecting,
receiving, sending and recording of working papers, reports and other
information. If there is a chance that information could be disclosed, you
should bear that in mind and construct it accordingly.

Keep all points short, polite and factual. Only record judgements that are
relevant to the issues at hand and can be justified. Ensure that all judgements
are backed by evidence. Ensure that only information that is absolutely
necessary and which forms part of a review, process or decision is held on file.

Remember, all information sent to a public authority in relation to its
functions and services is considered to be a public record. The decision to
disclose rests with the person receiving the information and all information
could potentially form part of civil, litigation and criminal proceedings. Any
department within a public authority could be liable for advice given by either
email or in paper form.

Bear in mind too that a public authority must have a good reason for not
disclosing information. Non disclosure could result in a complaint being lodged
with the Information Commissioner who could ultimately serve notices requesting
compliance. Failure to comply can lead to high court judgements, and ultimately
to a contempt of court charge.

Has the governemnt gone to far? Regardless of whether the Act is supporting
transparency or generating more bureaucracy and paperwork within authorities,
authorities are required to comply with the provisions — or pay the price.

Sumita Shah is public policy manager at the ICAEW. Technical guidance on the
implications of the Freedom of Information Act 2000 is available at

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