Public Sector - PAF brings new hope for auditors

Formation of the Public Audit Forum has been billed as a powerful addition to the public-sector audit regime.

In future, the big four national audit agencies – that is, the National Audit Office, the Audit Commission, the Accounts Commission for Scotland and the Northern Ireland Audit Office – will be working much closer together.

Although the forum is not a forerunner to a single national audit body, its remit as a talking shop will be to develop greater co-operation between the agencies and enhance their efficiency and effectiveness. It will also provide a strategic focus on cross-boundary issues and develop common public-sector audit standards.

The idea of rationalising public audit emerged from the work of the Nolan Committee, which investigated standards in public life. Lord Nolan called for audit agencies to form a common framework for investigating the management of public funds.

He also said audit was an ‘important way of uncovering irregularities in financial matters’, and recognised the role audit plays in establishing public confidence in public spending.

This link between sleaze and audit will be followed by the PAF. One of its first working groups will examine propriety and governance and it is due to report some time during next year.

Chairing the propriety and governance working party is KPMG public-sector partner Gilbert Lloyd. He believes that the forum will open essential channels of communication which will ensure proper dialogue around critical public-audit issues.

‘The forum will not only strengthen co-operation between the national audit agencies but also help deliver a consistently high quality of audit to bodies right across the public sector strengthening its ability to deliver excellent services to the public,’ he says.

The PAF is seen as a step in the right direction by analysts. Tony Travers, director of public-sector research body the Greater London Group, says: ‘There is a need in Britain to have consistency between the way different audit bodies operate.’

Consultative body for PAF

The forum will be complemented by a consultative body which includes representatives of government departments, audited bodies and the accountancy firms.

NHS bodies are keen to see the PAF provide greater partnership between auditors and the health service. NHS Confederation chief executive Stephen Thornton, who represents the NHS on the PAF consultative group, says there is a need to continually improve the quality of local value-for-money audit in the NHS.

‘NHS bodies are the customers and pay for this service,’ he says. ‘We need to ensure that we obtain value for money from our auditors.’

Achieving value for money is just one facet of the PAF’s work. It has developed three fundamental principles which it says underpin public audit.

These are: the independence of public-sector auditors, the wide scope of public audit – regularity, value for money, and the ability of public auditors to make their findings publicly available.

For now, the PAF has its work cut out. It must strive to get closer co-operation between the public audit bodies – something which has not been easy to achieve in the past, according to Travers.

Whether the PAF succeeds is down to the members and their ability to co-operate and share ideas.

‘Only time will tell if it is effective so that the principles will apply to audit policy right across the country. It will require the audit bodies, which have not been that close in the past, to work much closer together in the future,’ Travers says.