PAC faults two FDs

Two finance directors have been criticised in public accounts committee (PAC) reports for not controlling their chief executives, which prompted a public protest from committee chairman David Davis.

The FDs failed to prevent a failure in the standards of personal conduct by the chief executives of English Heritage and Swansea Institute of Higher Education, who also acted as their accounting officers.

Davis issued a statement attacking the failure of governance structures to deal with ‘problems caused by the personal conduct of chief executives.’ He complained the breakdowns came after a landmark PAC report on the proper conduct of public business, which identified inherent risks in areas of devolved responsibility after a series of scandals involving government agencies.

At English Heritage, Chris Green, a former senior British Rail executive, resigned after a ‘clear failure in the proper conduct of public business’ concerning use of a corporate credit card, an advertising contract, hospitality and the sale of furniture.

Graham Savage, English Heritage’s FD, had expressed concerns to the head of internal audit before leaving for a new appointment. A review was carried out of senior management expenses which landed on the desk of his successor, Tony Sannia, who put stronger controls in place.

Price Waterhouse, which conducted the external audit in place of the National Audit Office, picked up on the internal audit report and viewed expense overpayments as mistakes. But PW challenged the furniture deal and, on probing the advertising deal, discovered Green had provided misleading financial information.

The PAC found it ‘unsatisfactory that the FD (Sannia) recognised things were wrong but did not inform the chairman.’

At Swansea Institute the NAO found arrangements for monitoring payments for certificates for overseas courses which the PAC said were ‘seriously flawed’, criticising a former principal for ‘ill-judged’ trips to Kenya.

PAC was ‘concerned’ that longstanding problems in the overseas activities of the institute had not been challenged earlier by Brian Lewis, the institute’s FD, or its auditors, the Higher Education Funding Council for Wales, and criticised the quality of internal audit.

Both English Heritage and the institute said proper controls had now been introduced.

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