A scathing report by former Deloitte & Touche partner John Roques into the losses recommended appointing a finance director with relevant experience to the board and the management committee with overall responsibility for both analysis and accounting for revenue and for control and stewardship of costs.
Roques said he should be supported by a financial controller, also a qualified accountant, with day to day responsibility for all aspects of financial management and accounting.
Instead a ‘modified approach’ has been adopted – an expansion of the role of principal finance officer, with no indication of a requirement for a professional qualification.
The principal finance officer will be responsible for expenditure and revenue and the department’s 260 strong accountancy service, of which only fifteen are qualified accountants. A ‘suitably qualified accounting adviser’ will be recruited from the private sector.
The justification tabulated in a report by the National Audit Office is that ‘the role of principal finance officer requires an in-depth understanding of public sector finances as well as accounting skills’.vThe adviser’s job will be ‘to advise the principal finance officer on analysis and accounting for revenue and on control and stewardship of costs’.
Comptroller and auditor general Sir John Bourn said Customs accepted ‘or partially accepted’ 62 of Roques’ 65 recommendations, which he listed.
Proposals for integrated management and financial reporting systems, a more powerful role for the audit committee, liaising more closely with the NAO, and a review of internal audit were accepted without modification.
The Roques’ report was commissioned by paymaster general Dawn Primarolo in June 2000 after she learned from an internal review of the scale of the losses.
Reviewing the ‘unacceptable loss of revenue’, Bourn said in his report that Customs’ response to the frauds could have been more effective. They lacked an overall strategy and decisions by investigators to ‘let loads run’ so they could gain evidence for prosecutions instead of pursuing disruptive tactics were taken without higher level guidance.
But he admitted that even with hindsight it was difficult to determine whether disruption would have lead to lower losses. Roques discovered that despite internal reports, the board only once discussed diversion and board members, most of whom lacked operational experience, had no recollection of having done so.
Former Customs chief Dame Valerie Strachan ‘did not encourage discussion of business issues’ and there was an ‘inadequacy of financial support documentation’, the report said.
And at least one director told him there was ‘a premium on not bothering the chairman with line management issues’. She expected them to get together to sort things out instead.
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