MPs battle over adapting private sector accounting rules for the public sector

The Government refused to concede an all-party offensive aimed at underwriting the independence and powers of the Financial Reporting Advisory Board set up to scrutinise Treasury-proposed changes to private sector accounting rules to take account of unique public sector requirements.

Economic Secretary Melanie Johnson promised only to discuss the issue with the Public Accounts Committee and other MPs and ‘continue to think about the matter.’

Tory spokesman Oliver Letwin wanted to press for a vote on Conservative proposals for a National Accounts Commission to have the final say on adapting private sector rules to Whitehall needs during committee debates on details of the Bill facilitating the Government’s change from cash to resource accounting.

But Public Accounts Committee Chairman David Davis urged him to hold fire until a later stage in the legislative process to avoid direct confrontation and enable discussions to take place.

Disquiet over the Government’s determination to retain an advisory body was voiced by Davis and by the senior Labour member of the PAC, Swansea West MP Alan Williams, who together have tabled a series of detailed amendments to the Bill reflecting PAC concerns about the power, scope and independence of Comptroller and Auditor General John Bourn and the National Audit Office.

Government whips sacked an unnamed Labour member of the Committee to provide a place for Williams in a conciliatory move towards the PAC, who are conducting a series of parallel hearings on aspects of the Bill.

Liberal Democrat spokesman Edward Davey made it clear he shares many of the concerns expressed by the Tories over what was described as a constitutional measure with far-reaching implications.

Williams counter-signed the PAC amendments together with Public Accounts Commission and former PAC chairman Robert Sheldon and Liberal Democrat PAC member David Rendel.

Williams said the standards fixing body must contain the Comptroller, the NAO and the Audit Commission, it must be ‘clearly independent’ and it must report to the PAC.

He said: ‘We cannot have the Executive determining the shape and form of the body that sets the standards by which it will be reviewed.’

Johnson argued a statutory body would compete with the Accounting Standards Board and claimed FRAB has ‘independence at its heart’, offering to include a representative of the PAC.

She said: ‘I am not undertaking to introduce amendments on Report (a later stage) but I shall consider whether any further modification would assist in ensuring continued independence.’

Calls last night for audit watchdog to be given greater powers to probe government