PracticeConsultingSir Peter Kemp – You have to play by the rules

Sir Peter Kemp - You have to play by the rules

Private-sector firms that deliver public services must be prepared to accept a public audit and square up to the rules of accountability, writes Sir Peter Kemp.

Camelot did itself no favours by jumping up and down at the government’s decision that the National Audit Office should have access to its books.

There is no good reason for its knee-jerk reaction. If Camelot is worried about the cost, and the NAO must send it the bill, it should cut back on its other outgoings; if it is a case of so-called ‘over audit’ – something which certainly exists – it should cut back on some of its other checkers.

And there is surely nothing to hide. The need and reason for the move is plain for all to see. All except Camelot, that is. Camelot is a major public-sector player. It is a state monopoly. And it takes upwards of #5bn of tax money each year – or about 2p of income tax.

Alright, it is a voluntary tax, but a tax nonetheless and, with the exception of the sums it hangs on to, it pays this out publicly, whether to the Treasury, or to the so-called good causes, or to prize-winning members of the public.

This distribution is a huge public operation handling public money and it therefore requires public audit.

Public is different from private audit. It is no good Camelot saying it has private auditors. No doubt it has, and no doubt they are competent by private audit standards. But that is where the similarity ends.

Public audit requires something more than just a simple adherence to accepted private-sector standards and reporting on corporate governance.

It requires real independence, which means using an auditor whose appointment and fee are not set by the company’s directors, and it has a wider scope than private audit, going into regularity, propriety and value for money.

It also concludes with a report that can be examined, not by a tame group of shareholders, but publicly in front of an appropriate parliamentary committee or similar.

It is a good thing that private-sector organisations are beginning to deliver or join in delivering public services. But the private-sector organisations that want to participate – and there is money to be made – have to recognise the rules of the game.

Part of the rules of the game is accountability. They cannot have both the bun and the penny. This situation will not stop with Camelot; the House of Commons is calling for those other private-sector bodies which deliver public services to be more open and provide access for public audit.

The sensible ones will welcome this proposal and go along with it. The daft ones which object will lose out.

Sir Peter Kemp is chief executive of the Foundation for Accountancy and Financial Management.

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