Public Sector - Council audit reports waste money

Taxpayers’ money is wasted on local government audit reports as they are never seen by key decision makers or the public, according to a new study.

The report, commissioned by ACCA, says decision makers are left in the dark about key financial indicators. The report concludes management letters provide good financial information but are seen by too few to have an impact.

Management letters record problems and set out improvements auditors believe should be made. Audited bodies then implement recommendations, and auditors follow them up.

The report authors – Mary Bowerman, lecturer at Sheffield University Management School, and Iain Gray, visiting research fellow at Sheffield Hallam University – said: ‘The management letter provides a wealth of detail about the financial state of an authority, how well and authority is managed and the audit process itself.

‘However, it has little impact on the way in which the local authority is managed and has become part of a mere ritual. The management letter has the potential to strengthen accountability to council members and the public.’

The Audit Commission’s report revealed 86% of authorities considered the letter during council meetings. But while 97% of authorities made them available to the public, only 7% advertised them.