The public audit revolution.

Public audit may be about to undergo a major shake-up. In England, Wales and Scotland people are pushing for more openness and accountability. So confident of improvement is auditor general designate for Scotland, Robert Black, he is even claiming that in the future, audit north of the border may prompt adjustment of the long-established procedures at Westminster. Constitutional reform is probably New Labour’s most conspicuous success, creating a parliament in Scotland, an assembly in Wales, and one – finally – in Northern Ireland. This rash of change has triggered an interest in how public money is managed and that means audit. In Scotland the very nature of audit seems set to change when Black takes over on 1 April. In England, National Audit Office inspections of government departments and public bodies are presented to parliament in the shape of the Public Accounts Committee. The NAO is established as a creature of parliament to ensure democratic accountability. North of the border, however, the role of audit will be quite different. In a speech last week Black said he wanted to widen debate. Not only will audit reports go to the Audit Committee of the Scottish parliament, but he wants certain reports to go to subject committees. When you remember that parliamentary committees share powers in Scotland with ministers, in being able to initiate legislation, audit reports become a very powerful tool. In fact their impact appears far greater than in Westminster where reports only present an opportunity for the PAC to publicly grill nervous civil servants. ‘That’s a reasonable conclusion to be drawn,’ says Black. ‘There’s no doubt that members of Scottish committees would find support from audits providing objective evidence.’ In his speech Black obscured the impact saying the new parliament, and its modern procedures, provide a ‘unique opportunity to develop the potential of public audit’. But with audit now as a powerful weapon in justifying legislation and possibly change, the position of Black, and the audit body, is transformed. It seems likely then that Black could become the focus for pressure as politicians seek favourable reports to bolster their own agendas. If the public interest is to be upheld, it would be crucial that his non-political position be shored up against the possibility of political strong-arming. Such a situation seems unlikely at Westminster, where change is also being demanded. Here PAC members want the right of access for the NAO extended to all public bodies. Currently 80 non-departmental public bodies are audited by other organisations reporting to ministers, not parliament. Mandarins, it is understood, are nervous about further extension of NAO inspections because of the potential for unearthing financial scandal which might catch civil servants in the fallout. The increasing number of public/private projects involving high-risk financial arrangements is only exacerbating their anxiety. To date chief secretary at the Treasury Andrew Smith has resisted demands to extend NAO coverage as part of the Resource Accounts Bill. But insiders believe the Lords will reintroduce the amendments forcing government acceptance to avoid an embarrassing tussle over a Bill, which generally has consensus support. In Wales the creation of the national assembly has also brought about requirements for public audit. Unlike Scotland, Wales does not have its own dedicated audit body, using the NAO instead. However, Wales has its own issues to deal with. Assembly committees do not have anything like the powers of their counterparts in Edinburgh, and there remains concern about full public accountability. Around 47% of the assembly’s budget goes to local government, which has its audits carried out by the Audit Commission. However, the reports do not automatically return to the audit committee of the assembly, even though informal arrangements do exist. Janet Davies, chairman of the committee, sees this as a major problem, which might only be overcome with some radical changes. ‘I came out of local government and I feel a lot of concern that a lot of our money is going that way and we can only have a hands-off approach to looking at the finances,’ she says. It’s a huge problem in that the publicly mandated politicians do not have a legislated right to see how well almost half their annual budget is being spent. A situation which prompts Janet Davies to predict that, in the long term, Wales will probably need a merger of the two audit bodies to bring all public spending automatically before one committee. The high activity in the arcane world of public audit is a sign, not only of new constitutional bodies bedding in, but an indication of the enormous changes in the way public money is managed – especially in view of the popularity of public/private partnerships. In the future all the assemblies could be facing changes to their auditing. REGIONAL ROUND-UP England The National Audit Office, headed by Sir John Bourn, audits all national government departments and bodies reporting directly to the Public Accounts Committee of the House of Commons. Around 80 non-departmental public bodies are audited by accountants appointed by ministers who also receive reports. Wales Sir John Bourn is comptroller and auditor general for Wales and through the National Audit Office audits assembly bodies and departments and reports to the Audit Committee of the Welsh Assembly. The Audit Commission continues to inspect local government. Scotland From 1 April the Accounts Commission will continue to have responsibility for local government, but Robert Black will take over as auditor general responsible for the NHS, further education colleges, water authorities, the Scottish executive and executive bodies. Both offices will use the newly created agency Audit Scotland to carry out the audit work.