Since its creation in 1983, based around the old District Audit Service, it has gone from strength to strength, taking in the health service, ‘best value’ policy for local authorities and the GLA.
The commission is regarded as a success story, and rightly. But problems may be looming.
Principally, there’s a contradiction. At the heart of the commission is the audit of local authorities, health authorities and an assortment of other locally based bodies that spend Pounds 100bn per year. But to the commission and its senior staff, where professional accounting and auditing qualifications are surprisingly scarce, audit tends to be a Cinderella, notwithstanding the vital and arguably increasing importance of old fashioned propriety examination for fraud, consistency with the law and so on.
Other activities are more exciting and these include a self-selecting consultancy and the best value work. But the question is whether they are in harmony with the essential nature of the commission’s principal role of audit; they tend to involve what sometimes looks like a degree of management judgement, which double guesses the people in charge and doesn’t sit particularly well with the sterner approach required by hard-nosed audit.
It’s interesting that at a time when there are pressures for private accounting firms to distance themselves from their consultancy arms, the commission (and National Audit Office) seem to be going in the opposite direction.
Other issues are coming up – a tendency to centralise, not having regard for the great variety of individual audits, and move towards a one-size-suits-all attitude. Perhaps there’s insufficient openness to competition and performance measurement – after all the commission costs more than Pounds 100m per year to run. And there’s that well known jagged edge of a fit with the NAO. So where next?
The position may be tolerable, but these issues won’t go away. Should audit be separated from consultancy and best value? Should there be better machinery for follow-up? How about more effective performance measures?
Should there be a merger with the NAO? This is something Colin Sharman’s study of public accounting and accountability must consider. And while at it, it could consider the other questions as to some extent, they arise with the NAO too.
- Sir Peter Kemp is a former senior civil servant and member of the ICAEW
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