By Jaimie Kaffash
5 November 2010
The government has given contradictory messages on the use of public interest reports issued by auditors after the Audit Commission is disbanded, the chair of the local government select committee has told Public Finance.
The commission has a duty to report issues deemed to be in the public interest, including concerns raised by individuals, controversial matters for the community, and problems found when conducting an audit. The reports are issued by the district auditor.
However, Clive Betts, chair of the Commons local government committee, told Public Finance that the government has been unclear about what protections will be given to auditors appointed by local authorities. He expressed concern that if councils were given the freedom to appoint their own auditors, there would be nothing to stop them dismissing firms that issue the reports.
‘The government has not seemed to given the matter much thought in advance of abolishing the Audit Commission,’ he said.
‘This is not only a right in principle; it has to be implemented in practice. If a council appoints an auditor, the auditor reports the public interest and the councils says “we don’t like that, we’re getting rid of you”. Who is supposed to oversee this? It is a fundamental issue that gets to the heart of the independence of auditors.’
Betts said that when he had put this to ministers, he had received contradictory messages.
In an answer to a written question from Betts, local government minister Bob Neill wrote on October 18: ‘Subject to Parliament's agreement, auditors of local authorities will operate after the disbandment of the Audit Commission within a new statutory framework, overseen by the profession and the National Audit Office. This will provide for auditors to make public interest reports and will include protections to ensure their independence.’
However, a further written answer from Neill on November 1 said: ‘District auditors will retain a duty to report issues in the public interest. It is not envisaged that the NAO will assume any of the functions of the Audit Commission in this respect.’
Betts said: ‘The duty is still there but what protection they have got and from whom is clearly very uncertain.’ He said that the NAO’s role in this had not been clarified. ‘Neill said on October 18 that the NAO is involved in the framework, yet said on November 1 that it will not be involved. It is contradictory,’ he added.
