19 November 1999
Yet, even at this late stage, much of the infrastructure has yet to be agreed and there are still areas of controversy, as delegates at an Accounts Commission conference discovered last week.
Much of the confusion surrounds the relationship between the commission and the auditor general. These two powerful forces will procure audits from the private sector and from a new service organisation, Audit Scotland, which brings together the staff of the commission and the National Audit Office (NAO) in Scotland.
The commission currently oversees both local authorities and the NHS in Scotland, while the NAO covers central government. From next year the auditor general will take over the NAO's role plus the NHS responsibility, leaving local government with the commission.
The Public Finance and Accountability Bill, currently working its way through the Scottish Parliament, only offers a basic outline of how the new structures should work. It does not say who the chief executive of Audit Scotland will be, only that its board should include the chairman of the commission (Professor Ian Percy) and the auditor general (Bob Black). A further three board members should be chosen jointly by Percy and Black.
Some delegates at the conference were concerned about this arrangement. Alasdair Pinkerton, financial controller of practitioner services for the NHS in Scotland, suggested to Percy that there was a conflict of interest in having the people responsible for commissioning audits also employing the staff who carry out a good deal of the work.
Somewhat dismissively, Percy replied: 'We have been doing that for the past 25 years [at the Accounts Commission] and it hasn't thrown up any problems to date. Fifty per cent of the work is done by the private sector and 50% by our own teams. We have no plans to change that.'
Pinkerton, also a member of the public sector committee of the Institute of Chartered Accountants of Scotland (Icas), did not accept this response. Speaking later to Public Finance, he said that neither Percy nor Black should be on the board of Audit Scotland, and suggested the addition of 'three pals' did not reflect an image of independence.
'The board should have a chief executive who would be the head of the service provision. The remaining members should be non-executives,' he said.
He added that Icas had lobbied strongly against the chosen approach. 'If you are genuinely trying to have openness in the appointment, procurement and carrying out of auditing in the public sector in Scotland, you could do a heck of a lot better than the model they are proposing in the Bill.'
But Black rejected any suggestion that the structure compromised independence or that in-house providers would have an edge over private firms. He said there would be a clear distinction between the procurement and the provision of auditing services, and that the market should be 'managed' rather than fully competitive.
'My relationship with the audit provider must be quite close. It is not appropriate to use the language of pure market economics in that situation,' he said.
More general concerns over the auditing process were also raised at the conference. Delegates and speakers complained about the time and effort they had to devote to the ever-growing army of auditors and inspectors gracing their offices.
Oonagh Aitken, the new chief executive of the Convention of Scottish Local Authorities (Cosla), said that councils believed they were being 'audited to death', particularly through performance indicators (PIs). She said local government should be given more trust to regulate its own services.
'There is huge unhappiness in councils over the amount of resources and time that goes into collecting information that we are not interested in and neither is the public,' she told Public Finance.
But Aitken welcomed a review of PIs currently being undertaken by Cosla, the Accounts Commission, and the Society of Local Authority Chief Executives. She also commended Percy's commitment to increase the use of multidisciplined teams of auditors and inspectors.
Councils themselves faced criticism over delays in publishing their audited accounts. Scottish Finance Minister Jack McConnell said that this had long been a 'thorn in the side' of the Accounts Commission.
'There can be no acceptable excuse for the delays which have happened too often in the past, and I hope all local authorities, and other public bodies, will tackle this problem with the importance it deserves,' he said.
Percy reiterated these concerns. He said he was hopeful that councils would agree a new requirement that they publish audited accounts by a deadline of September 30 each year.
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