21 June 2002
If the suggestion is incorporated into the Comprehensive Performance Assessment regime, being developed in consultation with local government, all county and unitary authorities will for the first time be ranked on their financial management systems.
Auditors would examine each council on a range of criteria. Broadly, these would be: overall financial standing; internal financial controls; standards of financial conduct; legality of significant transactions; and financial statements. Authorities would be marked on a scale of one to four for each of these, with one signalling inadequate financial management, and four indicating whether effective systems were in place.
An Audit Commission spokeswoman told Public Finance: 'The criteria that auditors will use to reach the judgements have been developed by working with authorities and auditors, and will be subject to consultation.'
The local government watchdog will publish a second consultation paper on CPA next week, although it is not clear whether these proposals will be included in it or published separately. This will propose two sets of labels to describe authorities' overall performance, after the previous suggestion of 'high performing', 'striving', 'coasting' and 'failing' provoked widespread criticism from local government leaders.
But the alternatives are unlikely to get a significantly better reception. The commission is proposing a five-band system: 'excellent', 'good', 'fair', 'weak' and 'poor'. The alternative is four categories, with 'weak' being left out.
It will also put forward options for weighting different council services within the overall CPA report. It suggests that to secure an 'excellent' ranking, an authority would have to get at least a 'fair' rating for education, social services and financial management. A council could not get a 'good' or 'fair' rating overall if any of these services were deemed 'poor'.
Dennis Reed, director of the Local Government Information Unit, said the new labels were no better than the old. 'Each council has some good and some bad services, this will not be reflected in these catch-all terms. Whatever the categories are called will not make up for the structural deficiencies of the framework.'
But Paul Kirby, the Audit Commission's director of inspection, hit back. 'It is imperative that CPA supports improving councils and gives local people a clear idea where they stand. I believe the options we have set out do both,' he said.
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