By David Williams
30 October 2009
The local government regulator has been forced to defend its stance on the Icelandic investments fiasco after coming under renewed fire from MPs.
Phyllis Starkey, chair of the Commons communities and local government select committee, told the CIPFA treasury management conference that the Audit Commission should have warned councils before disaster struck.
‘The Audit Commission did issue new guidance after the Icelandic banking collapse,’ she told delegates at the October 22 conference in central London.
‘We felt that showed very clearly that there were questions the commission should have asked before, to make sure that authorities were at least following their own procedures. Many of them were not.’
However, she also maintained that the ultimate responsibility was always the councils’.
David Caplan, director of research at the Audit Commission, hit back.
Speaking at the same event, he said: ‘You can’t export accountability to the appointed auditor... it’s not the auditor’s fault when things go wrong.’
Caplan later told Public Finance that auditing was essentially retrospective and that the primary role of the auditor was not to stop accidents before they happen.
In its official response to the MPs’ report on the fiasco, the Audit Commission acknowledged criticisms of its own treasury management, and assured the committee that it now complies with its own best practice guidelines.
The watchdog admitted it could have done more to highlight the growing importance of treasury management as investments became increasingly risky in the lead-up to last year’s financial crisis.
However, it denied any culpability in the Iceland affair.
30 October 2009
The local government regulator has been forced to defend its stance on the Icelandic investments fiasco after coming under renewed fire from MPs.
Phyllis Starkey, chair of the Commons communities and local government select committee, told the CIPFA treasury management conference that the Audit Commission should have warned councils before disaster struck.
‘The Audit Commission did issue new guidance after the Icelandic banking collapse,’ she told delegates at the October 22 conference in central London.
‘We felt that showed very clearly that there were questions the commission should have asked before, to make sure that authorities were at least following their own procedures. Many of them were not.’
However, she also maintained that the ultimate responsibility was always the councils’.
David Caplan, director of research at the Audit Commission, hit back.
Speaking at the same event, he said: ‘You can’t export accountability to the appointed auditor... it’s not the auditor’s fault when things go wrong.’
Caplan later told Public Finance that auditing was essentially retrospective and that the primary role of the auditor was not to stop accidents before they happen.
In its official response to the MPs’ report on the fiasco, the Audit Commission acknowledged criticisms of its own treasury management, and assured the committee that it now complies with its own best practice guidelines.
The watchdog admitted it could have done more to highlight the growing importance of treasury management as investments became increasingly risky in the lead-up to last year’s financial crisis.
However, it denied any culpability in the Iceland affair.
