By Vivienne Russell | 27 March 2013
The auditor general has qualified the last accounts of Firebuy, the now-defunct organisation set up to improve procurement at the fire and rescue service.
Firebuy, a limited company and non-departmental public body of the Department for Communities and Local Government, was formed in September 2005 to negotiate national contracts with suppliers. It ceased trading in July 2011 following the coalition government’s quango review and its functions were transferred to other bodies.
Auditors found it went into liquidation without having prepared financial statements for 2010/11 or the relevant period of 2011/12. This contravenes Treasury requirements, set out in Managing public money, for independent assurance of an NDPB’s finances to allow its parent department to wind it up effectively.
‘In this instance, Firebuy Ltd did not transfer all of its financial documentation to the department,’ the NAO said.
‘As a result, there were transactions and account balances for which the comptroller and auditor general was unable to obtain sufficient documentary evidence. Furthermore, there were no longer any directors or staff of Firebuy Ltd to provide explanations for transactions, adjustments and events which the department could not explain.’
However, auditor general Amyas Morse noted that the balance sheet gave a true and fair of the state of Firebuy’s affairs as of March 2012.
He added: ‘As Firebuy Ltd no longer exists, I have not made any recommendations. The department has already taken steps to ensure that lessons are learned from this company closure by communicating the problems encountered with Firebuy Ltd to key stakeholders in the departmental group who are also preparing to face closure issues in relation to other bodies.’
Morse has also qualified his opinion of the 2011/12 accounts of the Royal Armouries after it increased the salaries of two staff members in defiance of the public sector pay freeze.
Under the rules governing the two-year freeze, which applied in 2011/12 and 2012/13, any pay rises for civil servants earning more than £21,000 needed approval from the relevant Whitehall department and the Treasury.
The Royal Armouries gave two pay rises, worth £5,000 and £4,000, to one employee, while another received a £6,000 pay increase. The NAO found ‘insufficient evidence’ that due process was followed in awarding these increases, and a lack of documentary evidence as to why the increases were justified.
‘In the absence of any approval from the Treasury, the payments have been deemed irregular,’ the auditor said.
