By Keith aitken in Edinburgh | 6 December 2013
Scotland’s government departments, councils and agencies must gear up for tougher standards of governance, irrespective of the outcome of next September’s independence referendum, the chief executive of the Chartered Institute of Internal Auditors has warned his Scottish members.
Ian Peters told the institute’s Scottish conference in Crieff in November that, in the aftermath of the banking scandal, the writing was on the wall for the old ways of monitoring risk, behaviour and probity in the public sector.
He also told Public Finance that he believes many of the same forces will progressively come to bear on the third sector, as voluntary bodies play a bigger role in delivering public services, and regulators and funders grow increasingly concerned with standards of governance.
Some of the key reforms, Peters said, had come through developing a closer working relationship between his institute and CIPFA, which culminated in the joint launch earlier this year of the Public Sector Internal Audit Standards.
These guarantee a consistent UK-wide rigour to internal audit standards for public sector bodies, including the health service and local government.
‘For the first time, a single set of standards exists for all government departments across the public sector and the devolved governments,’ he said. ‘Having consistent standards in place also establishes the basis for quality assurance.’
These, in turn, built on post-banking crisis initiatives such as Lord Browne’s annual reports and the National Audit Office’s report on internal auditing in local government, which aimed to infuse the public sector with the private sector culture of accountability to non-executives and stakeholders.
Peters told the conference: ‘The NAO’s report applies to England only and no similar review was undertaken of internal audit in Scotland. But the direction of travel for internal audit in the public sector across the UK is to achieve better for less.’
Increasingly, he said, internal audit was required to develop the capacity to monitor the culture and strategy of organisations rather than just their processes. A survey of CIIA members in financial services had led to sector-wide adoption of new guidance on effective internal audit.
He admitted the profession had failed to deliver sufficient warning of the risks that brought about the banking collapse, because it had not been allowed the opportunity to do so. The latest guidance aims to rectify that by redefining the relationship between auditors and executives.
Peters’ call for better public sector risk management came as a Scottish Government working group, chaired by former Scottish Enterprise chief executive Crawford Beveridge, published proposals for an independent fiscal commission, similar to the UK Office for Budget Responsibility, to monitor governmental fiscal assumptions in Scotland.
The new body would scrutinise the operation of the taxes due to devolve to Scotland under the Scotland Act, as well as being ready to assess governmental revenue and spending projections should the country vote for independence.
