Nothing like starting a blogpost on a tangent. I started my political existence in opposition. I was politicised by the 1979 Election, and joined the Labour Party in 1984. I was 29 before I really experienced a government of *my* colour. I realised in the past three months that many of my young comrades are the mirror image, too young to remember really a Tory government, they flounder at being in opposition.
One thing I have learnt from experience, it isn't necessary, as an activist, to oppose absolutely everything the Government does. Parliamentarians have a specific constitutional responsibility to oppose, but the rest of us should choose our battles wisely and sparingly, in order to make a greater impact when it really matters.
But I couldn't let the abolition of the Audit Commission go by without comment.
I have never worked for the Audit Commission, but I started my career at the National Audit Office, have worked for a large Accountancy firm, and in Internal Audit . For over twenty years.
There is no case for saying that any organisation must continue existing in perpetuity, nor that any particular function should always be delivered the same way.
When I worked for the big firm, it was on contract to the Audit Commission. They were responsible for appointing auditors to all Local Authorities. In many cases they appointed auditors from what was then known as the District Audit Service, in other cases, from private firms - I always understood the firm I worked for to be a Limited Liability Partnership, but I read in Wikipedia it changed its status - somewhat surprisingly - to 'co-operative' a few years after I left.
Councils had no real say in who was appointed their auditor, and they were in no position to dictate how much audit they be subject to. The amount depended upon how much was needed. The firm employed mainly trainees and potentially disastrous contractors (such as me, I wasn't disastrous!), in order to keep the cost down. Of course, that also risks a reduction in quality, but, hey what does that matter!
Audit isn't glamorous, and it's very difficult to persuade people that it's essential. Its necessity is usually more noticed in its absence.
I don't feel a need to shed tears over the demise of the organisation known as the Audit Commission. It's difficult to find out precisely what is happening to various different functions. I have read that the Value for Money work will transfer to NAO, which I feel relaxed about. There may be difficulties in the details, but that is for those closer to the initiative to work out. Possibly some work could be done by the Care Quality Commission.
But what scares me is the fact that councils will be able to appoint their own auditors, from the private or voluntary sectors. I am bit surprised to find that there are voluntary sector audit providers, unless that covers 'co-operatives' like my former employer. Perhaps for most councils, those that are moderately competent or better, it won't be a big deal, for a while.
But, to be honest, even in those circumstances, I am fearful of what it means.
I don't think Local Government yet knows - but can guess - how savagely they will have to cut expenditure. It will be exceptionally painful to slash the big spending budgets, especially schools, and care for the elderly.
It will seem like a no-brainer to go for the cheapest possible audit option. Even the most senior officers and elected members think that audit is there to prevent fraud, and that alone, and will claim to have great corporate anti-fraud structures.
Many of them will need to be persuaded of the need for Internal and External Audit, thinking them to be duplicate functions. Internal audit looks at the management of risks and the adequacy of controls, whereas External Audit exams the financial statements, and, where necessary, the systems that support them.
Irrespective of the cuts agenda, there is a need for Internal Audit to re-examine its role: when I started twenty years ago, no one but Internal Audit carried out any sort of scrutiny of risks, systems and controls. Nowadays, in most mature(-ish ) organisations have, at least to some extent, the tools to self-scrutinise. But the operational independence of an Internal Audit service is crucial.
In some councils, officers and members may welcome the opportunity to appoint their own auditors, swallowing the guff or believing the myth that 'bright people in accountancy firms' can offer us so much more. I simply don't think this is true. Sure, they have some great economies of scale in firms, being able to develop specialisms by client, by theme (eg Housing Revenue Account, infrastructure assets) or in use of a specific accounting system, for example. But I assume that the Audit Commission is also large enough to sustain that level of specialism.
And I have seen in firms I have worked with and worked for, that the standards are really not very high. I won't say more, for reasons of commercial confidentiality.
In the near future, deep cuts will bring about massive changes, not least significant staff reductions. At a time of change, when staff are departing, morale is low, remaining staff are under pressure to 'deliver more for less', corners will be cut, and there is a very real risk that controls will be ignored, and internal scrutiny will be scrimped. Appointing a poor quality external audit - and reducing internal audit - will exacerbate the problems.
But no one will notice. Eventually, service users will see a sharp deterioration in service levels, but that won't come as a surprise to anyone. We will blame it on the underfunding of services, it will be ridiculous to try and blame it on the absence of adequate audit.
It's impossible to imagine a Lambeth, or Westminster Homes for Votes, or Doncaster, happening again, because history doesn't repeat itself. In any case, if such scandals do happen again, will we know?
