Examination of Witnesses (Questions 380
- 401)
TUESDAY 15 FEBRUARY 2000
MR PETER
CORDLE, MR
ALAN STEELE,
MR GEORGE
KRAWIEC AND
MR JOHN
SHADDOCK
380. I can accept that they might not want to
give you an exact figure, you would not expect them to do that,
but do they not give you any indication?
(Mr Krawiec) They did not on that occasion.
381. In a sense do you think that is an abrogation
of responsibility? Am I putting that too strongly?
(Mr Krawiec) I have got some sympathy with the word.
382. What can local authorities do when they
feel that they have a poor audit, not just in terms of that but
other things? You said earlier that you would prefer an audit
which is challenging, which will discuss innovative ideas with
you where you can have a dialogue. When all of that is missing
and all that happens is that at the end of the term, as it were,
they say something, they have to do the very bare minimum and
drop the Management Letter on to your laps and go away, what course
does a local authority have in those circumstances for complaint?
(Mr Krawiec) You can go direct to the Audit Commission
in terms of response. Certainly we have had a review from the
Audit Commission in relation to the performance of our current
external auditors, who have been good by the way, I hasten to
add that in case they write in later.
383. Would you complain that you are not getting
value for money? Has that been an experience that any of you have
got yourselves into at any time?
(Mr Cordle) I know an authority where there was a
grave concern about the quality of the external audit. That was
raised with the Audit Commission and the auditor moved on from
that authority into another authority.
384. They moved him across?
(Mr Cordle) Yes. So from that point of view it did
not solve the overall problem. It solved this particular body's
problem but not somebody else's.
385. Do you think there should be some sort
of sanction or penalty or a black book?
(Mr Krawiec) I think there needs to be proper appraisal
of how an auditor in an external audit is working.
386. To protect the position of any local authority?
(Mr Krawiec) Yes.
387. Could I ask you finally what do you do
with your Management Letters? The final Management Letter, that
may or may not be made public, is usually at the end of the process
and not at the beginning. You will have talks with the auditors
before that. At what point do you involve in your respective authorities
lead councillors?
(Mr Krawiec) We have got a cabinet system now in terms
of the Management Letter which is presented to them.
388. The first one I am talking about.
(Mr Krawiec) Yes. It is also represented to what we
call the Economic Scrutiny Committee and a copy of the letter
is sent to all members.
Chairman
389. They are independent of your so-called
cabinet?
(Mr Krawiec) Yes.
390. Not influenced by the party whips at all?
(Mr Krawiec) They say not.
Chairman: It is all right that you look up to
the heavens but we need it on the record.
Christine Butler
391. As far as you know to the best of your
knowledge and belief, what happens?
(Mr Krawiec) We have gone on and sent the Management
Letter to what was our old Performance Review Committee and issues
are examined in depth there by the Policy Committee and will be
dealt with by the Economic Scrutiny Committee from now on in quite
a lot of depth.
392. When you get the final draft and it is
accepted as this is the Management Letter, you are all agreed
on this, you have no more quibbles, you have maybe had some adjustments
because something has been unfairly dealt with or whatever, but
at the end of the day you have got the Management Letter, how
do you make that public?
(Mr Krawiec) It goes through the committee process.
393. Via an open committee? It is never advertised,
no press release. Do any of you ever issue a press release "this
is our Management Letter"?
(Mr Steele) Yes, my authority certainly does. There
are several stages. First of all there will be a meeting of the
audit partner and the team with the executive of the council and
the other political parties. There will then be debate of the
letter at the full council meeting and around that there will
be press releases made. The Management Letter is made available
at libraries and places where you traditionally make such information
available. Then in the course of the year there will be reference
to it for our follow up work to see that it is being carried out
because as part of the audit of the next year the auditors will
be reporting on what we have done and the points that have been
raised.
394. Sometimes a Management Letter might contain
criticism which reflects directly on the policy of the council.
You say "this is our policy" and quite clearly the audit
might have a different view and say "you ought not to be
doing that, you are sailing very close to the wind policy or no".
How does a local authority deal with that circumstance? Does it
bow to the audit or does it defy it?
(Mr Steele) One debates the issue further. There is
some feeling that the auditor is seen as an adviser but I do not
think the auditor is necessarily an adviser. The auditor can comment
to the local authority but the officers particularly of the council
have duties and responsibilities from Acts of Parliament and they
will advise their councillors on what they should be doing or
should not be doing and will take appropriate legal advice or
whatever as needed. That may not come from the auditor.
395. Do you not think that these very circumstances
underline the necessity for openness and these things being as
public as possible?
(Mr Krawiec) I do not think anybody within local government
from an officer point of view has any problem with that issue.
Mrs Dunwoody
396. Has any one of you had an instance in the
last two years where a genuinely independent member of the general
public, not somebody representing a pressure group, an ordinary
rate payer, has asked either to see the letters or has in any
way queried any of the content?
(Mr Krawiec) Not from members of the public but we
have had interested reporters from the press. Those are the only
people we have had.
397. I am talking about an ordinary rate payer.
Have you any instance of an ordinary rate payer being made aware
that this information exists, asking either to see it or to question
its content?
(Mr Krawiec) It has not happened in my time.
398. Mr Shaddock?
(Mr Shaddock) No.
(Mr Cordle) I think in terms of the Management Letter
specifically the answer would be no. In terms of other ways in
through access to the records and so on, the inspection process,
the answer is yes, definitely.
(Mr Krawiec) We have had members of the public wanting
to look at information from the accounts but I thought you were
asking about Management Letters.
399. That was the specific matter.
(Mr Steele) Yes, I have.
Chairman
400. One success. Can I put one final question
which I think Mr Olner, who unfortunately cannot be here, would
have put to you. Do you not feel that far too much emphasis is
being put on inspecting an audit in outputs rather than inputs
and that it is a little bit of a nonsense to spend so much time
looking at what a council can do unless a bit more effort is put
into looking at the resources it has to do it?
(Mr Krawiec) In general terms I am not an input person,
I am an outcomes person in that it is results that matter.
401. So you do not mind how much money you get
from the Government?
(Mr Krawiec) No, but we have certain statutory responsibilities
and if you are saying, Chairman, which I am sure you are not but
I have to assume that you are, that Southend Council needs a lot
more grant then we are very happy to accept it. But in general
terms we have to live within the budget we have. That is where
members have to make policy decisions in terms of priorities and
things of that nature. I have been in local government for far
too many years and I have never known any politician who thinks
they have ever got sufficient resource from any source in terms
of what they are about. We have to manage with what we have got
and that is the nature of the beast.
(Mr Shaddock) 70 per cent of the expenditure on the
audit is on regularity. For me the essence of local government
is its probity. Anything which diverts attention from that key
inspection function to sustain the probity of local authorities
would be damaging to local authorities.
(Mr Cordle) I think on the inspection side one can
clearly see the importance of establishing that there are proper
processes used, appropriate data used. I think on the outcomes
I really feel we are in grave danger of working on the basis of
profound distrust of local government. The notion of inspecting
the outcome of every Best Value review really is way over the
top. It stems from a way of thinking in which it is assumed that
because some authorities may not do things as they really ought
to that means that everyone is coming short. There really ought
to be a much more rational approach to selective and very focused
inspection of the outcomes. We cannot eliminate the focus on outcomes
of Best Value reviews but they must be much more focused, much
more selective.
Chairman: On that note, can I thank you very
much for your evidence.
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