Memorandum by Hertfordshire County Council
(AC 03)
I have found the work of the Commission very
valuable in checking and developing our services. However, I have
concerns about the role of the Commission following the introduction
of best value in the local government sector. Some of these reservations
were recently expressed in writing to the Commission, following
the consultation document on the proposed changes to the Commission's
Code of Audit Practice (the Code), in respect of the local government
sector. The new Code will be enacted in July 2000, prior to consideration
by Parliament in spring 2000.
The remainder of this letter deals with the
specific points.
INSPECTION AND
AUDIT
Audit and inspection work should complement
one another. The audit regime however includes value-for-money
work. If the Commission continues to undertake value-for-money
work, nationally or locally, there is the potential for duplication,
contradiction and confusion between its auditors and inspectors
at the local level.
Consequently, the Commission should seriously
consider whether continuing with its value-for-money really is
justifiable.
PROMOTER OF
BEST PRACTICE
With the introduction of best value, there are
other organisations that are or will be performing similar roles
in evaluating and disseminating best practice information and
providing assistance for poor performing services. The most notable
example is the Improvement and Development Agency (IDEA), which
started work on 1 April 1999.
The Department of the Environment, Transport
and the Regions (DETR) will also for the foreseeable play an important
role by funding pilot studies, through its best value series programme.
Local authorities are also being encouraged
to share more information through benchmarking and performance
networks for example.
INDEPENDENCE OF
AUDITORS
The involvement of auditors in any value-for-money
work also raises the issue of the independence of auditors.
The new duty of auditors to issue an annual
report on the authority's best value performance plan also raises
the fundamental question of whether auditors can continue to undertake
value-for-money work, nationally or locally. In that it could
seriously compromise their independence if they become part of
the process, and thereby cause a conflict of interest.
THE COMMISSION'S
NATIONAL VALUE-FOR-VALUE
STUDY PROGRAMMES
AND LOCAL
AUTHORITY FIVE-YEAR
(BEST VALUE
PERFORMANCE PLAN)
SERVICE REVIEW
PROGRAMME
There is concern about the potential for conflicting
demands placed upon local authority officers when assisting auditors
in carrying out the Commission's national value-for-money (VFM)
study programme, and the execution of their own local (fundamental)
service reviews, in order to comply with the best value requirements
in local government.
This conflict will clearly arise, as it is unlikely
that the nationally imposed value-for-money studies programme
will align with a council's five-year service review programme.
It is not clear whether the new Code will compel
the auditors to carry out all or some of the Commission's national
value-for-money studies. Under the current arrangements, all national
study work must account for 20 per cent of the annual audit fee.
And it appears that this is unlikely to change.
It must be remembered however that the completion
of such audits requires considerable input from local authority
staff, as well as incurring the cost of the audit fee.
Furthermore, the Commission is not the only
inspection agency that the authority needs to accommodate. And
the Code should recognise this fact.
I would support a greater emphasis on management
arrangement work regarding all aspects of value-for-money audit
work and this includes best value. Which is similar to the "managed
audit" concept adopted in respect of the auditor's opinion
work on authorities annual financial statements. Where greater
reliance is placed upon the work of the officers of the local
authority. However, this approach is only a possibility, for sometime
in the future, according to the Commission in its consultative
document.
Chris Sweeney
Chief Financial Officer
December 1999
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