Memorandum by Mr Peter Reynolds (AC 04)
SUMMARY
This submission from a member of the public
suggests that our needs and expectations are insufficiently addressed
and reporting has actually deteriorated. There is need for the
watchdog to be guided by principles as well as regulations. The
internet could be used to encourage more expeditious reporting,
Performance Indicators might be augmented as well as reviewed
and use could be made of the visiting auditor's unique position
to observe and comment constructively upon under-performance by
long-established senior officers in local government employ.
NEEDS OF
PUBLIC INSUFFICIENTLY
ADDRESSED
My evidence is chiefly in the context of Local
Authority accountability to local residents and Council Tax payers,
having spent some years wrestling, to little effect, to improve
the apparent shortcomings of my own Borough Council's performance
in this respect and learning that it is the system, rather than
those who apply it, which is flawed.
A local authority tends to be a self-perpetuating
monopoly controlled by its senior officers, with relatively light
intervention by politicians. To whom, if not the auditor, should
the public look for assurance that this cosy arrangement delivers
to them what it should?
It is my belief that the Audit Commission is
working to the wrong "terms of reference" or "mission
statement", having been invented when Mrs Thatcher was prime
minister to ensure local government compliance with central government
regulations which were being thwarted. It is understandable that
this should be an important requirement as the bulk of expenditure
(by my local council at least) appears to be the non-discretionary
disbursement of central government grants: if local residents
want change in that they must go to their MP, not a local councillor.
DETERIORATION IN
REPORTING TO
THE ELECTORATE
The last decade has seen several accounting
changes but the perceived accountability to residents has in some
important respects deteriorated and has certainly not kept pace
with developing expectations and opportunities in regard to promptness,
clarity, relevance and accessibility of disclosure.
PRINCIPLES ARE
NEEDED
Whenever I have challenged, on matters of inadequate
disclosure, the District Auditor (and the Audit Commission, CIPFA
and the local authority concerned) the answer has always been
"You may be right but no regulation has been breached".
The audit should be governed by principles as well as rules.
Here are some examples, necessarily in my own
Borough but not to criticise them particularly for taking advantage
of the system and being no worse than the generality:
LATE REPORTING
DIMINISHES ITS
VALUE
The report and accounts are consistently too
late reaching the public but apparently this does not breach the
rules for "naming and shaming". The Tunbridge Wells
Borough Council Report and Accounts for the year ended 31 March
1999 are, on 8 December 1999 "at the printers" and,
I guess unlikely to be generally available this year. This is
not an isolated instance. In 1995 I wrote to the District Auditor
complaining of even worse delays in each of the preceding five
years: but, I was assured, no regulation had been broken.
AUDITOR AND
AUTHORITY BLAME
EACH OTHER
As I watched the process of delay repeated year
after year, I found the Auditor and the Authority tending to blame
each other and some of the worst instances have certainly seemed
to me to be directly due to the Auditor's ill-managed work schedules
or to inability to decide how to treat matters outstanding from
previous years. I have worked as an auditor myself, many years
ago, and recognise the incompetence which would not be tolerated
in the private sector. But the District Auditor is merely complying
with what the Audit Commission and the regulations require.
USE OF
INTERNET TO
LIST DEFAULTERS
It would not be unreasonable to expect the report
and accounts to be published (on the Internet, perhaps, as well
as printed) within three months and a defaulters' list, with brief
explanation or outlook, published and maintained thereafter, again
on the Internet. I proposed this to the Audit Commission some
years ago, when their PR department used to issue the defaulters'
list to the Press annually, but latterly it has been hard to find
who is in default and by how much. The discipline has been relaxed.
This is a very important matter, for there is
little value in publishing stale accounts. Modern technology removes
any mechanical problems and if it is still argued that there are
accounting or political reasons not to keep up with the best of
big business, the case should be debated openly.
THE MANAGEMENT
LETTER
A management letter is generally, I am told,
written to the local authority by the District Auditor after each
audit but this seems to reach very few eyes and has certainly
never been available to me, when requested. That embargo should
be reconsidered: openness has salutary effect on bad practices
which are widely perceived, by the general public, to abound.
ANNUAL REPORTS
Ten or 12 years ago the TWBC annual report and
accounts were much more readable and informative than they are
now. The bald figures were made more meaningful by a narrative
account of the main activities of each department. Unfortunately,
when I started to take an interest in the report and accounts,
parts of the report proved to be grossly inaccurate and misleading
and both TWBC and the auditor retrenched, reducing to a minimum
what was reported and audited in order to achieve "an unqualified
audit report" each year.
Essentially, the auditor walked away from any
responsibility for the potentially helpful, and in my view necessary,
explanatory words. This is not a very onerous task and who else
can ensure that a report holds water?
Apart from the headline activities in the Borough,
such as traffic calming and improving pavements and long-established
departments, I would expect the Report to describe the work of
more peripheral employees such as Youth officer, Sports officer,
Countryside officer, Agenda 21 officer, Arts officer, etc. Or
the fact that 25 staff have been engaged for three years' work
on the new Best Value regulations: the public might have something
to say about that one as the credibility of the exercise is still
in doubt.
CONCERN AROUSED
BY A
SCANDAL
The background to my awakened interest was the
public scandal of the mayor's forced resignation, and subsequent
conviction, for financial misdemeanours. There was some attempt
at cover-up and the whistle-blower was later made redundant. The
auditor was publicly silent on these matters.
AUDIT COMMISSION
HAS THE
CAPABILITY
I have worked with the NHS and seen and read
some of the Audit Commission's excellent surveys such as "Lying
in Wait" which gave authoritative credence to what many individuals
had been saying unheard. The fact that the NHS is too massive
to be much moved, in the short term, by such advice does not negate
its value in a ratchet process: the authentic evidence is on record.
So similar critiques of established practice within Local Government
would be worthwhile and might cheer the neglected tax-payer.
PERFORMANCE INDICATORS
Performance Indicators are of course compiled
and published on the web where, in my experience, they are less
accessible than one would wish. More importantly they need review
for reliability, pertinence, scope and effectiveness of presentation:
unfortunately such statistical tables in the fields of education
and health have attracted reasonable criticism which diminishes
the impact of good figures—more words are needed to accompany
them, perhaps.
Ongoing consultation would help and the modern
inexpensive way to achieve that is again via the Internet. Ostensibly
the Audit Commission is doing that but the process is fundamentally
flawed because it is a one-way silent process instead of being
open and interactive as with a communal bulletin board which allows
the public to post questions and comment and to read and respond
to the questions and comments of others. For a good working example
in the field of camcorders and computers, look at www.cv.co.uk
and follow the lead to Bulletin Board.
Such feedback would soon draw attention to flawed
indicators, such as response within five days to a letter (which
is satisfied by simple acknowledgement without reference to any
pertinent answer: I have been waiting many weeks for one from
the CEO, but it won't appear in the statistics). It would also
draw attention to significant omissions, such as staff turnover,
which is generally a sign of something amiss with management,
disclosure of membership of Masonic or other secret societies
by staff or politicians alike, the existence of an organisation
chart accessible to the public.
INFORMAL ASSESSMENT
OF SENIOR
MANAGEMENT EFFECTIVENESS
The quality of management in local authorities
is something that needs more attention than ensuring compliance
with the rules. The spur of commercial competition which tends
to keep senior executives on their toes is missing from the cosy
senior offices in town and county halls and any deleterious effect
should be quite visible to the itinerant auditor. What should
be done, when something seems advisable, could be invidious but
might inoffensively take the form of suggesting that senior officers
could benefit from cross-posting to a different authority for
a year or two. That is long-established practice in commercial
companies with several establishments and also, I understand,
in some government departments and agencies.
Disasters where the DA failed to Act or Draw Attention:
Two planning decisions where the authority has
permitted development on former railway lines, notwithstanding
established moves to reopen those lines to ease the ubiquitous
and fast-deteriorating road traffic congestion.
False declaration by the LA of the value to
the town of a new shopping mall—due initially to simple
misunderstanding of the figures but never corrected with adequate
publicity.
MY CREDENTIALS
Peter Reynolds, CA JDipMA, is retired from a
varied career which included 17 years as a management information
specialist for Unilever and occasional service on national and
European committees helping to frame new accounting regulations.
December 1999
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