Memorandum by West Devon Borough Council
(AC 07)
In response to your recent press notice regarding
the above, I welcome the opportunity to be able to express this
Council's feelings about the Audit Commission. External Audit
services to West Devon Borough Council are currently provided
by District Audit and are monitored, along with Internal Audit
services, by the Council's Best Value and Audit Working Group.
We have been disappointed with the facilities
for external audit for some time and have been seeking to change
the current situation.
I have listed below our various points of dissatisfaction
with District Audit:
Lack of choice available in choosing our external
auditor
It is my feeling that Councils should be allowed
to select external auditors using competitive tendering procedures
to select from a list of government accredited organisations.
This would help to create the market to attract good service providers
in more rural areas such as the south west. Since the auditors
sent to us are often sub contractors with little or no experience
of local government accounting it cannot be said that protecting
District Audit creates a useful centre of expertise.
I would like to bring to your attention the
disappointing response of the Audit Commission with reference
to our attempt to change our external auditor in 1997. This resulted
from a late submission of value for money work by District Audit.
I enclose a schedule of the unsatisfactory chain of events which
led to the Audit Commission refusing to give effect to the change
in auditors. This is despite the support for the change being
received not only from the Council and the District Auditor but
also from Ernst and Young (the likely alternative provider for
the South West).
The Council reluctantly recognises that any
attempts to secure best value in the procurement of external audit
services remain futile, as long as the Audit Commission continues
to override representations that the audit services received may
be improved if secured through "open" competition.
The main obstacle to the transfer of the Council's
External Audit contract is the Audit Commission's protection of
its interests in one of the largest providers of External Audit
services. Only when the Audit Commission has relinquished its
interests and brought about the introduction of transparent, genuine
competition can it demonstrate its own commitment to "promoting
the best use of public money".
Technical advice
In our experience, eg LSVT, when we have asked
District Audit for technical advice they have never been able
to provide it. They also do not give any approval for us to take
certain action or to adopt certain methods. Their attitude of
"do what you think is best and we will check it at the end
of the year" is one of constant annoyance. It is an extremely
unhelpful and frustrating response. In an environment where there
are constant changes in legislation and initiatives, eg Best Value,
it would be helpful to feel that we have some support and assistance
in implementing the changes and an external body which can warn
us of any potential pitfalls.
Added value
There are no "added value" services
offered eg VAT, legal advice. A commercial firm such as Ernst
and Young would be able to provide these facilities.
Level of fees
Every year the price increases have been significantly
above inflation which is hardly consistent with the demonstration
of efficient and economic professionalism. The Audit Commission
are expected to deliver value for money and their fee increases
could be said to be excessive.
The Council's Members are saddened by the fact
that scarce resources have to be diverted from front line service
delivery in order to pay escalating audit fees. They do not feel
any additional benefit is gained by this expenditure and are particularly
concerned that the development of Best Value is set to place even
greater financial burden on this Council with reference to District
Audit fees. They are particularly troubled by the fact that whilst
Best Value commendably requires us to subject services to "a
competitive process (that) has been properly employed", a
significant and substantial proportion of the Council's budget
must be "top sliced" to pay for an external audit service
that we have not been allowed to subject to a rigorous competitive
process.
West Devon Borough Council has had to carry
out several years of cost cutting reviews which has resulted in
both voluntary and compulsory redundancies. In addition we have
enthusiastically outsourced services wherever costs could be saved
and service delivery improved. Our ranking in The Independent
newspaper which listed us as 5th out of 260 District Councils
shows our success in these endeavours. We suffer financially from
a lack of economies of scale and the need to supply services from
two centres. Consequently our finances are less well placed than
other councils to bear such costs with equanimity.
I look forward to reading the findings of the
inquiry of the work of the Audit Commission. It would be useful
to know if other small Authorities are also experiencing the same
problems with their external auditors.
Lesley Halton
Borough Treasurer
December 1999
SUMMARY OF
EVENTS (JANUARY
TO OCTOBER
1997)
| January 1997 | West Devon Borough Council completes External Audit Quality Assessment.
|
| February 1997 | Meeting held between Council and District Auditor. District Auditor recommends change of external audit supplier.
|
| March 1997 | Report presented to the Council's Audit Working Group outlining the recommendation of the District Auditor.
|
| July 1997 | Further report presented to the Council's Policy and Resources Committee following informal discussions with Ernst and Young (the likely alternative provider for the South West) setting out practical considerations and confirming Ernst and Young's willingness to act. Members recommend that change be pursued.
|
| July 1997 | Visit to Council by Peter Coombes, Regional Controller for District Audit. Discussion took place regarding timing of change but unable to persuade the Council that the change should not be pursued.
|
| August 1997 | Letter sent from Council to Mr A Foster of the Audit Commission setting out recent events and requesting details of any actions required on the part of the Council.
|
| September 1997 | Telephone call received by the Council from Mrs Temple Murray of the Audit Commission, again confirming the immediate timetable in the lead up to the change of auditors.
|
| October 1997 | At the request of the Audit Commission, letter sent by the Council confirming understanding of the timetable discussed above.
|
| October 1997 | Letter received from Audit Commission refusing to proceed with transfer arrangements.
|
| October 1997 | Letter sent by Council to Minister for Local Government.
|
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