The future of audit

Posted by:

14 June, 2012

The National Audit Office is widening its remit as the Audit Commission exits the field - should local government fear a new era of inspection?

When LGC spoke to Lynda McMullan, formerly Kent CC’s finance director and now an assistant auditor general at the National Audit Office, she was absolutely insistent that the spending watchdog was not looking to become an inspector of councils following the demise of the Audit Commission.

Although the NAO is taking on extra responsibilities from the soon-to-be abolished body, principally oversight of external audit rules, and extending its value for money investigations to cover local government, Ms McMullan was adamant there was no wish to become a councils watchdog.

Some in the sector are concerned there could be ‘mission creep’, as readers of LGC will already know, and one senior figure told LGC that, while Ms McMullan’s stance is welcomed, they are concerned the organisation she has joined does not share her views.

LGC put that question direct to the former county council finance director, and she insisted that both her appointment and the NAO’s efforts to engage and listen with the sector were proof of the NAO’s honest intentions.

Comments made in recent months by Amyas Morse, head of the NAO, suggest he is of the same mind. While being quizzed by the Public Accounts Commission, the group of MPs which oversee the NAO’s work, he made it clear that any idea of the NAO morphing into the Audit Commission “was never a goer as far as we were concerned”.

This was, he said, because “our job, our primary role, is in relation to Parliament, not suddenly to become a limb of government. I have always had that at the front of my mind”.

He also expressed a keenness to engage with local government. Referring to the NAO’s responsibilities in setting the Code of Audit Practice, currently an Audit Commission responsibility, he said there was a need to “consult quite extensively with local government”.

He continued: “The thing that we have been very at risk of doing… and one of the important things, I think, moving forward, is that the sector does not feel that this is the centre, including the NAO, doing this to them.”

Mr Morse also touched on another criticism made – that the NAO’s experience has been largely limited to central government, a very different environment from local government – when he said: “Hands up – we recognise that we need to know a lot more about how local government operates. We need to consult with everybody and replace those networks [the Audit Commission had] with Solace, Cipfa and the LGA”.

He had met with local government officers already, he told MPs, and they were keen to express their views on what they want from audit. “They want to tell us…but we have to make the effort, get out there and do it, and we will do,” he said. “The issue, in a way, is to get out of our office and get over and ask them how this is to be done.”

Which perhaps means, if and when NAO comes knocking, local government should not bar the door and hide the accounts in the cellar in fear of a new round of inspections, but instead welcome them with open arms – and a wish list for the future of audit.