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Why auditors' alarms are ringing unheard

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A commentary on auditors feeling ignored by councils

If they ever existed, Sir Eric Pickles’ ‘army of armchair auditors’ must have fallen asleep on their cushions to judge by the lack of reaction when real auditors sound the alarm.

So too may have council leaders and officers – the most extreme example being stricken Northamptonshire CC having paid little heed to auditors’ warnings before its financial collapse a year ago.

The National Audit Office complained in a report today, Local Auditor Reporting in England 2018, that when auditors warned that local government financial arrangements were found wanting, too often the response was, “how fascinating, I shall inform my waste paper bin” (it didn’t quite put it like that).

Although it doesn’t directly audit local government, the NAO is responsible to Parliament for the use of public money, and so is legitimately concerned as to whether the auditing system established after the 2015 demise of the Audit Commission works properly.

The NAO said local auditors raised concerns about financial arrangements at nearly 20% of unitary and county councils last year, compared to 8% of local government bodies of all kinds, including districts and police and fire authorities.

It should be no consolation that the NHS was even worse, with 38% of its bodies - equivalent to 168 - having their knuckles similar rapped last year.

NAO head Amyas Morse said: “I am shocked by the persistent high level of qualified audit reports at local public bodies.

“A qualification is a judgement that something is seriously wrong, but despite these continued warnings, the number of bodies receiving qualifications is trending upwards.

“Let us hear no cries of ‘where were the auditors?’ when things go wrong. The answer will be ‘they did the job, but you weren’t listening.”

Paul Dossett, head of local government at audit firm Grant Thornton suggested the failure to give sufficient weight to auditors concerns was an attitude that originated at the top of government. 

“This report reflects that government departments have paid little practical heed to auditors’ reports, and this has had an influence on the regulatory environment that local bodies respond to,” he said.

Part of the problem is that auditors’ reports can be difficult for non-specialists - let alone the public – with the precise reasons for alarm buried in technical language.

Thus, if those who do understand it wish to bury what is said they may find it fairly easy to do so.

Maybe audit needs a higher profile with a body speaking out on its behalf and holding councils to account for their responses.

Perhaps, purely for the sake of example, it could be called the Audit Commission.

Mark Smulian, contributor 

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