Auditing watchdog to be axed – not fit for purpose

“The watchdog which oversees Britain’s tainted auditors will be scrapped after it was branded a ‘ramshackle house’ in a report.

The Financial Reporting Council will be shut down and replaced with a new organisation under different leadership, after former civil servant Sir John Kingman uncovered a litany of problems.

Kingman’s findings – in a study commissioned by the Business Secretary Greg Clark – are a vindication for campaigners who have spent years warning the FRC is not up to the job.

Kingman, an ex-Treasury mandarin who is chairman of Legal & General, said the FRC lacks transparency, is too dependent on the goodwill of big auditors for funding and has been damaged by constant leaks of information.

In his report he calls for:

■ A new regulator with a beefed-up regime to take action against failing bean counters and much shorter investigations to minimise delay;

■ Blanket bans on accountants who join the watchdog from overseeing their former employers;

■ A requirement for auditors to report any serious financial problems at companies they oversee;

■ Powers for the regulator to boot out a firm’s auditor if they have concerns it is not doing a proper job.

The FRC has been slammed for repeatedly letting auditors off the hook over accounting scandals, from Tesco to failed bank HBOS.

It came in for criticism earlier this year after the collapse of outsourcer Carillion was missed by accountants.

Kingman said: ‘What this spotlight has revealed is an institution constructed in a different era – a rather ramshackle house, cobbled together with all sorts of extensions over time. The house is – just – serviceable, up to a point, but it leaks and creaks, sometimes badly.

‘The inhabitants of the house have sought to patch and mend. But in the end, the house is built on weak foundations. It is time to build a new house.’ “

https://www.thisismoney.co.uk/money/markets/article-6505331/Disgraced-accountancy-watchdog-scrapped-following-damning-report.html

2 inquiries into big auditing companies: “cosy club” and “not resiliant”

“The origins of the shake-up now facing the accountancy industry can be traced back to the collapse of Carillion at the start of this year.

Concerns about auditing in Britain had been quietly growing among politicians for some time, but they came to the fore after the demise of the government contractor.

An inquiry by MPs called the audit market a “cosy club” and criticised the Financial Reporting Council as “feeble and timid”. Nearly 12 months later, two inquiries have concluded that regulation of the sector and competition between firms must be improved.

Competition and Markets Authority study

The competition regulator announced in October that it would investigate the audit sector to examine concerns that it was “not working well for the economy or investors”. It said that this would include looking at whether the sector was competitive and resilient enough to maintain high standards.

Since then the Big Four have lobbied hard against a wholesale break-up of their firms. They were supported by their smaller rivals Grant Thornton and BDO, despite the fact that the measure would not belimposed on them.

The CMA has stopped short of recommending a break-up of the firms, proposing a ringfencing of audit activities instead, but it has not dropped the threat entirely. Will Hayter, the CMA director responsible for the audit market study, said: “The possibility of a full split of the Big Four should not be underplayed.” The CMA said that it would be “protracted and complex” and that an effective ringfence of audit was a more practical and quicker solution, but it has not ruled it out. …”

Source: Times, pay wall

“NHS commissioning ‘needs period of stability to transform’ “

Owl says: You cannot make it up – body set up to transform the NHS needs time to transform itself before issuing its transformation policies to transform anything else!

“NHS commissioning needs a prolonged period of organisational stability after almost three decades of change, according to the UK’s spending watchdog.

Continued organisational restructuring causes major upheaval and commissioning in the health services needs stability to transform, the National Audit Office urged in a report released today.

Amyas Morse, head of the NAO, said: “We have seen almost three decades of change to NHS commissioning.

“It would be a huge waste if in five years’ time NHS commissioning is undergoing yet another cycle of reorganisation resulting in significant upheaval.”

He added: “The current restructuring of Clinical Commissioning Groups must deliver balanced and effective organisations that can support the long-term aims of the NHS and deliver a much-needed prolonged period of stability.”

A period of stability would allow commissioning groups to focus on transforming and integrating health and care services rather than on reorganising themselves, the report said.

Since CCGs replaced primary care trusts in April 2013, there have been eight formal mergers, reducing their numbers from 211 to 195 in April this year. Further mergers are expected.

The report also highlighted an increasing number of NHS commissioning bodies in England were exceeding their planned expenditure.

A total of 75 of 207 (36%) CCGs went over their budgets in 2017-18, the NAO noted. The total overspend across the groups was £213m.

This compared to 57 CCGs over spending on their budgets in 2016-2017 and 56 in 2015-2016.

“Many CCGs are struggling to operate within their planned expenditure limits despite remaining within their separate running cost allowance,” the report warned.

Increased pressures, the uncertain futures of CCGs and a lack of access to training and development were cited as reasons for the continuing issue of commissioning bodies being unable to attract and retain high-quality leaders.

Even though “both NHS England and the CCGs stressed [to the NAO] the importance of high-quality leadership”.

The watchdog also warned with further mergers there was “a risk that working across greater areas will make it more difficult for CCGs to design local health services that are responsive to patients’ needs”.

The total net expenditure of CCGs in England in 2017-18 was £81.2bn with net running costs at £1.1bn. Staff costs made up 57% (£693 million) of CCGs’ running costs, the NAO noted.

A 10-year long-term plan for the NHS and how it will spend an extra £20.5m a year was expected to be released by the end of this year.

A source from the Department of Health and Social Care has confirmed to PF it is now “likely” this plan will be release next year.

Responding to the report, chair of the Public Accounts Committee Meg Hillier said: “We should be concerned that increasing numbers [of CCGs] are overspending against their budgets.

“Like previous changes to NHS commissioning, CCGs are going through more change and the NHS is crying out for stability.”

She added: “It is vital that further restructuring supports the 10-year plan and isn’t an unnecessary distraction to addressing the real challenges in the health service.”

https://www.publicfinance.co.uk/news/2018/12/nhs-commissioning-needs-period-stability-transform

Exmouth campaign to retain current Post Office

Message from an Exmouth campaigner. If you agree, councillors (town, district, county) will need to be contacted.

“I am trying to encourage local community organisations to campaign against the proposed franchising of the Post Office in Exmouth which currently is based in the WH Smith Store to be run from February 2019 by WH Smith. I think this could be very bad for the community and the future of the Post Office as a government organisation for a number of reasons.

1. WH Smith is not a public organisation with a remit to provide a public service. The legal duty of its directors is to maximise shareholder value. Therefore the cost of running a well resourced post office could be in direct opposition to the aims of WH Smith which is to maximise its profits and maintain a viable commercial enterprise.

2. The value added service which the current Post Office staff provide is not directly quantifiable in monetary terms. The Exmouth Post Office provides an invaluable resource to elderly and vulnerable people. It is a safe place for people with dementia; the staff know their customers, many of whom have been using the Post Office for many years so the staff can look after their customers in a range of ways, from safeguarding their financial arrangements to alerting other services if they have concerns over the health and/or welfare of their customers. Recently a customer on a motability scooter was persuaded to wait in the store until the ambulance service was able to help him as staff were rightly concerned that he was on the verge of a heart attack.

3. The current staffing levels will not be guaranteed once WH Smith takes over the running of the Post Office; indeed it has been suggested that there could be as few as two members of staff on duty at any time running the Post Office. This will lead to longer queues which is a real trial for elderly or disabled people.

4. Existing staff have received several months of training to do their job. The CWU contrasts this with the poor training of a few days provided for staff where post offices have been franchised so that mistakes are far more likely to occur. Furthermore with limited staff, the level of personal customer service which is so key to community wellbeing will be lost.

5. Post Office staff who decide to stay may be TUPED over to WH Smith, but a few months down the line, if WH Smith puts forward a business case for reducing pension benefits or other work benefits which are not offered to its other staff, then the TUPED staff will lose those benefits. New staff will not enjoy the same level of benefits as staff formerly in the employ of the Post Office.

6. The Post Office is making a healthy profit up from £13 million to £35 million in 2017/18. It also received £370m in network subsidy from the government. Furthermore, customer numbers have increased at the Post Office with the number of bank branch closures. The continued uncertainty over the stability of the banking sector has made the Post Office an attractive savings option, so it is well placed to continue as a thriving public institution serving communities where private organisations have abandoned their customers.

7. This is not a private commercial organisation which needs to focus primarily on profitability and it should be true to its public service remit. Franchising reduces costs but it is also privatisation by the back door; vital public services suffered a damaging effect when they have had privatised services forced on them. The schools are a prime example of what can happen to public services when the private sector takes them over. Schools have been closed after gaining academy status and being transferred to private hands. This publicly funded asset is lost to the public sector and children lose their school when the academy trust runs into financial difficulties. The Post Office once franchised to WH Smith will be at the mercy of the market place not protected by public funding.

8. WH Smith has had mixed trading fortunes in recent years. It is currently increasing sales but not profits. It has closed 30 stores in the last year and opened 24 new ones but these have been based in travel hubs – bus and rail stations and airports – and hospitals. WH Smith is under no legal obligation to keep stores which it considers insufficiently profitable. The post office services could be lost if this happens in Exmouth.
I think the Post Office has been economical with the truth in its ‘information leaflet’ about the transfer of business to WH Smith. It has not provided the opportunity for the public to comment on whether they want this change or not, just feedback on accessibility issues. This is in no way a consultation; it is a purely commercial decision made by an organisation which should focus on communities not profits.

I hope you will be able to raise these issues on your website.”

Swire, the Commonwealth Enterprise and Investment Council and Business Forum

Swire is Deputy Chairman of the Commonwealth Enterprise and Investment Council.

Sounds good in every sense, doesn’t it?

He reveals he paid £2,083 every month until further notice for 10 hrs per month. £208 per hour – not half bad!

So what is this organisation? It describes itself as:

“CWEIC is responsible for organising the Commonwealth Business Forum alongside the biennial Commonwealth Heads of Government Meeting and Commonwealth Trade Ministers Meeting on alternative years.

Our day to day activity focuses primarily upon serving the interests of our members. We run a number of different scale and format events each year, providing Members with networking opportunities, access to leading Commonwealth figures from the worlds of government and business, and the chance to shape the Commonwealth’s business policies and agenda. …”
http://www.cweic.org/about/

Oh Lord, not another Business Forum! It is actually a business, describing itself as:

“Management consultancy activities other than financial management”
https://beta.companieshouse.gov.uk/company/09132366/officers

And, as Owl has reported, somewhat controversial:
https://eastdevonwatch.org/2018/03/31/hugo-swire-deputy-chairman-of-the-commonwealth-enterprise-and-investment-council-questions-asked/

Good fun going to
http://www.sarawakreport.org
and inputting Swire – lots of interesting stuff, particularly this one:

http://www.sarawakreport.org/2018/03/expose-how-petronas-paid-for-bns-covert-cambridge-analyticascl-campaign-during-the-sarawak-election/

And it plans to take advantage of Brexit as you would expect:
https://www.dailymail.co.uk/wires/afp/article-4307630/Empire-2-0-Commonwealth-eyes-post-Brexit-trade-boost.html

It partners with a controversial American company to make money from the Commonwealth:
https://english.alwatanvoice.com/news/2016/04/26/908483.html

Tangled webs, tangled webs …

Swire puffs

No, it’s not a recipe.

Swire has sent out a puff job about what he has “achieved” for East Devon over the last year, despite barely ever being here and getting himself knee-deep in Brexit machinations, about which we still have no idea who he supports and exactly what he supports.

His only interest currently seems to be helping to prop up the DUP in Ireland and keeping an eye out for which May successor might get him off the back benches.

Oh, and his “work” with the Conservative Middle East Council and being Deputy Chairman of the Commonwealth Enterprise and Investment Council ( see next post for more on that) and being provider of strategic investment advice for the Latin American market (Register of Interests). Not forgetting that little company he co-owns with controversial Lord Barker (Eaglesham Investments).

Owl will not be linking to the puff job.

Rural high-speed broadband? Better move to Spain or Portugal!

“… Ofcom said fullfibre internet is now available to 1.8m premises, a rise from 3% to 6% of homes and businesses, but the UK is still far behind countries such as Portugal, at 89%, and Spain, at 71%.

The regulator’s report also found that rural areas also face issues with mobile coverage. While 83% of urban homes and offices have so-called “complete” 4G coverage – services from all four major operators, Vodafone, EE, O2 and Three UK – it is a different story in rural areas. Just 41% of rural premises get complete mobile coverage, while Ofcom said that “in some remote parts of the country there is no coverage at all”.l …”

https://www.theguardian.com/money/2018/dec/18/uk-homes-slow-broadband-netflix-youtube-ofcom