Finally a way to publicly scrutinise Local Enterprise Partnerships and other quangos?

Owl says; But will the likes of Diviani (LEP) and Randall-Johnson (CCG) be in favour of more (or rather, any) scrutiny?

“Meg Hillier has told Public Finance that audit of local government spending needs to be more “transparent” for an increasingly “savvy” British public.

“I think the British public are much more savvy about things – they don’t trust the authority to spend things well,” she said to PF.

Since the Audit Commission was formally dissolved in 2015 “there isn’t the same level of transparency locally”, Hillier said.

Local authority finances “used to be well demonstrated,” she said, “so I think [making them more transparent again] is just something that we need to keep pushing on.”

Although she said it was “early days” and did not wish to say who she had been speaking to, she said she saw devolution as an opportunity to improve closer examination of how public money was spent.

“At metro mayor level or at a bigger regional level there is an opportunity for value for money audit and analysis because there are certain discreet pots of money coming down for very particular projects, so it’s easier to track it through from the day to day budget value for money,” she said.

Hillier was speaking to PF after the shadow communities secretary Andrew Gwynne told the Labour Party conference last month: “We will give local authorities public accounts committees to improve local government spending decisions.”

Local PACs was one of the Labour Party’s pledges in its 2015 manifesto so that “every pound spend by local bodies creates value for money for local taxpayers”.

Hillier said she was not able to give a clear view on what her vision for the extra layer of scrutiny of local government finances would be but did not believe local PACs were necessarily the answer as they would require “huge infrastructure”.

“I am not advocating we go out and set up lots of mini NAOs [National Audit Offices] – there is a bit of realism in this,” she added.

But Ed Hammond, director of Centre for Public Scrutiny, which has long been an advocate of local PACs, told PF that there is an “urgent need” for such bodies.

“Local PACs will be bodies led by elected councillors, empowered to follow the public pound across a local area, cutting across different organisations to get a real picture of the value for money of public services,” he suggested.

“In a world of increasingly complex decision making, and with greater pressure on finances, there is an urgent need for these bodies to give the public the assurance they need on the services they rely on.”

An Institute for Government report, out on Monday,

https://www.instituteforgovernment.org.uk/sites/default/files/publications/Accountability_modern_government_WEB.pdf

said that government should “review the case for setting up local Public Accounts Committees” to “provide new capacity to local government to scrutinise performance across the breadth of services offered in a region”.

These could initially be trialed in mayoral combined authorities, the IfG suggested.

Local PACs were discusssed in an IfG-led Twitter discussion on the report.

@ben_guerin
We also need to scrutinise links between local public services like health and social care: review case for setting up local PACs, initially in mayoral combined authorities #IfGaccountability

The Conservative mayor of Cambridgeshire and Peterborough Combined Authority James Palmer believed there was already enough local authority financial scrutiny in place.

Although, he suggested if more fiscal devolution was handed down to metro mayors then “that of course must come with the necessary level of local governance and scrutiny”.

“Whether that comes in the form of a local public accounts committee is of course a discussion that would need to be had as part of further devolved powers.”

Northern metro mayors recently called for post-Brexit EU replacement funding to go straight to the regions, bypassing Whitehall.

Chief executive of the Localis think-tank Jonathan Werran recently wrote a blog for PF on the future of fiscal devolution – see here:

https://www.publicfinance.co.uk/opinion/2018/10/running-out-road-time-change

https://www.publicfinance.co.uk/news/2018/10/pac-chair-seeking-ways-beef-local-government-spending-scrutinyq

EDDC’s current external auditors face probe over Patisserie Valerie

“The auditor of crisis-hit cafe chain Patisserie Valerie is facing an investigation by the industry watchdog.

Work by Grant Thornton has been called into question after bosses at Patisserie discovered a £28.8million black hole in the accounts, an unpaid tax bill and two ‘secret’ overdrafts totalling nearly £10million.

The auditor has worked for the company since 2006 and most recently signed off the books for the year to September 30, which said the balance sheet was strong and contained no borrowing.

… The Serious Fraud Office is already understood to be investigating and last night the Financial Reporting Council (FRC) confirmed it was reviewing the situation.

An FRC spokesman said: ‘We are looking into this matter carefully and will give full consideration to further action as more facts become available.’

… overdrafts with HSBC and Barclays had been run up by the company totalling £9.7million but directors only learned of them on Tuesday.

Likewise, around £28.8million that had previously been in the bank was unaccounted for and they learned tax officials were seeking to have the company wound up over unpaid bills.

… Grant Thornton declined to comment last night.”

… Cliff Weight, director of investor group Sharesoc, said: ‘I find it absolutely extraordinary that a company with revenues of £114million could ever lose track of £20million.’

https://www.thisismoney.co.uk/money/markets/article-6275371/Auditors-face-probe-Patisserie-Valerie-crisis-following-discovery-28-8m-black-hole.html

EDDC’s auditors (Grant Thornton) in the bad news spotlight again

“… In May, Patisserie Valerie said that it had £28.8m in cash reserves, while half-year profits were 14.2% up on the previous year at £11.1m.

On Thursday, the firm announced that its board had found “a material shortfall between the reported financial status and the current financial status of the business”.

Grant Thornton, which has audited the firm’s accounts since 2010, said it would not comment on Mr Johnson’s revelations to the Sunday Times.” …

https://www.bbc.co.uk/news/business-45854817

“Audit watchdog vows to restore public trust in sector”

Owl says: too late for us. EDDC’s then (and now) external auditor was given a consultancy contract to investigate the ramifications of the Graham Brown scandal:

https://eastdevonwatch.org/2016/03/06/external-auditors-watchdogs-or-bloodhounds/

https://eastdevonwatch.org/2017/11/08/so-guess-who-eddcs-new-external-auditors-will-be/

Maybe the Financial Reporting Council would be interested in this seeming conflict of interest?

“The UK’s audit watchdog has announced a reform programme to restore the public’s “falling trust in business and the effectiveness of audit” after its work showed that high-quality auditing was not being “delivered consistently”.

The Financial Reporting Council will implement a series of measures including increased monitoring and assessment of risks, and scrutiny of the future needs of investors and audit quality.

It will also address auditor independence, including banning accounting firms from providing consultancy work to companies they already audit.

The watchdog plans to work closely with the Competition and Markets Authority (CMA) on this issue.”

https://www.telegraph.co.uk/business/2018/10/08/audit-watchdog-vows-restore-public-trust-sector/

“Audit sector faces inquiry as minister points to deficiencies”

Interesting to note that a large number of people in East Devon have been pointing out deficiencies in internal and external audit foy YEARS!

https://eastdevonwatch.org/2014/09/17/please-dont-take-our-external-auditor-away-why-we-like-him-and-our-ceo-wants-the-same-auditor-at-both-councils-where-he-works/

https://eastdevonwatch.org/2015/01/15/a-question-for-the-swap-internal-auditor/

https://eastdevonwatch.org/2016/11/19/external-auditors-not-best-placed-to-review-local-plan-duh/

“The government has called for a comprehensive review of Britain’s auditing industry in what could herald huge changes to a sector dominated by the firms known as the big four.

Calls for reform have grown after the collapse of the construction giant Carillion and the former high street stalwart BHS revealed serious inadequacies in the auditing process.

The business secretary, Greg Clark, said it was “right to learn the lessons and apply them without delay” as he ordered the inquiry into competition within the industry where Deloitte, PwC, Ernst & Young and KPMG audit 98% of the UK’s largest listed companies.

“The collapse of Carillion exposed deficiencies in an audit process, where the market is dominated by just four large firms,” Clark said, in an interview with the Financial Times.

He added: “We know competition is one of the key drivers for maintaining and improving standards, so I have asked the Competition and Markets Authority to consider looking again at what can be done to improve the audit sector.”

Thousands of jobs were lost following Carillion’s collapse in January, with a subsequent parliamentary report finding that Deloitte – which received £10m to be the outsourcing company’s internal auditor – had been either “unable or unwilling” to identify failings in financial controls, or “too readily ignored them”.

Ernst & Young was paid £10.8m for “six months of failed turnaround advice”. Elsewhere, PwC was fined £10m by the Financial Reporting Council (FRC) for signing off on the accounts of BHS, before its sale for £1. The retailer collapsed in 2016, prompting the loss of 11,000 jobs.

Frank Field, the chairman of the work and pensions committee, said poor business practices were “waved through by a cosy club of auditors, conflicted at every turn”.

The FRC has previously called for an inquiry into whether the big four should be broken up, with their audit divisions spun off. This year, Deloitte warned that such a measure could affect the UK’s standing as a global financial centre.

Labour welcomed the announcement, but claimed the Conservatives were “playing catch-up”. …”

https://www.theguardian.com/business/2018/sep/29/uk-mulls-audit-sector-reform-after-minister-admits-deficiencies

Resuscitating high streets – or are they too far gone already?

Owl is noticing more and more empty shops – even in places that seemed to be weathering the High Street decline so far (eg Sidmouth).

Isn’t it time our council did an audit of our high streets (empty shops, open shops, temporary pop-up shops, local-owned independent, chain stores, charity shops) to get a proper idea of just how bad this problem is in each town and what the mix says about the health of each town centre? And time to come up with a strategy for their future?

“… Charges to withdraw money from cash machines would be scrapped under a Labour government to “save Britain’s high streets”.

Attempts to stop their “slow agonising death” were announced by shadow business secretary Rebecca Long-Bailey with a range of measures – including stopping Post Office closures.

Sky News can reveal Labour would draw up a register of landlords of empty shops in every local authority.

And the party would deliver free public wi-fi in town centres, for those having a coffee or working in community spaces.

The plans are due to be announced on Tuesday by Ms Bailey at Labour’s autumn conference in Liverpool.

She is aiming to boost support for the party in British towns, as leader Jeremy Corbyn suggested a general election could be called imminently.

Brexit secretary Dominic Raab insisted on Sunday that “it’s not going to happen”.

Research by Which? published in June found that the free-to-use ATM network was “under threat”.

The idea to ban them was championed by Labour MP Ged Killen, who welcomed the party’s announcement.

“No one should ever have to pay to access their own money,” he told Sky News.

“If any government is serious about economic development in our towns and high streets they need to protect the financial infrastructure people and business rely on.”

The other plans would see post offices owned by the government stopped from further franchising and closing.

Under-25s will also get free bus travel in local authorities where local bus services are either franchised or publicly owned.

Labour has also promised to “work with” councils to extend wi-fi roll-outs by commercial developers in public spaces.

And it will force shop landlords to make their identity and contact details public, creating an empty shop register to “make it easier to bring empty units into use”.

A new annual business rates re-evaluation will also be introduced. …”

https://news.sky.com/story/labour-would-scrap-atm-charges-in-bid-to-save-high-streets-11507872

“60% of public sector finance professionals have come under pressure to act unethically at least once in their career”

“Almost 60% of public sector finance professionals have come under pressure to act unethically at least once in their career, a CIPFA survey has found.

The institute surveyed members and other public sector accountants about ethical matters over the summer.

The results, revealed exclusively in PF, found that 57% of the 487 respondents said they had been put under pressure or felt under pressure to act in a professionally unethical way.

Of those who felt under pressure, 8% said they had fully carried out an unethical action, and 28% had done so partially.

The three most commonly cited unethical actions were supporting excessively optimistic budgets and business cases, dodging policies, standing orders and other regulations, and unreasonably downplaying risks.

Line managers and chief finance officers, chief executives and other directors were the two most commonly cited source of pressure in all sectors.

For respondents in local government, the council’s political leadership provided a third source of pressure, while those in the NHS cited pressure from regulators. …”

Source: CIPFA