9 January 2012

Who polices them?

When considering the accountability of our Town and Parish Councils with regard to their use (or abuse) of public funds, it is material to look at changes in legislation being considered by the current Government. Both the Audit Commission and the Standards Board are being abolished and some thought has been given to how 'smaller bodies' (eg Town or Parish Councils) will be regulated.

The Institute of Chartered Accountants in England and Wales (ICAEW) prepared a memorandum, dated January 2011, seeking to devise a new local audit regime. This document House of Commons - Communities and Local Government Committee - Written Evidence attempts to address the 'light touch audit regime' to which Town and Parish Councils are subject. Of note are points 51 and 52:

51.  We are, however, not in favour of a regime whereby each small body will be required to appoint its own auditor. The smaller parish councils do not necessarily have the skills or expertise to appoint their own auditor and it would not be appropriate to place this additional burden on them, which would inevitably be at a cost.

52.  For the smaller end of the scale, our view is that the precepting authority (to whom the parish is accountable) should take the responsibility for carrying out some checks of how the precept is spent. The precepting authority could use its own internal auditors or perhaps even its external auditors for this purpose (recognising that they were would be cost involved in using its external auditors).

The ICAEW's observations are interesting (item 51) where they recognise the possibility that Town or Parish Councils may not be sufficiently skilled to appoint  their own auditors, something that is standard practice at present. Further, the ICAEW's suggestion (item 52) is that policing the accounts of Town and Parish Councils be taken over (to an undefined extent) by the precepting authority which, in Somerton's case, would be South Somerset District Council.

In order to assess if this suggestion is practical, it is worth considering that, the last time I looked, there were 121 Town or Parish Councils within SSDC's administrative area. They are all obligated to report accounts around the same time and, given the scale of the work, it is unlikely that SSDC will do little more than a box ticking exercise. So how will this process be any more effective than the current 'light touch audit' applied by the Audit Commission regime?

But underlying the discussion about the strength of external audit (and who should police it) is the thorny question of the accuracy of the information provided by the Town or Parish Council.

In Somerton's case, if the internal auditor preparing the accounts is not supplied with accurate information, how are they to know that something might be amiss. Exactly the same situation applies to the External Auditor. Is a Council likely to tell their auditor to look more closely at an item if there is something untoward about the expenditure? Clearly the answer is NO. Is the internal auditor or the external auditor for that matter, obliged to look at every item of expenditure and test it against the Council's Standing Orders or Financial Standing Orders? Such an effort would be prohibitively expensive and impractical.

So we are left to face the sad fact that, if a Town or Parish Council, decides to ignore the dominant legislation and their own Standing Orders, it is perfectly possible that the information that is provided to the Internal Auditor and to the External Auditor will be presented in such a fashion as to avoid raising concerns.

So what constraints could be applied to such delinquent Councils? At present, I am aware of none. When I lodged my own objection to Somerton Town Council's accounts, I believed that, in objecting to the accounts, there would be a robust examination of the facts and that there would be real consequences should wrong-doing be uncovered.

Today, almost 30 months after lodging my objection to Somerton's accounts, the only real outcome of the process (apart from the violence and abuse to which I have been subjected) is the ever escalating cost of the External Auditor's enquiry. I continue to believe that neither the Audit Commission nor the External Auditor would have embarked upon the enquiry if there had not been solid justification for so doing and I will be interested to see what the External Auditor delivers for £60,000. But, at the end of the day, whatever the External Auditor says in their Report, the sad fact is that the taxpayer will, as usual, be forced to pick up the tab. That in itself must be comforting to delinquent Councils and Councillors, to know that they will not be made to pay for cataloguing their errors.

Till next time, I'm still Niall Connolly