MPs want ‘step change’ in local body auditing transparency

More than one in five local public bodies do not have proper arrangements in place to secure value for money for taxpayers, and some are also not putting enough information in the public domain about their performance, including reports from their external auditors, a public accounts committee (PAC) inquiry has highlighted

The numbers are worst for local NHS bodies such as clinical commissioning groups and hospital trusts, where 38% did not have proper arrangements, and PAC says it wants to see a ‘step change’ in transparency from all local bodies.

MPs said local bodies should also be taking auditors’ concerns seriously and addressing them promptly, but there appear to be few consequences for those who do not. Even where local auditors use their additional reporting powers to highlight failings, this does not always lead to the bodies taking immediate action.

When significant concerns are highlighted at individual bodies, central departments are not doing enough to make sure that local bodies take prompt corrective action, or to share learning that could help other bodies avoid the same problems.

While most of the audited bodies claim to have plans in place to address the weaknesses highlighted, only 5% could say they had fully implemented their plans. PAC pointed out that currently there is no direct consequence of receiving a qualified report from a local auditor.

The committee recommended that departments should set out, by the end of September 2019, clear expectations of how local bodies should respond to weaknesses reported by local auditors in 2018-19, including the potential consequences for local bodies who fail to improve.

PAC’s report highlighted concerns that, as partnership working becomes more complex, accountability arrangements will be weakened, and the performance of individual local bodies will become less transparent. 

Over the last three years, concerns over partnership working arrangements have increasingly been a reason for local auditors qualifying their value for money conclusions. But local auditors can only report on the arrangements in place within the individual bodies they audit, so only provide a partial view of how a partnership is performing. Central departments currently say little in their accountability systems statements about how they use information reported by local auditors.

The committee is calling on departments to make explicit the use of the assurance provided by local auditors; and outline how they will get assurance in areas not covered by local audit, such as how partnerships are held to account for joint decisions and responsibilities.

Meg Hillier, PAC chair, said: ‘Taxpayers must be assured that their money is well-spent but in too many cases local bodies cannot properly safeguard value.

‘It is vital that local bodies take auditors’ concerns seriously, address them swiftly and ensure meaningful information on performance is made accessible to the public.’

Paul Dossett, head of local government, Grant Thornton, commented: 'The public, quite rightly, want to know how and where their money is being spent and be reassured that it is being spent in the most efficient way possible. Public audit has played a role in ensuring this level of transparency, and also in calling out and addressing poor behaviour and performance.

'Building public trust is really important and local bodies should take any issues raised by an auditor seriously and act upon them accordingly. They should also ensure that information, including auditor reports, is easily accessible and meaningful and concentrates on what matters most to the taxpayer.'

Auditing local government is here.

Report by Pat Sweet

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