PwC and Deloitte prominent among companies offering hospitality to central government

PwC and Deloitte feature on the list of companies which offer hospitality regularly to central government departments, according to an investigation by the National Audit Office (NAO) which has called for the rules and processes for accepting gifts and hospitality to be tightened

The watchdog’s report examined the guidance for central government officials and published transparency data on the gifts and hospitality received by departmental board members, directors-general and senior military officers between April 2012 and March 2015. It looked at three case study departments: HMRC, the Department for Business, Innovation & Skills (BIS), and Defence, Equipment and Support (DE&S), a bespoke trading entity within the Ministry of Defence (MoD).

Through analysis of the internal registers, it found that HMRC officials accepted hospitality from some 400 organisations. The most frequent providers were foreign governments, notably the French government which topped the list with 19 instances, followed by suppliers and professional services firms. Capgemini, the main contractor on the Aspire contract, was the next most frequent, with 18 instances of hospitality. NAO says this included Capgemini providing a table for four HMRC officials at an industry awards event at a cost of £300 a head.

There then followed PwC and BDO (both 17 instances of hospitality). Hospitality from Deloitte is recorded 13 times, and from KPMG eight times.

The NAO estimates that officials in the three case study departments accepted a total of over £150,000 of gifts and hospitality in 2014-15 and said that although the total may not be high, ‘the reputational risks around accepting it can be substantial’.

The watchdog said: ‘Frequent acceptance of hospitality from particular organisations is not necessarily wrong, but it does need to be in the proportion to the business relationship.’

NAO said in its report that hospitality might involve no more than sandwiches provided during a meeting in the middle of the day, while gifts are often low-value items and, in certain circumstances, declining them might cause offence. However, it said all three departments fell short of good practice in some respects and said guidance could be strengthened by encouraging the recording of all offers received and of the estimated monetary value of gifts and hospitality accepted, and by better evidencing of the review of registers by managers.

The NAO raised concerns over gifts such as tickets to professional sports and cultural events, sometimes accompanied by a spouse and/or children; bottles of champagne; and iPads, although it did not cite the departments or officials who received these.

DE&S officials recorded that they had received the most hospitality, both in terms of frequency (5,213 offers) and monetary value. This compared with BIS officials who accepted 1,688 offers, and HMRC officials who accepted 1,079 offers.

In 2014-15, 17% of DE&S officials accepted gifts and hospitality with an estimated value of some £100,000. This compared with 3% of BIS officials and an estimated value of some £35,000, and 1% of HMRC officials, with an estimated value of some £19,000.The Cabinet Office has a principles-based approach to guiding officials on whether they can accept gifts and hospitality, based on purpose (in the interests of government); proportionality (not over-frequent, over-generous or disproportionate); and avoidance of conflict of interest.

NAO said the conflict of interest principle is difficult to test by reviewing the internal registers, and it found no examples of an actual clash. However, it pointed out that BAE Systems, Deloitte and PwC were among the most frequent providers of hospitality while also being major suppliers to government; as was the British Bankers’ Association, at the same time that some of its members were being investigated in the UK for market manipulations and by the competition regulator.

Amyas Morse, NAO head, said: ‘Public officials are sometimes offered gifts and hospitality by external stakeholders which it is reasonable for them to accept. This can, however, present a risk of actual or perceived conflicts of interest, and undermine value for money or affect government’s reputation.

‘While most, but not all, cases declared by officials appear on the face of it to be justifiable in the normal course of business, we found some weaknesses in the oversight and control of gifts and hospitality. This needs to be addressed by the Cabinet Office and departments.’

The NAO report is here

Pat Sweet |Reporter, Accountancy Daily [2010-2021]

Pat Sweet was the former online reporter at Accountancy Daily and contributor to the monthly Accountancy magazine, pub...

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