HC Deb 08 April 1856 vol 141 cc691-703

Sir, I rise pursuant to notice to call the attention of the House to the subject of Audit of Public Accounts. It will be in the recollection of the House that when the right hon. Member for Buckinghamshire (Mr. Disraeli) held the office of Chancellor of the Exchequer, he stated, in bringing forward his Budget, that the public accounts and the system of audit would be taken into consideration by him, with a view to improving that important part of the public service. The country looked with great satisfaction and lively hope to the announcement that the right hon. Gentleman was about to apply his consummate ability and his great powers to that subject. But soon afterwards the Government to which he belonged resigned, and no more has been heard on the matter from that day. This was a disappointment to those who felt the importance of the subject. But I should hesitate to bring the matter before the House if it were not for two circumstances which force it into public notice. For the last two years the Estimates have exceeded in magnitude those of any other period, since the great struggle which was terminated by the treaties of Paris and Vienna; and even now, when the blessings of peace arc restored to us, we cannot hope that for some time to come the Estimates will return to the limits which belong to times of complete security. This is a reason why the due management of the public accounts should be brought before the minds of thinking men. But there is this further circumstance. The House will remember that, when the Estimates for the Audit Office were proposed, it appeared that thirty-six clerks had been transferred from that department to the War Office. The reason given by Her Majesty's Government for this change was, that, as the Commissariat was transferred from the Treasury to the War Department, it was right that the audit of the Commissariat accounts should be transferred to the War Department also, and for this purpose those clerks were taken from the Audit Office and placed in the War Office. It seems to me that the reason given leads to the directly contrary conclusion. The fact that the Commissariat has been transferred to the War Office is the very reason why the War Office should not audit the Commissariat accounts. I am, moreover, informed that, although the removal of the Commissariat accounts has diminished the business of the Audit Board, the withdrawal of thirty-six clerks renders that Board inadequate to discharge its business. The last returns of the state of business in the Audit Office laid before Parliament in 1839, shows a great arrear, sometimes of eight or nine years. And, I fear, that the change just adverted to will render the arrears still greater. Various improvements have from time to time been made in this department, but those measures have been ineffectual, because the real defect has not been dealt with. That defect is the want of power in the Audit Board over the business confided to it. The Board is merely passive. It is not invested with power to compel accountants to bring in their accounts in a proper manner and at proper times, and to make them pass those accounts completely and regularly. I will show that this defective state of the audit is no part of the old constitutional law, and that it arose entirely from circumstances of an historical character. According to the old constitutional law, the Exchequer had complete control over all the accountants of the Crown. The principal accountants were the sheriffs and escheators, and the customers, who received the revenues of the State. The sheriffs especially were the greatest accountants. They managed the landed property of the Crown, and received the rents, and also received the revenues arising from the incidents of feudal tenures, as well as the aids and scutages granted by Parliament. All these officers were compelled to account to the Exchequer, and were under the control of that Court, from which, after passing their accounts, they received their quietus or discharge. Thus there was then a court of accounts, having entire control over the business which it had to transact. Subsequently the old feudal revenue dwindled and became insignificant, especially after the statute of King Charles II. abolishing military tenures, and new branches of revenue sprang up, and new officers were created for its collection and management. These new officers did not account to the Court of Exchequer, as the old officers did, but they rendered their accounts according to an imperfect system before the Auditors of the Imprest, and then before Commissioners appointed under Acts of Parliament, without the powers which belonged to the Court of Exchequer over the sheriffs and others. The Commissioners of Public Acts in 1785 pointed out this evil in their eighth Report. They stated that the power of compelling accountants to come in and account was lodged in the Court of Exchequer. This was done by ordinary process or by extraordinary process. The ordinary process was called distringas ad computandum, which issued periodically in every issuable term. The extraordinary was called capias ad computandum, which only issued by special order of the Court of Exchequer where money to be accounted for was in danger. The distringas was merely formal. It was issued to the Sheriffs of London and Middlesex, within whose bailiwick all accountants were supposed to be, and they regularly returned nulla bona, and non est inventus. The Commissioners then proceed to examine the office of the Auditors of Imprest. They state that the power of those officers was restricted to the examination of accounts. They had no power to bring accountants before them. If not compelled by Exchequer process, those accountants come at their own pleasure only. The Commissioners report, that the first cause of delay in the office of audit is, the want of an effectual power to bring persons to account. "This," they report, "is the source of delay which extends to every account subject to be passed in the auditors' office."They therefore recommend that the writ of distringas should be properly executed, and the accountants summoned before the Barons of the Exchequer to give reasons for their delay. The remedy thus suggested is, however, manifestly ineffectual. For it does not give the auditors a proper control over their own business, but leaves them with incomplete functions and entirely dependent on the Court of Exchequer. The statute 25 Geo. III. c. 52, passed in accordance with this suggestion, gave increased powers to the Audit Department. It abolished the Auditors of Imprest, and gave to the Crown power to appoint five Commissioners to audit the public accounts. Section 9 provides that the Commissioners may call accountants before them by precept under their hands. But the statute gives them no power to compel obedience to the precept—to compel attendance, or production of vouchers, books, and papers, and the like, without recourse to the Court of Exchequer. By Clause 19, only the Court of Exchequer has power to compel accountants to bring in their accounts. The Act gives no power to the Commissioners to enforce the various requisitions necessary for passing the accounts, such as answering queries, producing papers, and securing balances. By statute 46 Geo. III. c. 141, the number of Commissioners was increased to ten. The power of issuing precepts was extended, but the Act still leaves the auditors dependent on the Court of Exchequer. I come now to the last statute—1 & 2 Geo. IV. c. 121. This statute abolishes the ordinary process of distringas ad computandum, and renders the process of the Court of Exchequer more effectual, but still leaves the Board of Audit dependent on that Court, and unable to enforce its own authority. By Clause 26, persons refusing to attend and be examined on oath, or to produce papers, books, & c., or to obey the lawful requisitions of the Commissioners, are made liable to be fined by the Court of Exchequer, on the application of the Commissioners or the Attorney General. Here the House will observe that even the Court of Exchequer has only the power to punish disobedience, and that by a circuitous mode, on the application of the Commissioners to the Court or to the Attorney General; but there is no mode to compel obedience. The consequence of this imperfection of the powers of the Board has been great inconvenience to the public service, and considerable arrears in the Audit Office. The great defect which I have pointed out is a sufficient cause of that inconvenience and those arrears. It is a fundamental principle in administrative science that every department ought to have within itself all the powers necessary to give it a full control over the business which it has to transact. But how is it with the Audit Board? That Board has no power to compel obedience on the part of those over whom it is placed. It has no power to compel them to bring in these accounts. When these accounts are brought in, if an account is not satisfactory, the Board query it and send it back, and may surcharge the accountant. But the Board has no power to compel an immediate answer to the queries. Thus the Audit Office, in a letter to the Treasury of the 28th of February, 1849, complain of the want of anxiety of the accountants to answer the queries put to them, and recommend provisional surcharges to remedy that evil. Then, there is no power in the Commissioners to compel the immediate production of particular papers or documents, and none to arrest accountants and secure balances of public money without a slow and circuitous proceeding through the Court of Exchequer. Another defect must not here be omitted. Dr. Bowring, in his Reports on public accounts, points out that accounts are not audited in the form in which they are brought into the office. They are carried in in the form of the accounts of the particular department from whence they come, and then they have to be stated, being altered and put in the form required by the rules of the Exchequer, and then so declared. Now, Dr. Bowring and Sir H. Parnell both recommended a perfect uniformity of all accounts in every department—according to the Italian or commercial system—and that the account should be carried in in the form in which it is to be audited. This would save much time, for the process of stating the account after it is carried in, sometimes takes a month or even more. But the chief defect of the system pointed out by those gentlemen is, that the Board of Audit is not an independent efficient department, for want of power over its own business. Dr. Bowring, in his Reports, refers to the French Court of Accounts as a model of what a Board of Audit ought to be. That Court has no arrears. It audits the public accounts of France punctually from year to year without leaving any arrear. At this late hour of the night, I ought not to go into details. I shall, therefore, only make a very few more observations. The Court of Accounts is a regular body of independent Judges, who have all the machinery necessary for the audit of the public accounts. The Court has full jurisdiction over all accountants, and power to enforce its orders and decrees, both to compel accountants to bring in their accounts, and to enforce all its requisitions and orders during the process of audit. Thus the Court of Accounts has entire control over the business with which it is entrusted by law, without reference to, or dependence on, any other power in the State. In some cases it sits publicly, and hears judicially matters arising between the Crown and accountants. This remarkable institution also performs divers other duties, arising out of the audit of accounts, and highly advantageous to the public service. I am anxious to direct the attention of the House and the Government to it as an important example contrasted with the imperfect and comparatively inefficient system existing here. I speak of the system, because the persons employed in the Department of Audit are in no way to blame, and they will bear comparison with any other class of public officers. It is to the defects of the system that I desire to call the attention of the House. I have now only to thank hon. Members for patiently listening to my observations on this dry subject, especially at so late an hour of the night.


said, he fully admitted the importance of the subject, and his attention had been directed to it. The hon. and learned Member's remarks raised two questions: first, the state of legislation affecting the constitution of the Board of Audit; and, secondly, the administration of the whole system of audit under the existing law. He had had under his consideration the consolidation of all the various Acts relating to the audit without making any alteration in the audit itself. The question was, should the character of the audit, which, by a long series of statutes, had led to the establishment of the present Board of Audit, be changed? There were a number of departments consolidated in that Board, but its powers were not so extensive as the Chamber of Accounts in France, which possessed judicial powers as well as the powers of an ordinary audit. The present administration of our Board of Audit under the able superintendence of Mr. Romilly was anything but inefficient. At the same time, he was not aware that the Board as it existed was not efficient for its purpose. The hon. and learned Gentleman appeared to think that the transfer of the duties of the Commissariat to the War Department was detrimental to the public service. That subject had been discussed on a former night in Committee of Supply, and since that debate a full explanation of the manner in which the transfer from the Commissariat to the War Department, and the retransfer to the Treasury, and the grounds upon which it had taken place, had been laid upon the table. The transfer was consequent upon the consolidation of the business of the Commissariat with that of the War Department. In the business of the Commissariat there might be said to be two distinct operations. One was in the nature of banking, it being the duty of the Commissariat to keep the military chest supplied in all parts of the world. This business was transferred to the War Department, but it being found that that department was not fitted to transact it, it was retransferred to the Treasury. The other department of the Commissariat was that which had to do with provisions, clothes, fuel, and the transport of men and stores. That which was more of a military character, used to be managed by the Treasury, under the responsibility of the assistant secretary, but was transferred to the War Department when the various branches of that department were consolidated. But the Treasury had no separate audit, and, as the most convenient course, those accounts were referred to the Audit Office, where they were audited by a special staff of clerks. When, however, the transfer took place, there was no longer any necessity for keeping up this department. The details of the naval and military accounts had been always conducted by those departments themselves—the Admiralty auditing the one, and the War Office the other; but when the transfer took place it was found convenient to place the audit of the whole of the naval and military accounts in the same hands. Those accounts were accordingly sent to the Audit Office, where they underwent a full investigation; the vouchers were examined, and every item was placed under its proper head in regard to appropriation, so that there was an audit of appropriation as well as of authentication of payment. The whole mass of naval and military accounts were subjected to this ordeal, which he submitted was sufficient.


said, at that period of the night it was impossible to discuss a question of this nature, but the audit of the army accounts was undoubtedly a subject of great importance. He confessed he did not precisely understand what was the present state of that audit, but he hoped that before the Estimates passed through the House a full discussion would take place upon the question, and he might at the same time observe that he had given notice of a Motion which would bring the whole subject under the consideration of the House. He was glad to find that the Commissariat accounts, or what was called the Commissariat chest, had been retransferred to the Treasury, for he had always been of opinion that those accounts could not be satisfactorily kept by the War Office. So far as his recollection served him, the details of the Commissariat accounts had formerly been audited at the Treasury, and he believed they were subsequently transferred to the Audit Office. It was thought at that time that all public accounts should be audited by the Audit Board, and many accounts were transferred from separate auditors and controllers, and were handed over to that Board. He thought that was a right principle, and that the Audit Board ought to be auditors of all public accounts. The right hon. Gentleman the Chancellor of the Exchequer had stated that the naval accounts were audited by the Admiralty, and it was true that the accounts were checked there; but clerks of the Audit Office were present, by whom those accounts were overhauled. Although, therefore, the accounts of the navy were not actually audited at the Audit Office, they were audited under the eyes of the Audit Board. Some years ago, at his recommendation, a Commission was appointed, at the head of which was Mr. Larpent, of the Audit Board, in order to ascertain to what extent the army accounts could be placed under the control of that Board. Some alterations were consequently made, with the nature of which the House was not sufficiently acquainted, and he did not know how far the Audit Board exercised any control over the accounts of the army. For his own part, he thought such a check ought to exist, and that the Audit Board ought to possess the same check with regard to the Commissariat expenditure that they exercised with respect to the naval expenditure. He hoped the Chancellor of the Exchequer would consent to lay upon the table the Report of the Commission over which Mr. Larpent presided in 1841 or 1842, and also copies of the Minutes relating to the transfer of the Commissariat accounts. He regretted that the House showed so little anxiety with regard to this subject, which, in his opinion, was one of the most important that could engage its attention.


said, he fully agreed with the right hon. Baronet that the subject now under consideration was one of very great importance, and he thought they were much indebted to the hon. and learned Gentleman who had brought it under the notice of the House, although he had done so at a moment which was not favourable for a full discussion of the subject. He had been glad to learn from the observations of the right hon. Baronet (Sir F. Baring) that on a future occasion the attention of the House would again be called to the question. He did not rise for the purpose of continuing the discussion, but merely with the view of showing that respect which he thought the House ought always to evince towards any hon. Gentleman who brought under its notice subjects of importance which, from accidental circumstances, did not receive the attention to which they were entitled. The Audit Office, like everything in this country, had been the creation of time and circumstances, and had very gradually attained its present importance. In the first instance only one or two accounts were subjected to its revision, but it now exercised control over a large portion of the public expenditure. There could, however, be no doubt that the position of the Audit Office, considering how vast the expenditure of this country had now become, was not of so satisfactory a description as it ought to be. In his opinion an audit administration should be complete and independent. The whole accounts of the country should be placed under its control, and it ought to be directly responsible to that House. The taxes were voted by that House, which represented the people by whom those taxes were paid, and he conceived that the auditors of the public expenditure ought to make their reports directly to that House. He thought, at all events, there could be no difference of opinion as to the importance of rendering the audit administration complete. He hoped the attention of the Government would be directed to this question, and, although this was the first discussion he recollected on the subject, he trusted that it would be followed by others which would lead to a more efficient audit of the public accounts.


said, no doubt nothing could be more important than that there should be a good and complete audit of the public accounts, and most especially of the army accounts, but it was a great mistake to suppose that the audit of the military accounts was not complete and effectual for its purpose. It was not conducted by the Audit Office, and in his opinion it could not be. He was speaking of that great mass of the public expenditure which consisted of the money voted for the army's service—that was to say, for the pay and allowances of the regular Army, the Militia, and Volunteers. Now what was the audit that was required for that service? The whole of the money voted for the pay and allowances of the troops was issued through the regimental paymasters, periodically, upon estimates which they sent beforehand of the probable expenditure of the next month or two months. But it was issued to them in conformity with regulations framed and issued by the War Office, involving most minute details and providing for every variety of circumstances attending the services in which officers and men could be employed. When the accounts of the regimental paymasters came in, what was the object of the audit? It was twofold: in the first place, to ascertain that no sum had been issued for which the paymaster had not a voucher to show that it had been actually expended; but next, and almost equally important, was to ascertain that it had been issued in conformity with the regulations. Well, now, the Board of Audit were not competent judges of that matter. They did not know the regulations of the army. The War Office was the easiest and readiest judge of whether the sums issued and vouched for, as having been expended, had been issued in conformity with the regulations. The business of the very able men who composed the War Office was to check those accounts, and to report to the Secretary for War those issues which had been made, but not vouched, or which, if vouched, were not in conformity with the regulations of the service. If the issues had been made, and were not vouched, the case was very simple. The paymaster and his sureties were liable for the amount. But it constantly happened, and in an infinite variety of cases, that issues were made, and properly vouched that the money had passed out of the hands of the paymaster, but issued in a manner not in conformity with the strict regulations of the service. Those cases were referred to the Secretary for War, for him to determine whether they were justified by the particular circumstances of the case. That the auditors could not possibly be competent to determine; it could only be determined by the authority that issued the regulations, and therefore when hon. Members thought that the great bulk of the army expenditure could be audited by the Board of Audit, he could state that such an arrangement would involve a great amount of correspondence and delay. What would happen? The auditors would find a charge made by the paymaster not in confirmity with the strict regulations of the service. They could not judge whether it would be proper to allow that charge, and they would have to refer to the Secretary for War, and ask him whether, after the explanation of the paymaster, the charge should be allowed. The Secretary for War would write to the auditors to tell them what they were to do, and instead of being an efficient audit, it would only involve much correspondence and delay. He spoke from some knowledge of the matter—he held for some years the office of Secretary at War, and he knew that it was impossible for anything to be more strict and more prompt than the audit of the accounts of that part of the public service which related to the pay and allowances of the troops, which of course constituted the great bulk and almost the whole of the Army Estimates. In the present year other services had been combined—namely, those that belonged to the Ordnance. The accounts of the Commissariat and stores were of a different description.


said, he thought it was quite plain from the statement of the noble Lord that the question raised by the right hon. Baronet the Member for Portsmouth (Sir F. Baring) could not rest where it was. From that statement it appeared that the Minister for War was to make regulations, to see whether they were complied with, and, if not, to decide whether they should be relaxed. Now, it had always been understood that it was the duty of the Treasury to check and control the other departments whenever the Audit Board reported that anything was amiss. The noble Lord had given a strong opinion as to the issue of pay, but had passed slightly over the Commissariat and Ordnance, though the House ought to know by an independent audit whether the sums voted for those branches were applied to the purposes for which they were intended.


said, that the whole of the expenditure in the Commissariat and what used to be Ordnance Departments came before the Board of Audit, which saw that every charge had a voucher, and that every item was brought under its proper head in the Estimates, so as to correspond with the Appropriation Act.


said, that the arrangement was a very convenient one, and ought to be brought before the House more clearly than it had hitherto been. Nevertheless, with respect to the large sums payable in the army and Ordnance he still thought there should be an independent audit, to decide, among other things, in what cases there should be a departure from the established regulations.


said, the present state of the audit of the accounts was very unsatisfactory, and the explanation of the Chancellor of the Exchequer showed that some great amendment was necessary. It appeared to him that they would never arrive at a true audit till a power was vested in the auditors to demand that within a certain period of time accounts of all the moneys voted by that House should be laid before them. It was with regard to the army there would be a difficulty, because the regulations were made by the War Office; but why should not the regulations be laid before the auditors?


said, he would beg to ask the right hon. Gentleman the Chancellor of the Exchequer whether he would lay before the House certain Returns made in 1849, of the accounts then in arrear at the Audit Office. The House would then know better what it was about than it did now. If there was an independent Audit Board, like the Board of Accounts in France, it would be the duty of the Secrefor War to lay before it the regulations made by him involving expense, and then there would be no difficulty in the audit.

Subject dropped.

The House adjourned at a quarter after Twelve o'clock.