Audit Services: Cost-Effectiveness (Hansard, 18 March 1993)

§ The Parliamentary Under-Secretary of State, Department of the Environment (Lord Strathclyde)
My Lords, the bodies whose accounts must be audited by auditors appointed by the Audit Commission are specified in Section 12 of the Local Government Finance Act 1982. The principal audited bodies are local authorities, probation and pension authorities, drainage boards and health service bodies. The commission, not the body being audited, is responsible for the cost-effectiveness of the audit service.

§ Baroness Gardner of Parkes
My Lords, I thank my noble friend for that Answer. My concern is with who regulates the regulators. I serve on a health authority. We are most concerned when told how many days are required and the amount is set for us. It is entirely outside our control. Can my noble friend tell me why there is no element of competition or any way in which the bodies using the service can speak up for better terms or for competitive quotes? At the moment anyone using a private accountant is querying his expenses.

§ Lord Strathclyde
My Lords, the whole point of the Audit Commission is to make sure that the audit is done in the proper way. I sympathise with my noble friend's point as to who regulates the regulators. The hourly rate is set by the Audit Commission following consultation with local authorities, health service organisations and the accountancy bodies. The number of hours is negotiated by the auditor and the body concerned, but the Audit Commission super-vision system includes checks on whether the number of hours is in fact reasonable.

Lord Bruce of Donington
My Lords, will the Minister cause an investigation to be made into why the district auditor to the Westminster City Council finds it very difficult to exercise his powers? Bearing in mind the quite open scandals that have occurred in connection with the cemeteries and also the gerrymandering as regards types of building, will the noble Lord ensure that the investigation is carried out as a matter of expedition?

§ Lord Strathclyde
My Lords, I shall certainly look into whether or not there is the problem described by the noble Lord.

§ Lord Finsberg
My Lords, following the answer to my noble friend Lady Gardner of Parkes, can my noble friend say why it is not possible for the local authority or the health authority to go to whatever audit firm is needed provided that guidelines have been laid down by the Audit Commission in exactly the same manner as, for example, guidelines were laid down for those valuing for council tax purposes and no one was forced to use the district valuer? As we believe in privatisation, does my noble friend agree that the opportunity should be available for responsible bodies to go to outside firms if they wish?

§ Lord Strathclyde
My Lords, it is government policy, and has been for some years, that the Audit Commission should be the responsible body for making sure that the audits of public bodies are done in the proper way.

§ Lord Williams of Elvel
My Lords, can the Minister advise us how we can complain about the Audit Commission if we are not satisfied—as the noble Baroness, Lady Gardner of Parkes, is not satisfied —with the service which is given? We are told that we are all customers of the Inland Revenue. Presumably, health authorities and other bodies are customers of the district auditor and the Audit Commission. Can the Minister tell me how, as customers, we set about getting proper value for money?

§ Lord Strathclyde
My Lords, customers of the Audit Commission should complain first to the commission; secondly, to the National Audit Office, its auditors; and, thirdly, to my department, the Department of the Environment.

§ Lord Cockfield
My Lords, perhaps I may ask my noble friend a simple question. If the audit is carried out for the purposes of the Audit Commission, why should that body not pay for it?

§ Lord Strathclyde
My Lords, the Audit Commission is set up as a body to be fully funded by the fees which it charges its customers.

§ Lord Grimond
My Lords, harking back to the question asked by the noble Lord, Lord Bruce of Donington, can the Minister say exactly what powers the auditors have if they are dissatisfied with the accounts which they are auditing?

§ Lord Strathclyde
My Lords, I believe that that question is beyond the scope of the one of the Order Paper.

§ Baroness Gardner of Parkes
My Lords, will my noble friend the Minister ensure that the consultation which he has referred to between the body setting the charges and the one paying it is really being carried out? Will he assure the House that that will be so because, as I understand it, the charges are simply imposed?

§ Lord Strathclyde
Yes, my Lords. I shall make sure that consultation is being carried out. I shall write to my noble friend.

§ Lord Clark of Kempston
My Lords, does my noble friend agree that, as regards the Audit Commission and government departments, there are very many personnel looking for value for money? Would it not be a good idea to extend that to district audits?

§ Lord Strathclyde
My Lords, currently the Audit Commission does not audit government departments: it is done by the National Audit Office. That is another issue altogether.

§ Lord Williams of Elvel
My Lords, who, then, audits the National Audit Office?

§ Lord Strathclyde
My Lords, it is trusted to do its own auditing, but ultimately such bodies are responsible to Parliament.