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Public audit a “crucial part of our democracy”

Author: ICAEW Insights

Published: 15 Dec 2022

The Comptroller and Auditor General and the Chair of the Public Accounts Committee deliver keynote speeches at ICAEW Public Sector Conference 2022, emphasising the important roles of culture and audit in ensuring good governance.

Gareth Davies, the Comptroller and Auditor General and Head of the National Audit Office (NAO), delivered the opening keynote address at the second ICAEW Public Sector Conference. Speaking on this year’s theme of “getting governance right”, Davies told more than 220 virtual delegates that the “dynamic between the independent audit agency and the elected politicians on the Public Accounts Committee (PAC) is a powerful way of scrutinising those in government and is a key part of our democracy in the UK”.

Davies also drew on the findings from the NAO’s reports to outline what he saw as the key features of good governance in the public sector, including staff with the appropriate skills, clear organisational objectives, good-quality data and a “transparency first” approach. Dame Meg Hillier MP, Chair of the PAC, echoed this message in the closing keynote speech, describing transparency as “an ally of good governance”.

The importance of organisational culture in good governance was a message that attendees heard throughout the day. Hillier noted that “governance is not just about process, it also has to be embedded in the culture”. Giving a similar message, Iain Murray, CIPFA’s Director for Public Financial Management, said “if you go through the process [of risk management] and you just plough on regardless, you are missing the point”. Murray was speaking as part of a panel session on risk management in the public sector, which also featured Clive Martin, the Head of the Government Risk Profession at HM Treasury; Matthew King, a Non-Executive Director at Funding Circle; and Mfon Akpan, the Director of the Financial and Risk Management Hub at the NAO.

Adele Taylor, Resources Director at the Royal Borough of Windsor and Maidenhead, also spoke of the importance of culture during another panel session on lessons learned from failures of governance in local authorities. She stated: “If you can’t have people that can step up and ask the right questions without fear of being got rid of or being bullied out of the place, you are always going to have a problem.”

In the same panel session – which also featured Paul Dossett, Head of Public Sector at Grant Thornton – in response to an audience question about whether you can have too much governance, Sir Tony Redmond, author of the Redmond Review into local audit, warned about a culture of “ultra-caution” leading to bureaucracy and highlighted the importance of proportionality.

The significance of both external and internal audit in ensuring good governance was another central theme of the Conference and the subject of a well-attended breakout discussion group led by Ann-Marie Harkin, Executive Director for Audit Services at Audit Wales. In his keynote speech, Davies highlighted the role of auditors in ensuring public bodies are honest about their performance, stating it was a “key part of our job at the NAO”. When asked what was the most exciting thing about working at the NAO, Davies did not hesitate in his response: “It gives us the opportunity to make a real difference”.

Several speakers warned against public sector bodies reducing internal audit and other governance functions in response to tight spending settlements, with Hillier stating that public sector bodies “can’t skimp on governance”. In a similar vein, Davies described cutting the internal budget as the “worst thing to do to save money”.

With the focus on the importance of audit, discussion at the conference inevitably turned to the state of local audit in England following the news that only 12% of 2021/22 local government audit opinions were published by the deadline of 30 November 2022. Hillier described the situation as a “great crisis” and stated it was a “really big concern” for her committee. She worried that it undermined the quality of the Whole of Government Accounts, of which she declared herself a “big fan”. Similarly, Taylor acknowledged it concerns her that audit delays meant that she did not have “the professional backing that everything is true and fair” when she signs off grant returns to central government, though she stressed that she would not sign off a return lightly and drew on assurance from other sources such as internal audit.

Striking a more optimistic tone, Redmond spoke about the opportunity that would come from the implementation of the recommendations of the Redmond Review, including that all local authority audit committees should have one independent member. Endorsing the recommendation, Hillier issued a rallying cry to attendees to step up and become an independent member of an audit committee. “It will be one of the most noble bits of public service that you do,” Hillier said.

To watch the conference sessions on demand, please register for free here.

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