top stories

The Wales Office

Comments from ACCA
June 2003

Executive Summary

The Association of Chartered Certified Accountants (ACCA) is pleased to have this opportunity to provide comments to the Wales Office on the Draft Public Audit (Wales) Bill - the draft bill. These comments have been developed with our Public Sector Technical Issues Committee, a group of experienced accountants who work in the public sector.

ACCA welcomes and agrees with the main objective of the draft bill which is to create a single body in Wales which will be responsible to the Welsh Assembly for public audit.

We consider, however, that the bill does not go far enough. For example, we consider that it should provide for the Auditor General for Wales to have responsibility for auditing or for appointing the auditors for all Assembly Sponsored Public Bodies and higher and further educational corporations. In addition, the Auditor General for Wales should be given statutory access to bodies or companies in receipt of grants from the Welsh Assembly, registered social landlords, train operating companies, and private finance initiative contractors.

The budget for the work of the Auditor General for Wales should be provided direct by the Welsh Assembly. The only exception to this should be for local authorities which, in deference to their democratic mandate, should pay approved levels of fees to the Auditor General for Wales.

Detailed Comments

Objectives of Draft Bill

ACCA welcomes and agrees with the main objective of the draft bill which is to create a single body in Wales which will be responsible to the National Assembly for Wales for audit of public entities in the Principality. In future, the Auditor General for Wales will be responsible for his existing functions and also for the functions currently exercised in Wales by the Audit Commission for Local Authorities and the National Health Service in England and Wales. This move should improve the administrative efficiency with which public audit is delivered in Wales whilst protecting and enhancing the democratic accountability of local government. The additional responsibilities gained by the Auditor General for Wales should also help to strengthen his independence and improve his access to appropriate expertise.

Scope of the Auditor General for Wales

We consider that the draft bill should provide for the Auditor General for Wales to have responsibility for auditing or appointing the auditors for all Assembly Sponsored Public Bodies and higher and further educational corporations. In addition, as Lord Sharman recommended in his report, the Auditor General for Wales should be given statutory access to bodies or companies in receipt of grants from the National Assembly, registered social landlords, train operating companies, and private finance initiative contractors.

Thus, in principle, the Auditor General for Wales should have responsibility for the audit of all public bodies in Wales either directly or by appointing others to undertake this task. In addition, the Auditor General for Wales should be able to follow public money and ensure that it is only used for the purposes for which it was given and to ensure that the objectives of such funding are achieved efficiently.

In the case of higher and further education corporations, we accept that the pressure of work at certain times of the year would make it impractical for the Auditor General for Wales and his staff to undertake directly the audit work at each institution. If, however, the Auditor General for Wales was responsible for the appointment of the auditors of these institutions, this would underline their accountability to the National Assembly for the probity, propriety and efficiency with which they used their funds.

In addition, such an arrangement would enable the Auditor General for Wales to produce a code of audit practice for the sector and to provide supplementary guidance for the undertaking of the required audit work. The Auditor General for Wales would also be in a position to ensure that the work completed by the auditors met the required standards.

We would make a similar argument in recommending that the Auditor General for Wales or his appointees should also be responsibly for certifying claims, returns or accounts in respect of grants, subsidies and other payments made to the bodies in respect of which he has audit responsibilities. This should include monies paid to the bodies by the National Assembly or other public bodies including the European Commission. In addition, this would avoid the situation where an authority could �shop around� for a positive opinion on a particular grant claim.

Public Bodies Subject To Audit

Clause 59 of the draft bill covers the respective powers of the Secretary of State and the National Assembly with respect to amending the list of those bodies which are to be subject to audit by the Auditor General for Wales. We concur with the danger identified in the explanatory notes to the draft bill that removing entities from the list �could potentially be used either to save money or to avoid unwelcome reports into certain bodies�. We do not agree, however, with the recommendation contained in the draft bill that only the Secretary of State should have the power to remove bodies from the list. A more satisfactory solution would be for such a removal to have to be approved by both the Secretary of State and the National Assembly.

Fees for the Auditor-General

ACCA agrees, in recognition of the democratic mandate of local government, that local authorities should be required to pay the Auditor General for Wales a fee for the work undertaken in their organisations. We do not accept, however, that this principle should be extended to other bodies as required for in section 93 of the draft bill.

We consider that, in principle, the Auditor General for Wales should be directly accountable to the National Assembly for Wales for the audit of public bodies in the principality. The only exception to this rule should be for local authorities where the Auditor General for Wales should have a duel responsibility to the National Assembly and to the local council. Thus, with the exception of local authorities, the budget for the Auditor General for Wales should be provided directly by the Assembly rather than through fees paid by the entities which are audited. As those who pay the piper generally call the tune, the payment of fees to the Auditor General for Wales would inappropriately indicate influence over the conduct of the audit. In addition, it is administratively inefficient for the Auditor General for Wales to collect its income through the bodies which it audits.

Time Limits for the Publication of Accounts

Clause 56 of the draft bill requires Welsh NHS bodies to submit their accounts to the Auditor General for Wales no later than 5 months following the financial year to which they relate. The Auditor General for Wales is then required to lay the audited accounts before the Assembly within a further four months. These timescales appear to be over generous. For example, the Accounts and Audit Regulations 2003 for England provide for a transitional timetable which will eventually require local authorities to approve their audited accounts within 3 months of the end of the relevant financial year.

We do not consider that clause 56 of the draft bill complies with best practice for prompt publication of financial statements. In addition, this clause will also cause problems with the proposed introduction of "whole of government accounts" as the accounts from Welsh entities may delay this process. All public bodies should be required to move to the position where their audited accounts are published (in the case of local authorities) or laid before the Assembly within 3 months of the end of their financial year.

ACCA

We are disappointed that the name of our Association (the Association of Chartered Certified Accountants) is misquoted in clauses 1 and 14 of the draft bill.

Back to top