The Reluctant Armchair Auditor

Sorting spending fact from fiction

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The Reluctant Armchair Auditor is away

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Time to top up my tan and vitamin D levels.

I will be back unless I retire fully at my destination. (That is a possibility.)

The Reluctant Armchair Auditor

Written by reluctantarmchairauditor

January 22, 2011 at 3:40 pm

Posted in Uncategorized

The less than 1% club

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Here’s a list of councils that look to be losing less than 1% of their ‘spending power’

Poole -0.97%
Hampshire -0.95%
West Sussex -0.65%
Wokingham -0.63%
Richmond upon Thames -0.61%
Buckinghamshire -0.60%
Surrey -0.31%
Isles of Scilly -0.14%
Dorset 0.25%

Written by reluctantarmchairauditor

December 13, 2010 at 5:15 pm

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What the BBC could have asked

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Like many in the public sector (or dependent on it to make a living) I tuned into today’s Politics Show on the BBC to hear the Secretary of State questioned about the Localism Bill whose gestation is almost at an end. I also thought they would apply a bit of a squeeze on the local government settlement also due tomorrow.

I was disappointed on both counts. The Secretary of State was offered a series of easy leg-side full tosses which he had no compunction about heaving over the boundary rope. When a little bit of leg theory was applied – how would state intervention work in an individual’s disposal of his or her assets – you could hear the thump of aspiration into the too solid flesh of reality.

Too much time was spent on the Secretary of State’s views on the frequency of bin emptying. (I never knew that disposing of a person’s left-over chicken tikka was a fundamental human right – outside of Armstrong and Miller, of course.) Blow me down we also had a mention of Winterval again.

Winterval! It is an ex-story. It has ceased to be. It has shuffled off this mortal coil. It is as dead as the parrot. Instead, with the BBC (and others) it seems it is merely resting. True the story exposes the limits of the authoritarian localism of some leading politicians but every time it’s repeated it merely bolsters its credibility.

I would have far preferred the BBC to have tested out how and by whom the tab for all the new localism will be picked up. How can any community exercise a right to do something without the finance? The fact that I have a right to go to Wimbledon does not mean much if I cannot afford the ticket or have the means to get to SW19 in June. Of course I’m a finance wallah so I would obsess about this but money is important.

Another area of interest is around the practicalities of binding referenda on council tax increases. This is going to make life between budget setting and raising council tax bills pretty interesting. How will the question be put in the referendum? Presumably you only want the issue tested once? You don;t want an endless series of ‘higher’, ‘lower’ plebescites? How about – in the interests of equity – giving electors the right to veto a budget with a council tax increase they believe is too small?

Of course I am tempted to wonder if this is a universal principle why it shouldn’t be applied to our national budget as well? Obviously I know why. I know too that some of those objections have equal force locally. Should a local administration elected on a platform have to resubmit its programme to the electorate on the off-chance it might have changed its mind? Will councils be able to spend money to fund a campaign to support their argument? Will anti-rise campaigns have their costs met from the public purse too.

Armchair auditors will have some interesting digging around to do in establishing the costs of all this localism.

Written by reluctantarmchairauditor

December 12, 2010 at 4:37 pm

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Hutton debunks a myth

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A slew of cancelled client meetings because of the weather leaves me free to catch up with the news. My eye has been particularly taken by what he has to say about using the Prime Minister’s pay as a benchmark.

You will probably be familiar with the figure of £142,500. It’s been used as a useful cricket bat to thwack evil public servants. Here’s a typical example from Daily Mail. Ministers have enjoyed themselves with this too.

Those of us with a passing understanding of how to work out the total value of a remuneration package have treated the benchmark with the derision, sorry professional scepticism, it deserves.  About the only thing it had going for it was simplicity. But in my experience simplicity is often simply an excuse for crass reductionism.

Senior public sector managers with whom I come into contact have been grinding their teeth over the PM salary benchmark for ages. For perfectly sensible reasons none of them broke cover. Trying to defend yourself risks getting the treatment that John Ransford got on BBC’s Newsnight. A week later and Mr Ransford got a haircut of over £140,000 on his base salary.

For people like me who like numbers to be materially accurate Hutton has done us all a profound service. Have a look at Box 2E on page 56 of the Interim Report for the detail of the debunking. Suffice it to say he identifies the two flaws with the benchmark.

First, it nowhere near reflects the total value of the PM’s remuneration package. If you add in the salary the PM has chosen – and been able to forego – with the value of his pension, accommodation and so on by any calculation the package is worth more than £500,000. That’s probably right but it’s a rather different benchmark isn’t it?

The second flaw is, of course, that the PM’s remuneration package is not determined in a labour market but rather in a political stock exchange. PMs take a punt on low income yields during their time in office correctly calculating that simply by holding the office they hugely increase their worth. Capital growth of a sort. If you doubt that look at the before and after shots of Mr Blair’s London homes.

Thank you then Mr Hutton but I do not think we should hold our breath for the thundering headline that says, ‘Almost all public sector workers paid less than the PM.’

Reluctantly back to the armchair I must go.

Written by reluctantarmchairauditor

December 1, 2010 at 10:09 am

Garbage in, garbage out?

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We are in the first week of this brave New World of government transparency about its spending.

I have downloaded the spreadsheet, almost giving my steam-powered PC a heart attack, and played around with it. I’m not happy at all.

I kept asking myself whether all these lines of data were proof once again of the old adage: ‘grabage in, garbage out.’ The first question any auditor needs to ask themself is this: ‘Is this data from a reliable source?’ How do we know? How can we find out?

The National Audit Office (NAO) is responsible for auditing the accounts of central government departments. The NAO audit opinions will tell us something about the quality of the financial systems that produce the raw spending data we’ve been given.

What’s the score then for 2009/10 accounts? It’s difficult to tell. The NAO website may make sense to someone in the system but from the outside it’s incredibly hard to get anything about audit opinions out without a trawl through the news release archive.

Maybe I’ve missed something but perhaps the powers that be might consider a table somewhere prominent on the site that shows each department and gives their audit opinion status. Just a thought. The Comptroller and Auditor General (CAG) does produce an annual general report but you’ll see the latest one was published in February 2009 and covers the 2007/08 year.

Reassuringly 50 of the 56 sets of accounts audited by the NAO got unqualified audit opinions. Two of the six malefactors (DWP and MoD) feature on the bad-boy list again in 2009/10 along with Defra for the following reasons:

Hardly inspiring is it?

More important from a value for money perspective is what the NAO has to say about the effectiveness of financial management in government departments. Have a look at the NAO  financial management in CLG report to get a flavour and remember this was the position over a year ago. Goodness knows what is happening now as budgets are cut and staff numbers reduced.

So what are the issues from all of this discussion for the armchair auditor?

Firstly, we have no easy way of knowing whether the underlying financial systems used to generate all this information are actually any good. We can infer from the NAO that they are for most departments but that’s not quite the same. There’s a further question too that even for the best systems the quality of the output is largely determined by the quality of the input.

The weaknesses in financial management reported by the NAO may explain why we are all struggling to make anything at all out of the data that has been released.

The second, and final point, I’d make is this. Everything I know from all the change programmes I have ever seen is that they generate financial management and governance headaches of huge dimensions. These need skilled and knowledgeable people to sort out. Just have a think about what the staffing cuts being put on the table mean for promoting sound financial management and through it VFM for us taxpayers.

Not a comforting thought is it?

Written by reluctantarmchairauditor

November 24, 2010 at 7:45 am

Why the world needs a reluctant armchair auditor

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Frankly, at my time of life I have better things to do than muck about nosing through the tidal wave of ‘stuff’ the government is now shovelling out of virtually every door and window. But I’m more that a little ticked off that the government apparently thinks rigorous and effective audit of public spending can be outsourced to any gaggle of saloon-bar pundits.

I’m a finance professional and I’ve been an auditor. Politicians’ rhetoric about wanting an army of armchair auditors has got so far up my hooter that I’ve reluctantly dragged myself out of the comfort of my semi-retired armchair. My intentions?

Twofold. Firstly, to campaign for ‘real audit’. Secondly, to be a bloody nuisance. If we are going to rely on armchair auditors then let’s at least give them the tools to do the job. That doesn’t mean treating us like mushrooms.

I’m going to nose around the ‘stuff’ that’s piling up around this army of armchair auditors and see what, if anything, can be made of it.

It’s not how I envisaged spending my sunset years but I’ve long operated under the maxim that anyone who agitates to get a job ought, almost without exception, to be forcibly excluded from doing the thing they want to do. Look at the political classes and you’ll catch my drift. That’s why I am reluctant and proud.

Written by reluctantarmchairauditor

November 21, 2010 at 10:00 am

Posted in Uncategorized