When is an audit not an audit?

Some time ago in trawling through the Somerset County Council (SCC) audit papers, we found something interesting. I know that the idea of audit papers being interesting is a hard concept to follow.

Nevertheless the papers suggested that an audit of SCC’s Highways Department had revealed some concerns. Internal Auditors grade their findings as Priority 1, 2 and 3 according to how serious they are. This particular audit had three findings graded as priority 1. So you’d assume this would go to audit committee for discussion?

But no. This was what is known as an “Advisory Audit”. According to the Internal Auditors, this is not for public consumption. A new one on your humble correspondent who spent too many years toiling as an auditor. It is a review requested by management. It should therefore, according to the Internal Auditors, be treated as confidential. Why should any audit, paid for by the public purse remember, be treated as confidential? Why should it not come to the Audit Committee for public scrutiny.

However their were major issues at stake. Including an attempt by a contractor to get paid £361k that had already been paid. Something that Ian Liddell Grainger then raised in Parliament.

Having laboured the point, the Chair of the Audit Committee, Mike Lewis agreed that this was of public interest. It would be brought to audit committee. It would be discussed. And the full report would be available to public scrutiny. If only more chairs of audit committees were equally robust.

That meeting took place today. We learned that no duplicate payment was made, although it was asked for. The full audit report revealed a series of recommendation, not all of which had been implemented. And as councillor Mike Rigby pointed out, £4m of negative payments. What is a negative payment? The officers could not give an answer on the hoof, but more is promised on this in time for the next committee meeting. However the fact is that over the last 3 years £4,283,000 of negative payments have been made to Skanska. Something that should surely be understood.

Behind Mike Rigby’s question is an implication that overpayments have been made. Are these negative payments not effectively a method by which the books are squared away?

Finally Cllr Liz Leyshon put a proposal. That in future any advisory audit that had a priority 1 finding, should come to audit committee. Unfortunately this was became political, so 5 Conservatives voted against and the 3 others voted for. The committee did agree to have more training on internal audit matters before the next meeting.

All credit to Committee Chair Mike Lewis though. His final thoughts were these: “I want this to be considered during the training and to bring Liz’s proposition back to the next Audit Committee.”

Mike Rigby did not feel the debate had gone well. He told The Leveller® “I am astonished that any member of the Audit Committee would vote against a very sensible proposal to automatically see reports where major service failures have been identified. The Conservatives appear to have been whipped to vote against. Why would they do that? What do they think their role on the Audit Committee is? Or maybe they’re just trying to kick this awkward issue beyond May, in case there are elections? Given that I didn’t get an answer to my question about apparent Skanska payments to SCC, maybe there is worse to see under the bonnet.”

One comment

  • The officers could not give a reason why over £4,000,000 seemed to have been paid twice? Were they that unaware (I hesitate to say “ignorant”) of the likelihood of questions being asked that they didn’t bother to prepare?
    I only hope that whoever audits the County’s annual accounts for publication does simple but necessary processes like reconciling supplier statements to the County’s purchase ledger and the County’s sales ledger with customers’ statements. Shades of Grant Thornton and their Opium fiasco!

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