Commons slur for private sector auditors

The slur was cast by senior Public Accounts Committee member David Rendel, a Liberal Democrat, as he argued in support of the Sharman recommendations to widening the scope of the National Audit Office to monitor taxpayer funds invested in private sector partnerships, as well as audit these schemes.

Speaking in the annual PAC debate in Commons, Rendel said many private sector auditors were extremely good but added this caveat: ‘It is worth remembering what happened at Enron.

He went on to say: ‘At least one very well known private sector auditor seems to have gone way off the rails not only in failing to audit Enron properly in the first instance but then, when things started going badly wrong and the auditors were found to have been a failure, it apparently started to shred some of the papers to hide the evidence.

‘If that can be done by an audit company of the quality and prestige ofAndersen, I hate to think about what goes on in the private sector audit world.

He added: ‘There are better arguments than ever for saying that tax payers’ money is at risk, we ought to have our parliamentary auditors, the NAO, in charge of the audit’.

Rendel’s demands were echoed by PAC chairman Edward Leigh who said the NAO’s powers should include statutory access to the reports and accounts of the Financial Service Authority, the BBC and the Queen’s Civil List.

In response financial secretary Paul Boateng said he was ‘hopeful that it will be possible to make a positive response to the recommendations’ and said the government had ‘never objected in principle’ to the extension of the NAO’s statutory powers.

He said the importance of an independent audit was well recognised as a key accountability tool, and he agreed that ‘access to information associated with an audit is essential for the comptroller & auditor general.’

He said: ‘Our concerns focused on the practicalities of change, particularly how to avoid undue burdens for the private sector if non-statutory rights became statutory, and the need for assurances about the quality of audit if competitive influences were removed.’

Boateng added the government welcomed Sharman’s recognition of these concerns and the need for them to be addressed through protocols between the government and the C&AG and there had been ‘productive discussions’ at official level on the content of these protocols.