Comment / Watchdog abolition will leave a gap

Audits may now transfer to the private sector, but what else will the NHS lose with the demise of the Audit Commission?

When communities and local  government secretary Eric Pickles announced the shock abolition of the Audit Commission last month, he went straight for the throat. There was no consultation with staff, audited bodies or the public. And not much in the way of reasoned argument.

One could have imagined the move being explained by the suggestion that the watchdog had fulfilled its remit, highlighting key achievements, but that a new model was needed for new challenges. The commission was created by ministers and so can perfectly justifiably be disbanded by ministers.

Instead we were told that ‘the corporate centre of the Audit Commission has lost its way’ and that it had become a ‘creature of the Whitehall state’. The evidence offered – torn apart by most sensible media – included days at the races (in fact, the hire of conference facilities at Newmarket on non-race days), bagel bills (catering for visitors attending full-day meetings) and pot plants (apparently government buildings are devoid of greenery).

Engage any NHS finance director in a debate about the Audit Commission and most would suggest areas that could be changed – probably starting with the level of their audit fees. But I would argue that most would amend rather than abolish.

The commission has done huge amounts in the public sector and the NHS and in abolishing the financial watchdog we need to understand what we are throwing away. Alternative arrangements will need to be put in place for many of the activities the commission has carried out.

Audit will clearly continue, with private sector auditors expanding their audit activity beyond the current 30%. But will the promised £50m savings materialise? Will competition really drive down audit costs? Or will hindsight show us the commission’s supervising and fee-setting role in fact kept prices down? Will common challenges be identified? And will we get the same objectivity?

While accepting the audit of accounts, some NHS managers, outside FTs, are less convinced by the other aspects of the audit. But even here, most managers point towards national studies that have provided local value. Who else might we expect to compile best practice on clinical engagement, medium-term financial planning, joint financing and board assurance? What about the important work undertaken on learning from financial failures?

At a time when the service is looking for unprecedented productivity improvements, we need some mechanism for identifying shared problems and spreading best practice.

Others point out the role the Audit Commission has had in streamlining the NHS financial management system. It was instrumental in the abolition of the nonsense that was the resource accounting and budgeting ‘double whammy’. It has tirelessly made the case for financial management being a responsibility for all – not just the finance department. The fact that this is now more widely accepted – along with the recognition of the special role that clinicians have in financial management – is at least in part down to the commission.

There are also all sorts of professional activities that will be lost. Commission staff play a major role on many Department of Health working groups – to say nothing of their contribution to HFMA groups and projects (such as the popular guides to accounts issued free to all non-executives).

Then there is the auditor’s  local evaluation and use of resources assessment. There have been criticisms over the years about tick-box mentality and lack of subjectivity. But the assessments have provided hard evidence of an improvement in financial management in successive years – and have arguably driven some of that improvement. Against all this, £50m savings may seem small change.