The National Audit Office perspective: Police Audit Louise Bladen Director, Home Affairs Value for Money audit June 2014 Helping the nation spend wisely
The NAO’s audit responsibilities in the police sector Helping the nation spend wisely
Our role The National Audit Office (NAO) scrutinises public spending for Parliament. We help to hold government departments and the bodies we audit to account for how they use public money. Our work helps public service managers to improve performance and service delivery , nationally and locally. We are totally independent of government. Helping the nation spend wisely
Our remit for police audit • We do not audit or inspect individual police forces – those roles are performed by others. • We hold the Home Office to account for its use of public money – much of which goes to the police in the form of grant funding. • In practice this means that our VFM style reports on the police sector will look at thematic issues . • Recent publications include: Police accountability: landscape review (Jan 14) Private sector partnering in the police service: best practice guidance (July 2013) Police procurement (March 2013) Mobile technology in policing (January 2012) Helping the nation spend wisely
New local audit arrangements • The Local Audit and Accountability Act which received assent January 2014, gives the Comptroller & Auditor General (C&AG) new responsibilities relating to local audit. • From 15-16 onwards the NAO will prepare and maintain the Code of Audit Practice and will produce detailed guidance to local auditors to which they should have regard. • The Act also clarifies the C&AG’s powers to undertake work regarding the economy, efficiency and effectiveness with which local public bodies have used their resources and provides statutory access to information held by these authorities in support of such work. • This statutory access to information now includes Police and Crime Commissioners. Helping the nation spend wisely
Our work on Police Accountability Helping the nation spend wisely
Aim and scope of our report • NAO published Police Accountability: landscape review January 2014. See http://www.nao.org.uk/report/police-accountability-landscape-review/ • This timing allowed us to review the new accountability structures (post PCC elections) after they had been in place for just over a year. • The way in which accountability works in terms of roles, responsibilities and powers and how the Home Office can assess whether the system is working and what will happen in the event of failure is captured in the Accountability System Statement for Policing and Crime Reduction • We judged it was too early to conclude on whether the new arrangements will provide the Home Office with assurance that the police sector is achieving value for money. • Our landscape review approach was designed, therefore, to describe the changes to the police accountability landscape and identify potential risks to, and opportunity for, achieving value for money arising from them. Helping the nation spend wisely
Overview of the accountability system Helping the nation spend wisely
Overall conclusion “ The new policing framework has been in place for only just over a year but already it is clear that there are gaps in the system with the potential to undermine accountability both to the Home Office and the public. More work is needed to ensure that all elements of the framework are working effectively to minimize risks to value for money .” Amyas Morse, Comptroller & Auditor General 22 January 2014 Helping the nation spend wisely
Key findings – new system compared to police authorities • Elected commissioners are potentially better able to hold police forces to account and drive value for money than previous police authorities. • Elected commissioners have observed a significant increase in engagement with the public than under the previous system. • The new system provides more scope for local tensions to arise e.g. job boundaries, working relationships. • There is increased local flexibility bringing risks as well as opportunity – e.g. scope for forces to innovate and respond to local priorities but challenging for public to benchmark. Helping the nation spend wisely
Key findings – potential gaps in the framework • At time of publication HMIC did not have statutory authority to inspect PCCs. The Home Office has recently 2012 changed this in response to our recommendations. • Police and Crime Panels lack powers to act on Accountability information they receive meaning there are few checks and balances on PCCs between elections. System • Nationwide, six PCCs share a chief financial officer with their force, raising a potential conflict of interest Statement for • Gap between reliance placed by Home Office on external auditor scrutiny and work actually undertaken, creating a Policing and risk that the Home Office is not fully sighted on potential risks to VfM at the local level. Crime • Commissioners are not publishing all the data required of them limiting the public’s ability to hold them to account. Reduction • Concerns around usability of HMIC’s available benchmarking data for the public. Helping the nation spend wisely
Detailed findings on accounting and auditing practices Helping the nation spend wisely
Our findings on changing accounting practices • A key theme in our report was the extent of local variation which reforms had generated - preparation of accounts by forces and PCCs was an example of this local variation. • We heard concerns that splitting the accounts had created unnecessary work and expense – previously one set of accounts, now three. • The reforms had created unanticipated differences between PCCs and chief constables which needed to be resolved – for example VAT differences. Helping the nation spend wisely
Our findings on changing auditing arrangements • Changes to the police accounting landscape coincided with the outsourcing of police audits from the Audit Commission to private sector firms. • An absence of detailed and timely guidance on the application of the framework for the new local police bodies and their auditors in 2013 led to differing interpretation and application of accounting requirements. • In particular this was an issue around how to reflect the two corporations’ sole set -up. Helping the nation spend wisely
We examined accounts for 18 different police force areas for 12-13 and found significant variation in accounting practices Chief Constable’s Number Pension account held OPCC and group of force account status in? accounts the areas same? 1 Dormant Both Yes 5 Dormant Commissioner only Yes 1 Dormant Unknown Yes 1 Active Both Unknown 4 Active Both Yes 2 Active Both No 1 Active Chief Constable only No 1 Active Commissioner only Yes 1 Active Commissioner only No 1 Active Commissioner only Unknown Helping the nation spend wisely
It was difficult to compare accounts across the sector • Chief Constable’s accounts had nil values on their statements in some areas with all expenditure and cash flows kept in the OPCC accounts – the principal agent argument. • In contrast, in other areas, revenue spent by the Chief Constable on behalf of the PCC had been incorporated into the police force accounts. • In different local areas the pension account has been disclosed separately in the accounts of either the Chief Constable or the PCC. • The Home Office believe the reason for different interpretations is around lack of clarity as to whether Chief Constables should receive the same accounting treatment as local authorities. • The Home Office believe this will have been resolved through a Transitional Provision Order laid September 2013 which states that Chief Constables should be treated as local authorities for accounting purposes. • For 13-14 there is now updated guidance from CIPFA and an Audit Commission policy briefing – this should promote much greater consistency around accounting treatment with a clear steer away from the principal agent approach. Helping the nation spend wisely
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