Richard Commission - written responses to the Commission's consultation document |
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Archwilydd Cyffredinol Cymru Rt. Hon. Lord Richard of Ammanford QC |
3-4 Plasy Parc Ein Cyfeirnod/Our Reference JBB/1126/03 |
| Dear Lord Richard |
| POWERS OF THE NATIONAL ASSEMBLY FOR WALES |
| I have pleasure in responding to the Richard Commission's consultation paper on the Powers of the National Assembly for Wales. |
| This response provides some background to the office of Auditor General for Wales and my relationship with the Assembly and its Audit Committee in particular. I also set out my thoughts on the current and proposed accountability arrangements for the Welsh public sector and how they might be developed if the Commission were minded to recommend significant changes to the Assembly's constitution. |
| At the outset, I should point out that I am not permitted to question the merits of policy objectives. It would therefore be improper for me to offer a view on the sufficiency of the Assembly's current powers and its relations with Westminster/Whitehall. Similarly, it would not be proper for me to take a view on whether the Assembly should continue to be constituted as a body corporate. However, the Commission should be aware that any significant changes could have a consequential impact on the audit and accountability arrangements. The possible consequences are referred to in my submission below. |
| Role of the Auditor General for Wales |
| The office of Auditor General for Wales was created under Section 90 of the Government of Wales Act 1998. As the current office holder, I am responsible for the financial audit of some 22 accounts prepared by the National Assembly and its related public bodies. I am also empowered to undertake economy efficiency and effectiveness (value for money) examinations on those bodies, and on NHS Wales and the further and higher education sectors. My reports on accounts and the results of my value for money examinations are laid before the Assembly and published. |
| I have, in accordance with Section 92 of the 1998 Act, made arrangements with the National Audit Office for the provision of professional, technical and administrative services to support the discharge of my statutory functions. |
| The Audit Commission is responsible for appointing auditors for local government and NHS bodies. It also has a value for money audit remit covering those bodies. My value for money remit also covers NHS Wales. Within the current statutory framework, the National Audit Office works closely with the Audit Commission to minimise duplication of effort and the burden on audited bodies. |
| Single audit body for Wales |
| The Welsh Assembly Government has requested primary legislation to create a "Wales Audit Office" headed by the Auditor General for Wales with responsibility for the work currently undertaken by the National Audit Office and the Audit Commission in Wales. Under the arrangements envisaged by the Assembly Government, the staffs of the two existing audit bodies who are based in Wales would both transfer to the new single audit body. |
| I welcome this development. The creation of a single audit body for Wales would further enable the provision of an effective and efficient audit service for the Welsh public sector. The new body would be able to work to common standards and would be able to follow public money throughout the public sector as well as, for example, being better able to undertake studies of a crosscutting nature covering the joint provision of services by central and local government. |
| In setting up a new audit body for Wales, it would, of course, be necessary to protect the constitutional position of local government who are accountable to their own electorates rather than the Assembly. Also, as both the National Audit Office and the Audit Commission would lose their "Welsh arms" to the new body, it would be necessary to create a new mechanism for providing appropriate cross-border comparative information. This would entail close collaborative and co-operative working with other public audit and inspection agencies in the United Kingdom. This already happens to a large extent through the auspices of the Public Audit Forum. |
| If such legislation is forthcoming, I will, of course, work closely with colleagues in the National Audit Office, the Audit Commission and the Assembly to ensure the successful creation of the "Wales Audit Office" taking due account of the above issues. |
| Constitutional independence of the Auditor General for Wales |
| Under the 1998 Act, the office of Auditor General for Wales is a Crown appointment and totally independent of the Assembly. In recommending an appointment to Her Majesty, the Secretary of State for Wales would normally consult certain key Assembly post holders but the Assembly does not have a formal role in the process. The reason for this is due to the long held principle of audit independence recently endorsed by the Public Audit Forum that prevents a public body responsible for the exercise of executive functions from appointing its own external auditor. The National Assembly for Wales is, of course, constituted as such a body under the 1998 Act. |
| The Commissioners may wish to contrast this with the position in Scotland, where under the Scotland Act 1998, the Auditor General for Scotland is appointed by Her Majesty on the nomination of the Scottish Parliament. The Northern Ireland Act 1998, makes similar provision for the appointment of the Comptroller and Auditor General for Northern Ireland. |
| I note from the consultation questions that the Commissioners are considering whether the Assembly should be reconstituted along the lines of a parliamentary model. If the Commissioners were minded to recommend the creation of a "Welsh Executive" that is legally separate from the parliamentary arm, and the UK Government were to accept that recommendation, then I suggest that it would also be appropriate to consider whether the "parliament" should have a statutory role in recommending the appointment of the Auditor General. |
| The audit arrangements for public bodies in Wales are, quite rightly, laid down in primary legislation and cannot therefore be significantly amended by the Assembly. Section 144 of the 1998 Act gives the Secretary of State certain powers to amend by Order the list of bodies that are subject to scrutiny by the Auditor General for Wales. This prevents the need for further primary legislation if the Assembly uses its own powers to reorganise public sector bodies. |
| Section 93 of the 1998 Act requires the Auditor General to prepare an annual estimate of his income and expenses for consideration by the Assembly's Audit Committee. If the Committee wishes to modify the estimate it must consult the Secretary of State and have regard to any advice that he may give. |
| This role for the Secretary of State continues to be appropriate whilst the Assembly is constituted as a corporate body responsible for executive functions. If the Commissioners were minded to recommend the creation of a Welsh Executive that is legally separate from the parliamentary arm, and the UK Government were to accept that recommendation, then it would be appropriate to consider whether the "parliament" should take on these functions but with suitable overriding statutory safeguards to protect the Auditor General's independence and objectivity. |
| Accountability arrangements |
| The Audit Committee is a statutory committee of the Assembly set up under Section 60 of the 1998 Act. Its main role, as laid down in Section 102, is to consider the reports that have been laid before the Assembly by the Auditor General for Wales. It does this by taking evidence on those reports from Accounting Officers and other senior officials and by producing its own reports to the Assembly. Under the Assembly's Standing Orders, the Cabinet must respond to the Audit Committee's conclusions and recommendations within 30 working days. |
| The Audit Committee cannot contain any Cabinet Members and must be chaired by an Assembly Member who is not a member of a political party that is represented in the Cabinet. The Committee operates on non-party lines and concerns itself with issues of regularity, propriety and value for money that have been raised by the Auditor General in his reports. Those reports are agreed for factual accuracy with interested parties before publication. |
| There is thus a very close working relationship between the Audit Committee and the Auditor General that has operated very effectively since the establishment of the Assembly in 1999. During that period, the audit and accountability process has identified the scope for significant financial savings as well as a range of non-quantifiable improvements to the financial management of the Welsh public sector. The effectiveness of the Committee's work can also be measured by the fact that the Cabinet has accepted virtually all its recommendations. There is thus a very clear case for preserving the special relationship between the Committee and the Auditor General as provided by Section 102 of the 1998 Act should the Commissioners be minded to recommend any changes to the Assembly's constitution. |
| As with other Assembly committees, the Audit Committee may only require serving members and officials of the bodies listed in Schedule 5 to the 1998 Act to give evidence or produce documents. This power is more limited than that available to the Westminster and Scottish Parliaments and the Northern Ireland Assembly. This limitation has not proved to be a problem for the Audit Committee to date as former members and officials of Welsh public bodies have given evidence voluntarily when asked to do so but this issue may be worthy of consideration in a wider context. |
| In my opinion, the accounting and audit arrangements that were put in place as a result of the Assembly being constituted as a corporate body with executive functions have worked well to date, and the creation of a single audit body for Wales should help to improve further the effectiveness of the audit function across the Welsh public sector. If the Commissioners are minded to recommend any significant changes to the Assembly's constitution, this may provide a further opportunity to enhance the audit and accountability arrangements. |
| I hope that this submission is helpful to the Commissioners in their deliberations. I should, of course, be willing to provide further written or oral evidence. |
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Yours sincerely |
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