| 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. |
|
Yours sincerely
|
|
JOHN BOURNE
|
