Tuesday, 6 January 2004

Another Scottish Parliament scandal

This time it's not the building; it's the day-to-day expenditure of the Scottish Parliamentary Corporate Body on things like salaries and running costs. The parliamentary audit committee has been in session today and was addressed by the Auditor General:
He said parliament bosses had been given several warnings of shortfalls in procedures and his report was the equivalent of a red card.

At one point last year nearly 300 discrepancies totalled more than £5m.

The Auditor General continued:
"What I mean in plain terms is that while there was sufficient evidence to confirm that the accounts are not materially mis-stated there were important shortcomings in the corporate body's internal financial controls.

"Specifically these weaknesses in control prevented me gaining sufficient assurance regarding the possibility of accounting errors or even fraud affecting the corporate body's affairs in some way."

This affair has been played down in the media on the grounds that there was:
"a mixture of debit and credit entries, which were offset against each other, the combined net total of the unreconciled entries was very small, at just over £300. But the combined value of the 290 underlying transactions which have not so far been matched were significantly greater, some £5.3 million." (from the notes to the Auditor General's report)
The news reports didn't give us enough to understand the implications of this. If £5m worth of phone bills had been recorded as, say, electricity costs, then it's not very efficient, but not such a big deal. If, on the other hand, £5m worth of current expenditure had been wrongly recorded as accounts receivable (assets) there would indeed be a potential loss of £5m that was understated in the accounts.

Let's give them the benefit of the doubt (for the moment). What is totally unforgivable is this:

"During 2002-03 the Corporate Body did not complete the necessary periodic reconciliations between its ledger and bank accounts ...... By the final stage of the audit, in early December 2003, 290 items remained unreconciled between the Corporate Body's bank accounts and its ledger either because payments recorded through the bank were not recorded in the ledger or vice versa."
That's just not acceptable. Reconciling one's bank account is the starting point to getting the accounts correct. This is a shameful disclosure especially in Scotland, the land that more or less invented accountants.

Reading further into the AG's notes we find this:

Final accounts testing found continuing errors affecting a wide range of matters including income overstated by almost £2m, two compensating errors of £1m each on fixed assets and errors in creditor accruals of £1m.
This would seem to indicate that the "bottom line" was out by a hell of a lot more than £300, but it's not expressed clearly enough to know the real story.

I wish that I'd gone along to the meeting today, although as a mere taxpayer I wouldn't have been able to contribute. I've read that the Parliament has failed to appoint a finance chief for many months. Here's the deal: I'll do the job for nothing as long as I can fire anyone I find to be incompetent.