Mike Causey – Wrecclesham and Rowledge
Waverley Borough CouncillorArchive for Audit
24/7
I probably shouldn’t be up still (it’s almost midnight here in Singapore), but my body clock is refusing to adjust and perhaps that’s not such a bad thing if it means I avoid jet lag this coming weekend.
Anyway, it means that I’m at the 24 hour Starbucks just outside the lobby of the hotel, and I’m not alone! I’ve learned that Singapore is pretty much a 24/7 society: you’ll find students doing their homework at this hour, people running along the east coast park (it’s a little cooler at these hours), and colleagues take conference calls into the small hours as so much in BP is driven by UK business hours.
And, I’m reading draft agenda papers for the next audit committee! It seems a good use of my wakefulness. And indeed, this paper happens to resonate greatly with my day-to-day responsibilities at BP (for IT risk) as the agenda contains a paper about exactly this topic at Waverley, and how the IT audit plan should be derived from such a risk based understanding. I completely agree.
However, one get too much of a good thing. I think I need to catch a couple of hours sleep before joining another conference call that was arranged UK hours. I am getting a bit Singaporean?
Ups and Downs
The Audit Committee this evening had its ups and downs. The Annual Governance Statement from the Audit Commission was definitely an up. Very strong language about the high standards of Waverley’s financial processes and statements, which speaks to the good work of officers in the finance department, in whom members have high levels of trust.
For me, the down is always in the list of Internal Audit findings that need their target completion dates revised. I acknowledge that the reasons can be strong and compelling, but as on overall story it tends to convey the sense that IA work simply isn’t top of the priority list for most officers, even though the findings reflect a risk that needs to be addressed. Tonight we emphasised that these needed to be final extensions, and tightened the timeframe in each case.
Audit Committee enjoyment (yes really)
I always look forward to the audit committee. That may seem crazy to some, as audit isn’t exactly ‘sexy’. But in my view the audit committee performs a very critical oversight and scrutiny role, assuring the governance of the council’s financial and business process activities, and independently challenging audit findings and responses. (Even to the extent that last night we questioned the involvement of member feedback in the request for a revision of a due date for an internal audit finding).
Tonight was particularly valuable, as I felt that the quality of the meeting had taken another step-up. The timeliness and content of officer updates on internal audit findings were much better. In the main, the committee was able to understand progress on each finding simply from the written comments. The sense of the officers working with (rather than against or in reaction to) the committee was also heightened. Not that it’s ever been particularly confrontational, but that tonight it felt extremely worthwhile.
Getting away from it all
And by “it” I mean politics. I’m based at Keele University for a couple of days, attending a global risk forum.
However, I’ve come full circle today, back to politics and at its core, back to the very reason why I’m a politician. Let me explain.
The plenary session this morning was inspiring. Paul Moore spoke about his experience of the risk culture at HBOS, from where he was sacked as head of risk when executives simply didn’t like what he had to say about the sales culture at the expense of ethics and integrity.
During his talk, I spotted various quotes and language that indicated to me that he held beliefs that transcended a simple passion for work and was more akin to faith. Wonderfully, I had the chance to spend about an hour with Paul this afternoon and during a wide-ranging conversation I’ve been inspired by his example of choosing truth and integrity over job security. The story of his ‘whistle-blowing’ about behaviour at HBOS has been well documented, but doesn’t quite convey the depth of sincerity of intention that Paul brought to bear on his actions.
Paul believes that there’s generally a hunger for integrity in leadership whilst at the same time, in many corporations, a greed and bullying culture (my description, not his) that means being confident enough to speak truth to power is a mountain that’s too high to climb. His work in risk is inspiring, as it makes me believe that what I’m engaged in day-to-day has the potential to make a huge difference not only to business decision-making and investment planning, but also to the very way in which the business culture develops. He also holds the hope that examples such as his – of prioritising truth over money and power – can affect policy formation and benefit society.
We share faith that acknowledges a higher purpose for our world and we both desire to be transformed through our faith, as well as to transform the environment around us. Our hour in conversation has encouraged me immensely: encouraged me to continue to find strength to not leave my values in the office carpark each day; to be prepared to speak out in tough situations with less regard for me, and more regard for others; to model transparency of words and actions in order to do the right thing.
“Never confuse honest dissent with disloyal subversion.” Eisenhower
KLOEs
I’ve been reading the Annual Audit Letter from the Audit Commission, for the audit of Waverley’s 2008/09 year and, being a consumer of similar documents in my professional life, I can say that I’m pleasantly surprised by its clarity and concise nature.
I’m reading it in anticipation of the Chairman’s briefing for Audit Committee in a few week’s time, which, with this meeting’s agenda, forms just a small part of the 150ish pages. I do enjoy it though – I find it the meeting where I can most use the skills and capabilities I bring from other walks of life and, find that inevitably the audit findings being discussed cover all the critical service areas of the council and thus provide a great opportunity to cover most issues of importance.
What I could do without though, is the additional three or four letter acronyms that I’m constantly having to learn [KLOE: Key Line of Enquiry]!
IFRS: Tax or simply a taxonomy?
The title of this post isn’t an exact choice, but serves as a close enough illiteration in order to highlight a key challenge of the move by Waverley to the International Financial Accounting Standard.
One of the more nonsensical rules is that un-used employee holidays as at the end of the financial year, have to be added up, and represented as an accrual – in other words money that the council has to budget. Now of course, it’s not real money and, Waverley has quite a number of staff whose leave year starts at various calendar dates, rather than the same one across the board.
However, more important than this, is the fact that it’s possible that if the accrual for unused leave is big enough, it might theoretically mean that a council has to raise more money in council tax to cover this budget item, than it might have done otherwise! I’m being serious – it’s possible. And so, my comment about nonsensical rules: my mouth literally dropped open when I heard this on Tuesday evening.
Thankfully, this rather awful potential implication hasn’t passed the Audit Commission and CIPFA by, and so they are highly likely to include in their guidance (due out from CIPFA in mid-December) that this particular item will somehow be excluded from having a net impact on the council budget. Not sure how, but having seen some of the more creative public accounting rules in practice (depreciation) these past couple of years, I’ll sure they’ll find a way.
IAS or IFRS? SICS or IFRICS?
Perhaps the oil company I work for isn’t the biggest acronym culprit I know – perhaps it’s a combination of the government and the accountancy profession.
Last night I attended the Audit Committee at Waverley Borough Council. I’ve pretty much found the right area to serve I think – the committee’s responsibilities are a close match to both my day-to-day work and my competencies and, I do actually see it as incredibly important that such an oversight role is robustly and consistently performed.
Anyway, this meeting we had our external auditor along – the Audit Commission – answering questions and presenting information on the International Financial Accounting Standard, which will start applying to the UK public sector over the next couple of years onward.
Now, I’ve no intention to go into detail here – not least as I’m no expert. But, I did want to say that I’m delighted both with the quality of our Audit Commission manager and, with the project management at Waverley to make this transition happen. All evidence is that we’re now being well served in both these areas.
