The public sector encompasses all bodies involved with the development or implementation of government policy or the provision of a service to the community. They include local and central government, the NHS, housing associations, educational institutions and other public authorities. Vacancies for internal auditors exist as temporary assignments, fixed term contracts and permanent roles and can be found throughout the UK.
Central Government, Agencies and "Quangoes"
Central Government consists of a number of departments, each with a closely defined area of responsibility, such as Work and Pensions, the Environment, Food and Rural Affairs or the country as a whole, as is the case with the Home Office.
Beyond these central departments are government organisations like the Environment Agency or the Highways Agency. Each of these has a smaller remit with specific areas of interest. Most are self explanatory, the area of interest being in the name of the agency. Each agency is tied to the Central Government department that shares the interest.
Quangoes, or Non-Departmental Public Bodies (NDPB's) are similar to agencies, though they have a greater degree of financial autonomy and, if anything, an even more closely defined area of interest. Quangoes are established by Acts of Parliament and their functions vary according to the needs of the time. Many are simply committees that convene occasionally to provide advice on issues such as food safety or other hazards. Other quangoes are far larger. The British Council, for example, is a global organisation promoting training, education and British industry and influence around the world.
Most of these bodies have an internal audit function of some kind, although the smaller bodies, the agencies and quangoes, often make use of the services of a parent or sponsor body, generally a Central Government department that provide them with their internal audit service.
The Audit Commission
The Audit Commission acts as the external auditors of the public sector on behalf of parliament and includes District Audit and the National Audit Office.
Internal Audit in Central Government
The role of internal audit in Central Government has recently changed, for two reasons.
- The current administration's modernising agenda has encouraged government departments to become more accountable to the electorate, whilst also performing their duties along more commercial lines where possible.
- Linked with this process has been the move to a more risk-based approach to internal audit that is becoming universal in the private sector. This has led to a move away from traditional systems based auditing to a greater concentration on corporate governance and a control culture. A key benefit of having more efficient controls, coupled with greater transparency in the decision and policy making processes of government, is to try and make accusations of sleaze and waste both less frequent and more readily investigated.
Recruitment in Central Government
Central Government has traditionally been recognised in the recruitment market as providing well-trained internal auditors who subsequently move on to roles in the private sector. In recent years, the public sector has started to market itself as an attractive employer, taking initiatives to commercialise and modernise the auditing and accounting methods, which has slowed the migration of internal auditors away from Central Government.
For a number of years, Central Government has employed temporary and contract workers, largely in order to cover vacant posts created by departures to the private sector or budget restrictions. This is likely to continue for the foreseeable future.
Local Government
Local Government is the most accessible and accountable part of the public sector for the general public. Local Government provides local services, collects locally administered taxes and acts as the first point of call for property planning, refuse collection or complaints about any part of the local infrastructure. Around the UK, local authorities can be County, Metropolitan, District or Borough councils according to local features and populations.
Internal Audit in Local Government
Historically, internal audit departments in Local Government were generic, auditing across social services, housing, education, the environment and other devolved directorates. In many authorities, individual auditors have specialisations, such as contract or computer audit, and are allocated assignments according to that expertise.
The introduction of Best Value to replace CCT has had a significant impact on Local Government operations and could redefine the role of the auditor in the sector. Best Value Reviews are key to the process and need to be carried out consistently. There has been a suggestion that the most effective arbiters would be the auditors themselves although whether this would be an internal or external function is unclear. Reviews of audit departments themselves have been carried out by most local authorities and have largely demonstrated a resource shortfall.
Recently, outsourcing has become increasingly common. Partial or total outsourcing of an authority's internal audit function removes a number of problems that would be encountered by an in house department. Not only are any recruitment difficulties removed but, perhaps more importantly, any outsourcing partner has to provide staff to cover any peaks and troughs in demand, as well as for specialised roles. This would alleviate the need for a Local Government departments to try and find year round employment for computer audit specialists, for example.
Outsourcing or partnering arrangements can be highly flexible, from accounting for an entire department or a part of the annual audit plan, to purely providing a particular skill set. Most frequently, a Big 4 firm is the partner, but recently these firms have faced intense competition from the next tier of professional practices which are increasing their share of the public sector outsourcing market.
The latest alternative to outsourcing is the formation of audit consortia, whereby a number of audit departments amalgamate to form a larger grouping with responsibility for the internal audit of each of its component authorities. This has already proved an effective solution in the NHS and may be tried in Local Government where many of the same conditions apply.
Internal Audit Recruitment in Local Government
Where outsourcing has not yet taken place, Local Government in the UK, particularly in and around London, has, to a certain extent, relied on temporary recruitment, as local authorities have found it difficult to recruit suitably skilled and qualified internal auditors for permanent roles in the face of competition from the private sector. However, recently, public sector salaries have been reviewed upwards and employers have been more flexible in their requirements, resulting in an increase in permanent recruitment. That said, at the same time, the number of trainee accountants and auditors on contracts with local authorities has fallen, suggesting that there are more recruitment difficulties ahead. The formation of audit consortia may prove to be the most effective solution to the recruitment problem.
The Health Service
Most people make use of the NHS. Contact tends to be with the frontline hospital or GP services rather than the Health Authorities behind them. The Health Authorities are the monitoring and advisory bodies between the NHS and Central Government.
Internal Audit in the NHS
Most hospitals are now part of an NHS Trust or larger Primary Care Group and prefer to employ the services of an audit consortium or private company as an external provider rather than retain an in-house internal audit function. The original consortia were formed when a number of hospitals or trusts amalgamated their own audit functions, but now they tend to bid for internal audit work right across the NHS.
Internal audit in the health sector follows broadly similar lines in terms of approach and methodology to the rest of the public sector, the major difference being in the operations audited. Nowhere else in the sector will an internal auditor have to review a pathology department one week and a paediatrics department the next.
Internal Audit Recruitment in the NHS
Opportunities for both temporary and permanent employment in the NHS remain good as the audit service providers expand their businesses and client bases. For a long time, there has been a drain of experienced and qualified staff which has created good opportunities for entry-level positions and promotion prospects at Senior and Principal Auditor level. The move to shared services is likely to lead to fewer but larger audit providers. At the same time, these providers are likely to develop more diverse services and therefore, more staff with particular specialisations in, for example IT and internet-based technologies.
Beyond modernisation and the introduction of Best Value, within the NHS there have been large-scale organisational changes with the introduction of Trust status and the amalgamation of care providers into Primary Care Groups. These larger units have advantages in terms of purchasing or commissioning power and are creating new challenges and opportunities for those who provide their internal audit service.
Education Schools are not really users of audit staff, supported as they are by the local authority. However, universities and colleges of further and higher education are under increasing pressure to improve financial control and management. Inevitably, this has led to the need to strengthen and expand internal audit departments.
Housing Associations and RSLs
Housing Associations and other Registered Social Landlords (RSLs) represent the public sector alternative to local authority housing provision. They vary in size from massive nationwide organisations with a housing stock in the thousands to Tenant Management Organisations (TMOs) managing a single block of units.
Internal Audit
Like the health service, housing associations make use of external audit providers but many of the larger ones retain an in-house department. Most smaller housing associations do not have an internal audit function, relying instead on advice and input from external auditors.
"Not for Profit" Organisations
While it is true that the public sector as a whole is not intended to produce profits, the phrase "not for profit" tends to be applied to charities. Given their size, diversity and reliance on large numbers of casual and volunteer staff, it could be argued that there is a great need for charities to have strong internal audit functions. Most of them have an element of fund raising, based on the collection of significant amounts of cash by volunteers, which is inherently difficult to control.
Internal Audit
Few charities, apart form the larger household names, have the resources to fund effective internal audit departments, so recruitment in this area is likely to remain only a tiny part of the overall internal audit market. Some of the largest and best-known charities do have quite large, high profile internal audit departments that are well regarded in the internal audit industry. |
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