Government’s £70 million internal audit spend is inefficient

20 June 2012

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20 June 2012 | Kamalpreet Badasha

The government’s £70 million spend on internal audits is not being used efficiently, according to the National Audit Office (NAO).

The effectiveness of internal audit in central government report, published today, found the quality of audits vary and are not tailored to meet the needs of individual organisations. The value-for-money studies in the report found there was not enough information to allow effective decision making on spend.

The study covered audit strategy, audit staff capability and whether internal audits are adequately evaluated. Some 63 per cent of users felt the identification of efficiencies required ‘some’ or ‘substantial’ improvement, followed by 44 per cent stating improvement was needed in audit report relevance. And 41 per cent felt the staff of the NAO needed greater expertise – this was further enhanced by stakeholders saying audit days were perceived to be unproductive.

Despite this, the report found that of the 118 key users consulted, 40 per cent felt internal audits added substantial value to the organisation, with a further 44 per cent saying the internal audit added some value.

However the audit plans that were analysed were considered to be “inconsistent and unclear”. Less time needs to be spent working on small-scale issues relating to compliance and there needs to be greater focus on looking at whether department processes and procedures are working effectively overall. The report revealed of the 71 internal audit plans reviewed, only 16 included performance metrics.

The Treasury plans to implement a programme with the aim of improving internal auditing from March 2013.

“Good internal audit should be the ‘eyes and ears’ of senior management, giving honest and clear information. However, in central government, it is not delivering consistently at this level,” said Amyas Morse, head of the NAO. “There needs to be a clearer statement of the important role of internal audit from the Treasury on one side and a determined move to deliver internal audit’s full potential across government on the other.”

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