# What is Audited?



## Marie (17 Mar 2004)

This may be a naieve question (or even in the wrong thread!) but what do auditors 'audit' and does it have to occur annually before the organisation can publish its Annual Report and Accounts?

In the NHS Trust I work for a consultation document was recently circulated from which we learned that the Trust Board had 'no idea' how much money was spent on training and development each year (though it is reckoned to be in the millions!!)

I had always thought an organisation - especially a public service - was more carefully audited, and wondered what was included/excluded when the institutions accountants 'look at the books'?


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## Brendan Burgess (18 Mar 2004)

Hi Marie

The audit practices vary according to the institution being audited, who is doing the audit and in what country the audit takes place.

A limited company is audited under the Companies Acts. The main purpose of this is for the auditors to report to the shareholders that the accounts prepared by the directors show a "true and fair" view of the results for the year. They are not supposed to be searching for fraud and they are not supposed to be commenting on how well run the company is. 

In Ireland, our public sector organisations are audited by the Controller and Auditor General. They do a statutory audit as described above but they also do a value for money audit. This is where they report such information as "the ESB has been paying 200 employees sitting in a power station for the last ten years which has been shut down".

I don't know anything about the UK public sector audits.

Brendan


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## ajapale (19 Mar 2004)

Tut, tut Brendan, I'ts not like you to be wrong.



> In Ireland, our public sector organisations are audited by the Controller and Auditor General. They do a statutory audit as described above but they also do a value for money audit. This is where they report such information as "the ESB has been paying 200 employees sitting in a power station for the last ten years which has been shut down".



KPMG are the ESB auditors and the ESB annual report does not contain any value for money audit as you suggest. ESB in common with other commercial/trading semi-states engages one of the big accountancy firms for their annual external audit.



> The main purpose of this is for the auditors to report to the shareholders that the accounts prepared by the directors show a "true and fair" view of the results for the year. They are not supposed to be searching for fraud and they are not supposed to be commenting on how well run the company is.



The basis of the ESB audit is exactly as you outlined for limited companies under the companies act. Indeed some commercial semi-states are limited companies.

www.irlgov.ie/audgen/AUDITS.HTM has a list of what the comptroller and auditor general deals with.

Departmental Funds and Accounts
*Non Commercial* State Sponsored Bodies
County Enterprise Boards
Health Boards
Hospitals
Health Agencies
Universities 
Institutes of Technology
Other Educational Bodies
Vocational Educational Committees 
North/South Bodies


Ajapale


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## Brendan Burgess (19 Mar 2004)

Thanks AJ

One thing I have learnt from AAM is that I am often wrong. Does the Comtroller not do value for money audits in the semi-state companies?

Brendan


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## <A HREF=http://pub145.ezboard.com/baskaboutmoney.s (19 Mar 2004)

Not sure if this is any use on the Comptroller and Auditor General issue:


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## Brendan Burgess (20 Mar 2004)

Hi 0

It's useful insofar as it shows me up as even wronger!

Brendan


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## Marie (20 Mar 2004)

Thanks, 0 and Brendan.  The info on the Training and Development (1993) by the Comptroller and Auditor was useful and the recommendations spookily like those being consulted on presently by my Trust's HR unit.  The truth is that large complex organisations which have grown amoeba-fashion do not in general have an internal monitoring faculty ('organisational mind') co-ordinating activity towards the organisational objective (like health-care provision, electricity-generation/sale, money-transfer or whatever). Would the limit of audit be the limit of management information systems and lack of system evaluation?  A lot of money is spent on training and development and this is ambivalently viewed.  Perhaps there is as yet no method of cost-benefit analysis appropriate to complex human systems (though the Performance Management and Development System mentioned in 0's link would move towards more accurate data-collection)?


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## ajapale (20 Mar 2004)

Hi Marie,
There are other types of audit besides the types of audit referred to by 0 and Brendan.

Quality audits to ISO 9000:2000 cover training and development in considerable detail. Many organisations under go external assessments against the EFQM (European Foundation for Quality Management) model.  This model has a people results section in which organisations must demonstrate such things as training days, training spend etc. A third audit mechanism is the Fás "Excellence through People" assessment. I think this is called investors in people in the UK. Again this is an annual external assessment in which the organisaton outlines its approach to people management in general and training and development in particular.

Many public and private sector organisations are accredited to these standards.

I hope you find this usefull.

Ajapale


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## Marie (20 Mar 2004)

Ajapale, I had no idea there were national- and internationally-established standards - that is very helpful as HR have asked me to contribute to T&D development!  My employing Trust LOST it's "Investor In People" accreditation when we merged with the other Essex NHS Trusts three years ago, after achieving it just three years before that. We had the impression Investors in People was a separate outfit unconnected with Value for Money or audit, rather than a part of networked quality control.  I was one of the randomly-selected employees contributing into the review process the year we applied, and the year we lost it.  The IinP process was transparent, rigorous and fair.....most impressive.  Thanks again!


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## Natchessmen (21 Mar 2004)

Marie

I see a very definite trend toward competency based training, by this I mean auditable (see there it is again) training records with prescribed syllabus by trained trainers, followed (most importantly) by a true and fair assessment of knowledge learned, with periodic reviews. This is best for hard skills but even for presentation skills or assertiveness courses this is becoming the norm.  Employers have a right and indeed an obligation to see value for money for training, so perhaps the one-day-wonder-courses are coming to an end.

I have seen cases (I'll check for links later) where unfair dismissal was successfully taken against an employer.  The employee's contract was not reviewed as he was deemed incompetent, at the tribunal the employer couldn't prove that the other party was trained correctly. In fact there existed training records, signed and dated, by both parties, but no assessment of competency! As it happened the employee was awarded IR£100, so read what you will into that.


I would be very surprised if any initiative within th UK NHS would be without the obligatory metric of progress and who knows why not throw in an owl league table or two!!

Nat


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