As an ex auditor (both external and internal) and having had some considerable experience of fraud investigations and compliance work, I can state that it is a fundamental requirement in order for an auditor to be able to do his/her job in a professional and credible manner (and for the audit report to have credibility) that he/she and the department that they work for are not only independent but
perceived to be independent.
When that independence is undermined by, eg, an unhealthy close relationship with the auditee, or by unhelpful dissemination of information about ongoing audits to third parties, then the auditor can no longer perform his/her function.
My thanks to a loyal reader who pointed me to a recent article in the Guardian that shows that the National Audit Office (NAO) has had its independence severely compromised by the alleged actions of its own boss Amyas Morse.
The
Guardian reports that Morse, who set up a judge-led review into the "sweetheart" multimillion-pound tax deals between HMRC
and corporations, undermined the whole process by
telling Dave Hartnett (when he was still head of HMRC) that the inquiry would
find "nothing of substance".
For good measure Morse told his staff that the review by Sir Andrew Park
would find no evidence of serious wrongdoing.
In an email marked "private and
confidential – please do not pass on to anyone without coming back to
me", sent by Hartnett on 15 December 2011 to 10 senior HMRC
officials Hartnett wrote that he had held a meeting that afternoon
with Morse which was "useful and interesting".
Hartnett went on:
"Amyas
has been insistent that Andrew Park tackles the cases one at a time. He
[Morse] has told me that he has made clear to the NAO that his
expectation is that nothing of substance will be found in the review."
Morse
apologised for the way that Hartnett's
officials had been treated by PAC:
"He
[Morse] did not envisage things playing out the way that they have and
was sorry for the individuals in HMRC who had been bruised by the
actions of the PAC and for the difficulties the department had
experienced."
It is clear from the text that the relationship between NAO and HMRC has become far too cosy; as such the perceived independence of NAO has been severely compromised, which means that NAO can no longer perform its role effectively.
QED!
By the way, does anyone know what has happened to the whistleblower Osita Mba?
Tax does have to be taxing.
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