THE Audit Commission and finance services company Deloitte have appeared in front of a scrutiny committee to explain how they missed NHS Croydon's £28 million overspend.
But if the panel was hoping either organisation would accept responsibility they were left disappointed. Internal auditors Deloitte, paid £60,000, said it was not within its remit to look at financial accounts.
They shifted the focus on to the Audit Commission, paid £275,000 as the primary care trust's (PCT) statutory external auditor, which said it had reviewed its work and found it was "sufficient".
Instead both auditors suggested the responsibility lay with the trust's directors and finance officers, most of whom have refused to appear before the inquiry.
Jason Cummings, chairman of the South West London joint health and overview scrutiny committee, asked Deloitte's representative: "Can I ask you a very simple question? Why didn't you pick this up?"
Neil Yeomans, partner for local government security and controls, replied: "Our role is to help the board make a statement of control. We are directed by the audit committee to make sure the organisation is meeting the strategic objectives.
"The area described in the report is not one of the areas we were pointed towards by the audit committee."
NHS Croydon posted a surplus of £5 million in its 2010/11 accounts when it had in actually overspent by £23 million. Both Deloitte and the Audit Commission missed that "unwarranted adjustments", uncovered later during in investigation by Ernst & Young, had been made to the agreement of balances.
Cllr Cummings added: "So you would have said it is acceptable that the internal audit would not have picked up on this?"
"If you look at where we were directed to do our work they were a comparable set of areas which we would look at for other clients," replied Mr Yeomans.
"The matter of year-end agreement of balances is not typically an area we are asked to look at. It's fair to say with all the PCTs we deal with that it isn't regarded as a significant risk."
Merton Cllr Suzanne Evans said: "You were being paid £60,000 a year and it appears to me you weren't asking any questions at all. So from a point of view of managing strategic internal risk, I would argue that you have failed."
Mr Yeomans replied: "Simply stated, it was not our responsibility to be given the end-of-year accounts, that's the responsibility of external audit.
"Our job was to ensure that management did a good job of managing the strategic risks it had identified."
Cllr Evans replied: "Well, it clearly didn't because there's a £28 million black hole in the accounts. So surely you must have failed?"
Cllr Cummings added: "Between yourselves, the management, in terms of the board and the audit committee, should this type have thing have been picked up and, if it should, where does the blame lie in this case that it wasn't?"
Mr Yeomans replied: "My general statement is that the primary responsibility must lie with the management. All of them have a role in approving the accounts."
He added: "If invoices are not presented to either internal or external audit then they can't form any part of the testing. We wouldn't know they existed."
Cllr Cummings said: "So are you suggesting there was a failure of the integrity of management?"
Mr Yeomans said: "I am simply saying that if information isn't made available then we can't report it."
The committee has not scheduled any further public meetings following Monday's at Kingston Guildhall. It plans to publish its report before Christmas.
