Carillion report ‘highlights contracting headache for councils’
0A damning report into the collapse of contractor Carillion shows the challenges public sector bodies face when outsourcing services, according to a financial advice firm serving local authorities.
A report by MPs on the Work and Pensions and BEIS committees this week said that central government has “lacked the decisiveness or bravery” to address the failures in corporate regulation that allowed Carillion to become a “giant and unsustainable corporate time bomb”.
Commenting on the report, June Matte, CEO at PFM UK, said the Carillion report “makes it clear that the challenge the public sector faces is the ability to select the right partner (or auditor) for the right reasons and to be explicit in the goals that partner needs to achieve.
“It is difficult to avoid conflicts of interest that are inherent in such large organizations. While we don’t support excessive regulatory intervention, we would welcome greater regulation of the audit market and much greater competition in the sector. We also question the value for money that most clients received, given high fees such as the ones alluded to in today’s report.”
Matte said the public sector would benefit from additional safeguards around conflicts of interest, such as compulsory rotation and a lock-out period preventing the sale of additional services by the same firm.
“Regulation separating firms who act as advisers to the public sector and those who act on behalf of investors, such as is seen in the US, would also be beneficial,” she said.
