Accountants and the State

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Prem Sikka has a knack of hitting nails on the head. His latest Guardian piece looks at the relationship between the state and accountancy firms. As he puts it:

There is something very odd about the way UK governments deal with administrative failures. In earlier times, rulers called upon obedient high-priests to manage their crises. In return for high rewards and protection, the priests engaged in some ritualistic practices and absolved their masters of all wrongdoing. The mutual back-scratching continued.

Rather than creating independent and accountable institutional structures to investigate maladministration, politicians now call upon consultants, the new high priests. A large chunk of the £2.8bn public sector contracts go to accountancy firms and they are not in the habit of blaming themselves or their paymasters for failures.

And as he concludes:

The brief evidence cited above shows that there is an unhealthy relationship between the UK state and major accounting firms. Accounting firms have penetrated the state and their many anti-social activities go unchecked. Despite dodgy audits and dubious tax avoidance schemes no UK government has ever prosecuted any major accounting firm. Is it any wonder that the public confidence in political institutions is low?

I think Prem has a good argument: why do we assume that the Big 4, whose business model is to undermine the state, should advise it, and what should we think about politicians who accept that situation?

The Big 4 have no magic wand. Far from it: their advice is very often the basis of the supposed disasters in government management; many of the IT failures being attributable to them in part, and to the over-stated claims of the private sector in their entirety. But the public sector still lacks confidence in its own ability. I think that's the error of judgement: without some of the dire advice it has received over time I suspect the public sector would have appeared substantially more competent than is represented to be the case (and I stress, represented).


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