Chief auditor: Accounting & Business


Sir Andrew Likierman strongly rejects the suggestion that he is a trouble-shooter. Yet it is undeniable that he has been appointed to address some serious challenges.


The most important of these is that the affable and relaxed Sir Andrew is the first ever chairman of the National Audit Office. The NAO audits the accounts of government departments, but was itself caught in the uncomfortable glare of publicity when its former Comptroller and Auditor General, Sir John Bourn, was criticised for some of his expenses claims for himself and his wife.


Subsequently, Sir John resigned – citing a conflict of interest with another role as the then chairman of the Professional Oversight Board – and the structure of the NAO was reformed. Sir Andrew was appointed Chairman at the end of last year and has just chosen 4 non-executive directors. A new C&AG was appointed – Amyas Morse, a former PwC partner, has just taken on the job.


That Likierman was chosen should be no surprise: his credentials are impeccable. Sir Andrew was a managing director of the Treasury; he is a former head of the Government Accountancy Service; he was (until his NAO appointment) a non-executive director of the Bank of England; and he remains a non-executive director at Barclays Bank. And – to complete the demanding collection – his main job is Dean of the London Business School.


But perhaps Sir Andrew’s most significant responsibility is behind him, as the man who modernised government accounts – introducing accruals accounting (Resource Accounting and Budgeting, in Whitehall language) between1996 to 2004.


Likierman plays down his role as a public sector revolutionary. “There’s a good quotation from Disraeli that the mark of a good action is that it seems inevitable in retrospect,” he says.


There’s one or two things I would have done differently,” he concedes. One is that he and his Treasury team should have limited the technology solutions that departments could use in moving to the new accounting arrangements. “We should probably have cut the sheer diversity”, he says.


In some other respects we were over-ambitious and could have done things simpler,” he adds. “We tended to mirror the private sector as far as possible and adapt it to the public sector. We could have acknowledged the scale of this very ambitious undertaking and made things easier for ourselves and departments by cutting-out some things that weren’t absolutely essential.”


But the adoption of Resource Accounting and Budgeting was not an end to the reform: it continues with the current public sector move to IFRS. The one flowed into the other.

Without it [RAB] you couldn’t have done IFRS,” says Sir Andrew. “We were putting in mainstream accounting. We knew that it would never be static, there would be changes and that the public sector framework would develop”.


Sir Andrew stresses that as NAO chairman it would be wrong for him to comment on the impact of IFRS on public sector accounts and that, anyway, the separation of responsibilities between himself and the Comptroller & Auditor General means that the C&AG talks about operational matters.


Likierman accepts that he was walking into a challenging job at the NAO, but that was what made it attractive, he says. “I could see it was a difficult call, but in some respects it was an exciting thing to do. Here is a new framework to be set-up. It’s not like anything that has been there before. It has got to be handled with great care, bearing in mind Parliament’s concerns, but also bearing in mind the importance of the NAO’s role. That seemed to me an important challenge. The great thing is that I feel the NAO is an organisation which has had, and continues to have, a high reputation”.


Because I have done work before on difficult corporate governance frameworks – for example my work in 2006 on the United Nations – it seemed that here was something really interesting and different that would need care, but would also be fascinating. That was why I applied.


The object of the exercise is to make sure that Parliament is satisfied that the right arrangements are in place and that their interests are safeguarded; that the C&AG is satisfied that he has got the right level of authority. Everyone else, including government, needs to be satisfied that there isn’t an issue.”


But Sir Andrew doubts that the NAO model of corporate governance is one that can be copied elsewhere, because of the NAO’s unique circumstances. “I can’t see that any other body is quite the same,” he says. “We have the C&AG whose powers remain very significant, yet here is a board of which he is a member. Making this work in terms of adequate governance, but leaving the C&AG unfettered to take judgments – this is the really interesting and challenging part. But that is precisely the interest in creating something of this kind.”


The other audit bodies are not in a comparable position, points out Sir Andrew. “The Audit Commission, for example, is not a parallel. I was a member of the Commission for three years, so I am well aware of that. And while their governance clearly works well, it is not the same kind of relationship that the C&AG has to the Public Accounts Commission.”


That’s why I am cautious about parallels. I hope we ourselves are going to find best practice and adapt it to the particular needs of the NAO and of Parliament.”


While the situation at the NAO was clearly problematic, Sir Andrew strongly resists any suggestion that he took on an equally difficult role at the London Business School. Likierman had been acting Dean for eight months in 2007 and was appointed to the role on a permanent basis earlier this year. His appointment came after what the Financial Times termed “a troubled 18 months”.


Sir Andrew denies any similarity between his two new roles. “I wouldn’t characterise the NAO and the London Business School in the same way, at all,” he insists. “I was asked to take this job on at the London Business School because the governors wanted a change in the leadership structure, not in governance. At the NAO, what I hope I bring is the combination of relevant experience in knowing about the organisation and in the application of complex governance arrangements.”


That set of skills reflects a very diverse career and is supported by his accountancy qualifications. Sir Andrew is CIMA- qualified – he is a past President – as well as an FCCA.


I followed a rather French-style career, where people move from sector to sector,” he reflects “and I’ve moved round a lot. There have been two full-time spells in commercial life, two full-time in government and four in academic life, which I’ve always combined with work in a non-executive capacity. I have been able to do that because my underlying financial skill set is easily transferable. Anyone can do the same and I would recommend it – I’ve certainly appreciated the variety. ”


He says the public and private sectors remain culturally different in many ways. “For example, the public sector is more difficult in corporate governance terms because of the wider range of stakeholders, including elected representatives and wider society interests. Sir Andrew also suggests that the private sector lags the public sector in acknowledging the need to have a wide range of performance measures. “The non-financial and qualitative aspects seem to me to be under-rated and under-powered as part of most private sector performance frameworks,” he says.


As part of his work on performance measurement, in which he is an acknowledged expert, he has recently undertaken work looking at performance-related rewards. He concludes that bonuses should reflect a mix of past performance and evidence that an organisation is able to sustain that performance. It is not, he argues, just a matter of rewarding shareholders in the short term.


The fact that Sir Andrew has just completed further academic research demonstrates that at 65 he has no intention of slowing down.


I am used to working hard,” he explains. “I have never worked a 45 or even 50 hour week. I work six pretty long days each week. Four are for the London Business School, and two for anything outside: mainly now the NAO and Barclays. So I try to pack a lot in. Certainly any meetings I chair start on time and are pretty short. It helps that I walk fast and cycle to many outside meetings – it is usually the best way to get around London.


Likierman denies that this is stressful. “On the contrary. My experience is that there’s stress if one doesn’t like what one does. I hugely enjoy what I do. I’m incredibly lucky.”

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