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| Audit chiefs have £10m in Iceland | |
| (10 minutes later) | |
| The watchdog which monitors all national and local government spending has admitted it has £10m tied up in Iceland's troubled banks. | |
| The Audit Commission seeks to ensure that £180bn public sector spending each year provide "value for taxpayers". | |
| It said it deposited £5m in Landsbanki in April this year - and a further £5m in July in Iceland's Heritable Bank. | |
| The commission said the deposits were in "full compliance" with their guidelines "on prudent investment". | The commission said the deposits were in "full compliance" with their guidelines "on prudent investment". |
| The admission is embarrassing for the body established to ensure greater efficiency and value for money in the delivery of public services. | |
| The Commission said that it did not expect the investments - which account for about 4% of its annual turnover - would affect its future operations or staffing. | |
| However, it has launched an internal review into how the deposit decision was taken and says it expects the National Audit Office, which audits its finances, to hold a separate inquiry. | |
| At the time it invested the money, the Audit Commission insisted in a statement on Thursday, the two banks in question had strong credit ratings. | |
| "Like other public bodies, the commission is obliged to maximise returns on its working reserves," it said in a statement. | |
| Questions about the position of the Icelandic banking sector were already being aired in Parliament, as well as in the City, in July. | |
| Local authorities across England and Wales invested £858m in Icelandic banks, money which is now at risk after the turmoil in the country's economy and the banks' nationalisation. | |
| It emerged on Wednesday that three councils with money in Icelandic banks potentially face "severe" short-term financial problems. | |
| Ministers have sent a team of financial troubleshooters to the councils to assess their position and what assistance they may require. |