Audit commission caught in the Icelandic cataclyism

It is remarkable that the Audit commission,the government body charged with watching over the public sector has now been forced to admit that it too had invested in Iceland.

After this morning's FT article in which the paper claimed that it had

£10m frozen in Reykjavik as news of its deposits spread.

The commission has been forced to admit that

The Audit Commission today, Thursday 16 October, confirmed that its exposure to the Icelandic banking collapse is around 4% of its annual turnover. It made two separate deposits. In April 2008 £5 million of its cash balances were placed in Landsbanki Islands and in July £5 million in Heritable Bank. Like other public bodies, the commission is obliged to maximise returns on its working reserves. At the time the deposits were made, the banks had been awarded an F1 credit rating.
Because the deposits were made on a fixed term they are not due to mature until 2009, therefore whether the Commission’s exposure to the Icelandic banks will lead to losses is yet to be determined. It is not expected that the deposits will impact on the Audit Commission’s plans, operations or staffing