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Local Government Minister Grant Shapps has welcomed today's announcement by the Audit Commission that hard-pressed councils and other local bodies should see big fee reductions following the successful outsourcing of the Commission's centralised audit practice

Outsourcing is the next step to disbanding the Audit Commission and putting in place a new decentralised framework that will refocus audit on helping people hold their councils to account for local spending decisions. It should save £250 million over five-years, leading to fee reductions of around 40 per cent for local bodies. This will help councils in managing their budgets during this challenging period, and ensure the same high audit standards are maintained to safeguard public money.

Four firms are expected to win contracts, increasing the number of suppliers of local public audit from five to seven. This will help create more choice in the market ahead of local bodies appointing their own auditors. Other firms will have the opportunity to enter the market then too.

The contracts awarded by the Audit Commission will begin on 1 September 2012 and last for five years. The Government was happy to support the sector's preference for these big fee reductions to be locked in for five-years.

In the meantime, the Government is pressing ahead with its plans for disbanding the Audit Commission. A draft Bill will be published in the Spring for Parliamentary scrutiny. The legislation will be introduced as soon as Parliamentary time allows. The legislation will include arrangements that allow these contracts to continue after the Commission is abolished.

Staff at the Commission's in-house practice will transfer to the winning bidders on 31 October, leaving a small residual Commission to oversee the outsourced contracts until the Commission is abolished and the contracts transferred.

Mr Shapps said:

"Today marks another step on the road to replacing the Audit Commission with a more streamlined and competitive local audit system that increases town-hall transparency and the accountability of councils to local citizens.

"The potential savings of £250 million with 40 per cent fee reductions for councils show that our decision to outsource the Audit Commission's in-house practice was the right one."

Sir Merrick Cockell, Chairman of the Local Government Association, said:

"The Local Government Association would like to see councils themselves procuring their audit services and we have been working with Government to that end. In the current financial climate this next step towards that goal represents significant and guaranteed savings for five years and that is good news for local government. At a time when they are facing very hard decisions about budgets, this will be a tangible financial benefit to them."


Written by Scott Buckler
Monday, 05 March 2012 12:12

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