Next phase of local public audit

Published on Thursday, 05 January 2012 10:05
Posted by Scott Buckler

Local Government Minister Grant Shapps has published the next steps on the road to a more efficient and accountable local audit system that will replace the Audit Commission's centralised inspection regime

The Government is today publishing its proposals for the new arrangements for audit of local public bodies.

Following the decision to abolish the Audit Commission, the Government sought views last year on a new, more transparent and accountable local public audit framework that would both reduce the cost of public audit and maintain high standards of scrutiny over public money.

The Government will now begin a period of intense discussion with councils and audit firms so they can shape the practical details of the new, localised audit system. A series of workshops with council finance experts will begin this month.

The Government intends to bring forward legislation to formally close down the Audit Commission and introduce the new framework as soon as Parliamentary time allows. A draft Bill will be published for pre-legislative scrutiny in the Spring.

The new framework will free local bodies to appoint their own independent auditors from an open and competitive market. It will be based on the private sector audit model with transparent regulation overseen by the Financial Reporting Council and the National Audit Office. Separate arrangements will be developed for smaller bodies like parish councils.

Local Government Minister Grant Shapps said:

"Today we are taking another step down to road to replacing expensive centralised local public audit with a more streamlined and competitive local audit structure. Councils are already showing they can be open and accountable - publishing details on their day to day business from spending to structure and taking control of their own auditing affairs.

"The plans set out today will see Whitehall take another step back so that councils can begin to take ownership of their new audit system. Robust and independent external audit will continue. We want councils to be part of how we create a better, more efficient and transparent audit service that offers best value for money and properly serves taxpayers."

In addition, as the Audit Commission is wound down the Government will put in place suitable transitional arrangements.

The Audit Commission is currently in the process of outsourcing its in-house audit practice. The contracts will start from 2012-13 and are expected to run for three to five years to ensure best value for money and give local bodies the time to plan for appointing their own auditors.

Once these outsourced contracts have been awarded the Commission will further downsize in readiness for final closure. This smaller body will be responsible for overseeing the contract period after which the new arrangements will come into effect.

Vernon Soare, Executive Director of Professional Standards at the Institute of Chartered Accountants in England and Wales (ICAEW), said:

"The Institute of Chartered Accountants in England and Wales understands the importance of the proper stewardship of tax payers' money by local public bodies and the need to provide good value and effective public services to citizens. We welcome the publication of the proposals and the clarity over the next steps. The Institute of Chartered Accountants in England and Wales will continue to assist the Department for Communities and Local Government with its work on the new public audit regime."


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