New local audit steps move £1.2 billion savings closer
21 Mar 2014 04:21 PM
Local Government
Association to lead interim arrangements for public sector audit after
2015.
Local Government Minister
Brandon Lewis announced yesterday (21 March 2014) that as part of plans to save
£1.2 billion from the abolition of the Audit Commission the Local Government Association
(LGA) will lead interim arrangements for public sector audit after
2015.
The Local Government Association
will set up a new company to take on responsibility for management of the Audit
Commission’s contracts until the legal introduction of local appointment
in 2017.
The government abolished the
Audit Commission’s expensive inspection regime and, in 2012, its audit
practice was outsourced to private audit firms. The Local Audit and Accountability Act 2014 will disband the
residual Audit Commission and introduce a new local audit
framework.
The decision to close the Audit
Commission has already led to savings of over £400 million. The
transitional body is providing a step further towards achieving savings to the
taxpayer of £1.2 billion over 10 years.
In addition, ministers have
asked experts at the Chartered
Institute of Public Finance and Accountancy (CIPFA) to develop the Audit
Commission’s counter-fraud measures in a new national Counter Fraud
Centre.
Ministers believe that this new
centre can be part of the next generation of activity to ensure local
authorities can access information to help them proactively prevent and
prosecute local fraud.
Local Government Minister
Brandon Lewis said:
Today’s decisions mark an
important step towards greater localism and our audit reforms that will save
£1.2 billion. The Local Government Association will play a key role in
getting arrangements in place to pave the way for the new local audit regime
that passes power down through more local choice and transparency. This will
leave more time for councils to get on with the business of local
government.
Chairman of the Local Government
Association Sir Merrick Cockell said:
Placing the LGA at the heart of
this process will help ensure that high quality audit continues to be delivered
with stable audit fees. We are pleased that government has recognised the
unique strengths of the LGA which make it ideally suited to set up the
transitional body.
It is our aim that councils that
wish to do so will have the opportunity to access external audit from a
national body when the current contracts come to end. We believe that this will
continue to provide the public sector nationally with the best prices for
external audit.
Chief Executive of Chartered
Institute of Public Finance and Accountancy Rob Whiteman said:
Tackling fraud and protecting
the public purse are at the heart of public concerns about the way government
spends taxpayer’s money. It is fantastic news that the Audit Commission
will be able to transfer their current work on fighting fraud to CIPFA’s
new Counter Fraud Centre.
The new centre will be a global
leader in protecting public resources from fraud. It will fight to make sure
that every penny of public money is accounted for and spent on the services
that communities need.
Further
information
Outsourcing all the Audit
Commission’s in-house local public audit work to the private sector has
lead to a 40% reduction in council audit fees and left only a small residual
Commission staff to oversee the outsourced contracts until the Commission
closure is completed and the contracts transferred.
The Local Government Association
will be responsible for managing the Commission’s £85 million audit
contracts as well as the value for money profiles when it closes at the end of
March 2015. It will also have responsibility for working with the
Department for Work and Pensions to enable the continued delivery of the
Housing Benefit count.
The Local Audit and Accountability Act 2014 delivers the
government’s commitment to close the Audit Commission and transfer its
remaining functions. The Act puts in place a new local audit and accountability
framework for local public bodies in England. This replaces the centralised
arrangements for the audit of local bodies with a more localist approach,
giving local bodies the freedom to appoint their own auditors from an open and
competitive market; manage their own audit arrangements, with appropriate
safeguards to ensure auditor independence; and retain the same high audit
standards. As a result, audit services will be better matched to local
bodies’ individual needs.
The Act also protects the rights
of taxpayers to inspect local bodies’ accounts and allows them to say if
they think there are matters that the auditor should examine. In addition, the
Bill maintains public interest reports and we intend that the new regime should
safeguard whistleblowing protections through secondary
legislation.
A plain English guide to the Local Audit and
Accountability Act is available.
Savings of up to £1.2
billion from the abolition of the Audit Commission are over a 10 year period
and include savings made by local authorities on external audit fees. An impact
asssessment quantifies the costs and savings associated with the
government’s programme of reforms to local audit set out in the
Act.