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The Audit Commission's new Codes of Audit Practice effective today

The Audit Commission's new Codes of Audit Practice for local government and NHS bodies were approved by Parliament on 9 March 2010. Copies of both Codes and the Statements of Responsibilities are available on the Audit Commission website.

The Codes determine the nature, level and scope of local audit work and provide the framework within which independent professional auditors provide assurance on the stewardship and use of public money.

Michael O'Higgins, Chairman of the Audit Commission, said:

"It is easy to take the audit process for granted. It mostly occurs behind the scenes. But audit in the public sector is an essential element in the process of accountability for public money and the proper conduct of public business. Auditors help the rest of us to hold those who govern and manage public services to account.
'The fact that we enjoy such high standards of financial probity and propriety across the public sector in this country is in large part a result of the strength of the public audit arrangements. These Codes of Audit Practice are an important part of that. They prescribe how independent auditors, appointed by the Commission, should meet their statutory and professional responsibilities. They underpin the statutory independence of auditors, which enables them to speak 'without fear or favour'."

Separate Codes for local government and the NHS reflect the different accounting, corporate governance and performance management frameworks in the two. They both have to be updated every 5 years.

The Commission has made minimal changes to the new Codes, to:

  • align auditors' responsibilities when they make their annual value for money conclusion with the key lines of enquiry in the new approach to use of resources assessments
  • reflect legislative changes since the Codes were last approved, including the abolition of the audit of best value performance plans for specified local government bodies and the replacement of  the Healthcare Commission by the Care Quality Commission
  •  for the first time include references to auditors' responsibilities in relation to the annual report and remuneration report in the NHS Code and the annual report, where produced, and the proposed remuneration report in the local government Code. We also included references to the  summarisation schedules in the NHS Code and to the whole of government accounts return in the local government Code
  • incorporate minor drafting changes, where we felt that the wording of the Codes needed clarification or could be improved

The Codes have been developed in consultation with key stakeholders, who endorsed the approach we have taken.

The Audit Commission Act 1989 requires the Commission to review the Codes and submit them to the Secretary of State for Communities and Local Government who is responsible for laying them before both Houses of Parliament every five years. The current Codes were approved in March 2005. The new Codes will come into effect immediately.

Notes to editors

The Statements of Responsibilities of Auditors and Audited Bodies have been updated to align with the new Codes. The Statements of Responsibilities assist auditors and audited bodies by summarising where - in the context of the usual conduct of an audit - the different responsibilities of auditors and of the audited body begin and end, and what is to be expected of the audited body in certain areas. The Statement of Responsibilities supports the Codes, and auditors may refer to, and/or incorporate, it in audit planning documents, annual audit letters, reports and other audit outputs.  As for the Codes the Commission has prepared a separate statement of responsibilities for local government and the NHS.

The new Codes will come into affect immediately. The Statements of Responsibilities will apply from 2010/11 audits.

Each Code has been drafted as a high level document, omitting material that simply summarises the requirements of professional auditing standards.  This allows the Codes to focus on the Commission’s core requirements and those aspects of the audit which are specific to its regime, and to leave questions of detail to professional auditing standards and other guidance issued by the Commission.

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