Protecting the public purse

Audit Commission continues drive to reduce audit costs

The Audit Commission has today announced that it will retender audit contracts worth £25.2 million a year. The contracts currently held by audit firms were initially awarded in 2006 and 2007 and extended in 2010. They represent about 30 per cent of the total local audit work carried out in England.

The other 70 per cent of the market was successfully outsourced in 2012, having been previously carried out by the Commission’s then in-house Audit Practice. The outcome of the competitive process in 2012 enabled the Commission to reduce statutory audit fees by up to 40 per cent. Over five years, those new contracts will save local public bodies some £250 million.

In light of these savings the Commission believes that, by terminating the 2006 and 2007 contracts and retendering, it can obtain greater reductions for all bodies, for longer. The new arrangements will come into effect from the audit of the accounts for 2015/16.

Announcing the decision, Commission Chairman, Jeremy Newman, said: “We are not complacent and we’ve taken a step that we anticipate will reduce audit costs, passing on even more savings for local public bodies. In this difficult financial environment, any savings we secure must be of benefit.  We are grateful to The Department for Communities and Local Government, the Department of Health, the Local Government Association and the NHS Confederation, for supporting this decision”.

For further information please contact:

Nick Rigg
The Press Office, Audit Commission
DL: 0303 444 8284, M: 07970 906 112

Notes for Editors

  1. The Commission provided the two years notice required under the contract for early termination.
  2. The Commission will be contacting audited bodies likely to be affected by the decision later this week to explain the practical implications for them.
  3. These contracts are for external audit services and cover a wide geographical spread across England.
  4. The Audit Commission currently has seven firms providing external audits service to local public bodies: Deloitte LLP, Ernst & Young LLP, Grant Thornton UK LLP, KPMG LLP, Mazars LLP, PKF (UK), and PricewaterhouseCoopers LLP.
  5. This announcement directly affects Deloitte LLP, Grant Thornton (UK) LLP, KPMG LLP, PFK (UK) and PricewaterhouseCoopers LLP.