The Audit Commission’s role is to protect the public purse.
We do this by appointing auditors to a range of local public bodies in England. We set the standards we expect auditors to meet and oversee their work. Our aim is to secure high-quality audits at the best price possible.
We use information from auditors and published data to provide authoritative, evidence-based analysis. This helps local public services to learn from one another and manage the financial challenges they face.
We also compare data across the public sector to identify where services could be open to abuse and help organisations fight fraud.
The Local Government Finance Act 1982 established the Audit Commission for Local Authorities in England and Wales on 21 January 1983. We began work as a public corporation on 1 April 1983.
On 1 October 1990, we assumed responsibility for the external audit of the NHS and our name changed to the Audit Commission for Local Authorities and the NHS in England and Wales. A consolidating Act, the Audit Commission Act 1998, brought the earlier statutory provisions together into one document.
The Local Government Act 1999 extended our powers to include inspection of best value authorities, and the Local Government Act 2003 provided for the inspection of registered social landlords. The same legislation also conferred on us express powers to undertake comprehensive performance assessment of local authorities. The Health and Social Care (Community Health and Standards) Act 2003 said a foundation trust may appoint an officer of the Audit Commission as its auditor with our agreement. This provision is now in the NHS Act 2006. In 2005, we took on the appointment of auditors to English NHS charities through a provision in the Charities Act 1993.
The Fire and Rescue Services Act 2004 extended our functions to cover fire and rescue authorities’ compliance with the Fire and Rescue National Framework. Our remit in Wales was transferred to the Auditor General for Wales by the Public Audit (Wales) Act 2004. The words ‘and Wales’ were dropped from our name in 2008.
The Serious Crime Act 2007 gave the Commission an express statutory power to conduct data matching exercises. The Local Government and Public Involvement in Health Act 2007 transferred the Benefit Fraud Inspectorate to the Audit Commission, and gave us a new power to provide advice and assistance to other public bodies. The 2007 Act also allowed us to report on the performance of English local authorities in support of its programme of comprehensive area assessment. The Housing and Regeneration Act 2008 replaced registered social landlords with registered providers of social housing, and awarded the Commission power to inspect them at the request of the Tenant Services Authority.
In August 2010 the Department for Communities and Local Government (DCLG) announced plans to put in place new arrangements for auditing England’s local public bodies.
The Local Audit and Accountability Act received Royal Assent on 30 January 2014. The Act makes it possible for the Audit Commission to close, in line with Government expectations, on 31 March 2015, 30 years after it was established.
In the place of the Audit Commission, there will be a new framework for local public audit, due to start after the Commission’s current contracts with audit suppliers end in 2016/17, or potentially in 2019/20 if all the contracts are extended. A transitional body will oversee the contracts in the intervening period. The transitional body will be an independent, private company to be created by the Local Government Association (LGA).
Several of the Commission’s functions will continue after its closure. The Local Audit and Accountability Act gave the Comptroller and Auditor General a duty to prepare and issue Codes of Audit Practice and guidance to auditors; and a power to carry out examinations into the economy, efficiency and effectiveness with which relevant authorities have used their resources. The Act also provided for the Commission’s data matching powers, and therefore the National Fraud Initiative, to transfer to the Cabinet Office. The government has announced that the Commission’s counter-fraud function will transfer to a new public sector ‘Counter Fraud Centre’ to be established by the Chartered Institute of Public Finance and Accountancy (CIPFA).
The Commission’s in-house Audit Practice was the successor to the District Audit Service which was first established in 1844 and was absorbed into the Audit Commission when it was set up in 1983. It kept its separate brand name until 2002.
The Audit Practice used to undertake the majority of audits for local public bodies. In July 2011, DCLG Ministers confirmed their preference for transferring this work to the private sector by outsourcing contracts.
The Commission’s Board agreed this approach and carried out a procurement exercise to give private-sector bidders the chance to compete for the Commission’s audit work. This meant all of the Commission’s in-house work would be outsourced in time for the audit of 2012/13 accounts.
In March 2012 the Commission announced the results of the procurement exercise awarding five-year contracts to four private firms. Later in March the Commission also confirmed arrangements for the audit of the country’s 9,800 smaller local public bodies
On 1 November 2012 around 700 auditors transferred to new private-sector employers and the Commission’s Audit Practice closed.