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Audit Commission > Audit regime > Codes of audit practice > Value for money conclusion

Value for money conclusion

Background

The Code of Audit Practice requires appointed auditors to issue a conclusion on whether the audited body has put in place proper arrangements to secure economy, efficiency and effectiveness in its use of resources. This is known as the value for money (VFM) conclusion.

In response to changes in the economic environment in which the Audit Commission and its audited bodies operate, the Commission introduced a new approach to auditors local VFM work from 2010/11.

VFM conclusion based on specified reporting criteria

Appointed auditors of the following types of bodies are required to give their statutory VFM conclusion based on reporting criteria specified by the Commission:

  • NHS trusts
  • single-tier, county and district councils
  • fire and rescue authorities*
  • police bodies**
  • the Greater London Authority bodies

*A separate VFM conclusion is not required for county fire and rescue services, as they are covered by the auditor’s VFM conclusion for the county council.
**For 2012/13 the criteria will not apply for police bodies outside London, and auditors will focus on the key risks associated with the abolition of police authorities and the transition to police and crime commissioners

Specified criteria for the auditor’s VFM conclusion

Auditors of the bodies listed above give their statutory VFM conclusion based on the following two reporting criteria, as specified by the Commission.

Specified criteria for the auditors VFM conclusion:
The organisation has proper arrangements in place for securing financial resilience. The organisation has proper arrangements for challenging how it secures economy, efficiency and effectiveness.
Focus of the criteria:
The organisation has robust systems and processes to manage effectively financial risks and opportunities, and to secure a stable financial position that enables it to continue to operate for the foreseeable future. The organisation is prioritising its resources within tighter budgets, for example by achieving cost reductions and by improving efficiency and productivity.

VFM conclusion for other bodies

A different approach applies to auditors’ local VFM audit work at the following types of audited bodies:

  • Other local government bodies not included above (for example, national park authorities, waste disposal authorities, joint committees and integrated transport authorities)

For 2012/13 this approach also applies for:

  • Primary care trusts and strategic health authorities, which will be abolished from 1 April 2013.
  • Police bodies outside London.

Auditors meet their VFM duty at these bodies by:

  • reviewing the annual governance statement / statement on internal control;
  • reviewing the results of the work of other relevant regulatory bodies or inspectorates, to consider whether there is any impact on the auditors responsibilities at the audited body; and
  • undertaking other local risk-based work as appropriate, or any work mandated by the Commission.

Auditor guidance

The Commission produces guidance to support auditors in meeting their statutory VFM responsibilities. The guidance is available from the following link: