Audit Commission

The Audit Commission has completed a consultation on its proposed audit fees for health, local government and community safety organisations for 2011/12. Scale audit fees for these bodies will be between 5 and 20 per cent lower in 2011/12 than in 2010/11 (view the 2011/12 Work programme and scales of fees).

And the Commission has agreed, subject to affordability, to give additional rebates in 2011/12. This means that public bodies audited by the Commission will see a significant net reduction in fees compared to 2010/11. They will be notified of the amount due to them in the summer.

Subject to the timetable for the Commission's abolition, it is also committed to delivering further significant fee reductions of up to 15 per cent in 2012/13.

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

'We have listened to what respondents to our consultation have said and want to do more to help the bodies we audit. The Commission is continuing to drive down its costs and become more efficient. So it has been able to achieve almost £40 million in savings over three years, which are being passed straight back to health, local government and community safety organisations to help them with their own budgeting.'

Fees are the principal way the Audit Commission finances its activities, and it has a statutory duty to cover its costs, taking one year with another. During the consultation many respondents recognised that the Commission faces a difficult period leading up to its abolition. The proposals to give a rebate on 2010/11 fees, and reduce fees in 2011/12 were welcomed.

However, most local government respondents expressed the view that the previously proposed rebates and reductions were too small given the financial pressures councils will face next year. That is why the Commission has decided to increase the cost savings to audited bodies.

Others suggested that central government should pick up the costs arising from the ending of Comprehensive Area Assessment (CAA) and the abolition of the Commission, rather than public bodies.

Michael O'Higgins adds: 'The costs of ending CAA, and of the Commission's own abolition, must come from the public purse. Some will be met from reserves, and any balance will be funded by the Department for Communities and Local Government.

Because of the savings plans we already had in place and the timely and effective action we have taken to control our costs, we have been able to make rebates of £9 million to audited bodies in 2010/11, even after meeting the costs of ending CAA, including the cost of making several hundred staff redundant. We are committed to giving additional rebates in 2011/12 and further fee reductions in 2012/13.'

The new scales of fees show:

• A cut in scale audit fees of between 5 and 20 per cent at audited bodies. This reflects the reduction in the ongoing audit costs arising from the transition to International Financial Reporting Standards, which first applied to local government bodies in 2010/11, and our new, more focused approach to local value for money audit work.
• No increase for inflation applied to audit and inspection fees or the hourly rates charged by the Commission for certifying grant claims and returns.

Notes to editors

1. At the end of 2010, the Audit Commission consulted 909 audited and inspected bodies and others on the proposed work programme and scales of fees 2011/12. the consultation closed on 7 January 2011.
2. Under Section 7 of the Audit Commission Act 1998 and Section 12 of the Local Government Act 1999, the Commission has a statutory duty to prescribe scales of fees for the audit of accounts, and inspections. Before prescribing any scales of fees we consult audited and inspected bodies, their representative bodies and the accountancy profession. Once the Commission has prescribed a scale of fees, the applicable fee becomes payable by the body.
3. In law, the Commission must meet the costs of audits and its other statutory functions through audit fees.
4. In setting scales of fees the Audit Commission considers: its responsibility to ensure that auditors have appropriate resources to meet their statutory and professional responsibilities; its statutory duties, taking one year with another, to balance expenditure and income for each sector - local government and health; the expectations of government and other stakeholders; and the affordability of any changes.
5. The Audit Commission is an independent watchdog, driving economy, efficiency and effectiveness in local public services to deliver better outcomes for everyone.
   Our work across local government, health, housing, community safety and fire and rescue services means that we have a unique perspective. We promote value for money for taxpayers.
6. On 13 August 2010 the Secretary of State for Communities and Local Government announced that he plans to disband the Audit Commission. His intention is to have new arrangements in place for auditing England's public bodies by 2012/13.

For more details about the role of the Audit Commission visit www.audit-commission.gov.uk

For further information please contact:
Mark Nicholson
Media Relations Manager, Audit Commission,
Millbank Tower, London SW1P 4HQ

Direct line 0844 798 2135 / 0207 166 2135
24hr Press line 0844 798 2128
Mobile 07813 038132
E-mail m-nicholson@audit-commission.gov.uk