07 July 2011
The Audit Commission welcomes the Communities and Local Government Select Committee's report on its inquiry into the Audit and inspection of local authorities, published on 7 July 2011.
The Select Committee recognises there is a wide range of views on auditor independence. In its evidence to the inquiry the Commission has maintained its view that those charged with raising local taxes and spending public money should not also choose who audits their work. This remains the Commission's position. However, the Commission welcomes the Committee's concern that there should be strong safeguards to ensure the independence of auditors and notes their view that local authority audit committees should have an independent chair and a majority of independent members to help ensure this.
The Committee considered that there was a "potentially useful option of retaining a residual function for the Audit Commission, which may have presented an opportunity to prevent the fragmentation of functions." The Commission agrees.
The Commission believes this report is an important contribution to the debate and agrees there are areas where more work needs to be done. These include:
- support to ensure independent audit committees have the advice, training and resources required;
- safeguarding public interest reporting;
- achieving consistency of audit under a new regime;
- how to deal with the loss of comparative data;
- ensuring fee competition and a competitive market for local audit;
- what mechanisms would trigger failure and intervention at a failing authority; and
- monitoring the costs and savings of implementing the new regime.
Eugene Sullivan, Chief Executive of the Audit Commission said:
'The Commission has made an important contribution across many aspects of local government and to ensuring proper accountability for public money. We will continue to work with Ministers and their officials to design and implement the new arrangements and fulfil our statutory duties until the replacement regime is established. We will do this with the continuing resilience and professionalism that our staff have demonstrated since the abolition announcement nearly a year ago.
'The report also recognises that our in-house audit practice is "held in high regard" and that its audit skills and expertise must not be lost in a new competitive market.'
Notes to editors
1. The Audit Commission is a public corporation set up in 1983 to protect the public purse.
2. The Commission appoints auditors to councils, NHS bodies (excluding NHS Foundation trusts), police authorities and other local public services in England, and oversees their work. The auditors we appoint are either Audit Commission employees (our in-house Audit Practice) or one of the private audit firms. Our Audit Practice also audits NHS foundation trusts under separate arrangements.
3. We also help public bodies manage the financial challenges they face by providing authoritative, unbiased, evidence-based analysis and advice.
4. The government has announced plans to disband the Audit Commission and put in place new arrangements for auditing England's local public bodies. It is consulting on proposals for the new regime. It is also considering with us the options for transferring the in-house work to the private sector, including the in-house audit practice becoming an employee-owned company.
Members of the press can request a copy of the Select Committee's report from Hannah Pearce via pearcehm@parliament.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
Email m-nicholson@audit-commission.gov.uk