Audit Commission

Audit Commission

Eric Pickles, Communities Secretary, announced the disbanding of the Audit Commission on 13 August 2010. Prospect believes there is a risk that existing major players in the audit market will monopolise the current Commission audits to the exclusion of new players in the public audit market.

In January 2011, Prospect submitted evidence to the House of Commons communities and local government select committee's inquiry into the audit and inspection of local authorities.

What it does: audits the £200 billion spent by 11,000 local public bodies – local government, health, housing, community safety and fire and rescue services.

Four main areas: audit; assessment; research; detecting fraud (the National Fraud Initiative has identified around £664 million of fraud and overpayments since it was established. The public auditors in the devolved administrations have joined the NFI.)

Number of staff: 1,985 (year to 31 March 2010):
Operational: 1,302, Central Directorates: 681

HQs: London and Bristol

Regional offices: Leicester, Solihull, Stevenage, Bolton, Gateshead, Leeds and Exeter.

Further info/what experts and users say

"The Audit Commission's responsibilities for overseeing and delivering local audit and inspections will stop; the Commission's research activities will end; audit functions will be moved to the private sector; councils will be free to appoint their own independent external auditors from a more competitive and open market; and there will be a new audit framework for local health bodies. This will save council tax payers £50 million. The National Audit Office will oversee the new audit arrangements, helping ensure probity, robust scrutiny and healthy competition."

Eric Pickles, 6 September 2010

Find more information on the abolition of the Commission in a House of Commons library, briefing paper, September 2010

"Auditors get slammed for shoddy ethics by Financial Reporting Council:
The Big Four accountancy firms have been slammed for failures in the quality and independence of their audit work by a City watchdog.”
Telegraph, 14 September, 2010

The future of local audit
Issues for consideration, based on the Commission's practical experience of running the existing system.
A paper by the Audit Commission, September 2010

“UK public services are about to enter the most financially difficult era in living memory.

“High-quality audit will be a vital defence against some of the problems that are likely to arise as public bodies attempt to downsize their organisations and services to live within significantly reduced budgets.
If we do not find the right answers, the demise of the commission might come to be regretted at home as well as abroad.”

Steve Freer, chief executive of the Chartered Institute of Public Finance and Accountancy
Quoted in Public Finance magazine

“Opinion: who'll watch the watchmen when the auditors are away

“Will communities really benefit from councils being able to appoint their own (private sector) auditors?

“The loss of objective research-based thinking at worst hobbles the local government improvement agenda and at worst hands it over to the Daily Mail.

“Local taxpayers want to know not only that the incomprehensible financial statements produced by their council are objectively true and fair but also that their council tax has been wisely spent.
Comment by Chris White on Liberal Democrat Voice website

Audit Commission’s latest annual report

Doncaster metropolitan borough council – an example of why we need the Audit Commission
Secretary of State for Communities and Local Government (Mr Eric Pickles): "I am announcing today a package of intensive measures that I am proposing to put in place to turn around Doncaster metropolitan borough council after 15 years of poor governance and dysfunctional politics.

“Following a corporate governance inspection of the council, the Audit Commission published their report on 19 April, 2010, which concluded that the council is not properly run, is failing, and lacks the capacity to improve. The commission recommended statutory intervention by the Secretary of State.

“The then Government accepted the report, announced that Government would intervene, and sought representations from the authority and its partners by 25 May on the form that intervention might take. It also established an emergency advisory board to provide, if urgent decisions were needed, leadership and clear support to the council's acting chief executive.

“I have considered carefully the Audit Commission's report and recommendations, together with the representations received from the council, including the mayor, and its partners about the form of any intervention.

“I am satisfied that there is a strong case for intervention at Doncaster metropolitan borough council, and I have issued today to that authority a draft of a direction that I intend to make under section 15 of the Local Government Act 1999 specifying the form of intervention to be put in place at Doncaster, together with a draft explanatory memorandum.”