Tuesday, 21 October 2014

Scrapping Audit Commission was ‘missed opportunity’

The sudden abolition of the Audit Commission was a ‘missed opportunity’ to reassess how the performance of local authorities is monitored, a committee of MPs has found.

In a report published today, Audit and inspection of local authorities, the communities and local government select committee says the scrapping of the body could have been a chance for ‘a valuable reassessment of the arrangements for public audit’.

Communities secretary Eric Pickles announced his intention to scrap the commission in August 2010. Local authorities would be free to appoint their own auditors, and the Audit Commission’s audit business would become a stand-alone firm.

Other functions of the body, including inspecting local authority housing services, would pass to other bodies.

In its report the CLG select committee, which is a cross party group of MPs that monitors the work of the Communities and Local Government department, says it accepts auditor independence can be safeguarded through the new arrangements provided a robust audit framework is put in place.

The government is due to publish a public audit bill in the autumn, which will set out more detail of how local authority audit will work once the Audit Commission ceases to exist in its current form.

The select committee says the commission should remain a ‘major player in the public audit sector’ and warns it should not be taken over by one of the ‘big four’ audit firms.

On inspection, it notes the regime had become ‘over-burdensome’ although it did allow the performance of local authorities to be compared.

Committee chair Clive Betts said: ‘Under the new regime we believe councils should focus on comprehensive local reporting against local objectives. However, the need or a broader perspective will remain so we also recommend that the need for comparative performance data be reviewed two years from now, once the new arrangements have bedded in.’

The committee calls on the government to clarify what action will be taken in cases of serious corporate or service failure.

Despite warning that the decision to scrap the commission could have been a ‘missed opportunity’ it says the time for such a re-evaluation has passed, and urges the government to concentrate on successfully implementing the changes it has announced.

It adds: ‘Once new arrangements are in place, we recommend that the government instigate a wide-ranging review of public sector audit and how it fits into the wider context of accountability for the expenditure of public money.’

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