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Audit Commission axe: Cost warning for councils over 'big four' auditors

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Audit Commission axe: Cost warning for councils over 'big four' auditors


Published by 24publishing for in Housing and also in Communities, Local Government

Audit Commission axe: Cost warning for councils over 'big four' auditors Audit Commission axe: Cost warning for councils over 'big four' auditors

Allowing local authorities to appoint their own auditors will put at "risk" checks on how public money is spent, an influential Commons committee has warned.

As part of its "bonfire of the quangos" the Government is axing the Audit Commission and giving town halls greater financial independence.

But the Communities and Local Government select committee claimed there were "risks to accountability for public money" unless tough legal safeguards were put in place.

In a report it states: "It is clear that these proposals involve both opportunities and risks.

"We heard concerns that some fundamental principles - particularly that public bodies should not appoint their own auditors - were being breached."

The Audit Commission carries out 70% of local government audits and contracts out the remaining work to private firms.

MPs said it was "crucial" that councils had a strong choice of auditors and should not just be left to the "big four" commercial auditors.

They also called on the Department for Communities and Local Government to "demonstrate its commitment to transparency" by reporting the full savings and costs made in the wake of the abolition of the Audit Commission.

Chairman Clive Betts said: "The over-burdensome inspection regime clearly made the Audit Commission very unpopular with local government but it did provide the public with a means to compare and assess the relative performance of their own council.

"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 urged the Government to include tough protections over the principle of auditor independence in its public audit bill, due to be introduced in the autumn.

It also recommended that the majority of members on any local audit committee should be independent.

Local Government Minister Bob Neill said: "This government has set in train measures to radically scale back centrally driven, bureaucratic and costly inspection and auditing, saving council taxpayers money.

"The committee is right to acknowledge these proposals deliver greater localism and financial independence for local government.

"Our proposals for a new audit framework will maintain the principle of auditor independence and audit standards.

"Councils will simply be free to choose independent, external auditors from an open field.

"No decisions have yet been taken on privatising the Audit Commission's in-house practice. We are working closely with the commission on options and will be announcing next steps shortly.

"We've always said we'd be happy for staff to set up a mutual."


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