01 April 2005
Public sector auditors will 'significantly reduce' their scrutiny of specific service areas to focus on organisations' corporate centres, under new principles published this week.
The Code of audit practice, launched by the Audit Commission on April 1, for the first time gives auditors a specific responsibility to scrutinise bodies' use of resources.
It supersedes the existing code of practice and scraps auditors' obligation to look at the financial aspects of corporate governance and performance management.
The new code, by concentrating on the use of resources, is intended to give auditors the scope to scrutinise and reinforce the relationship between sound finances, strong management and good performance.
As a result, auditors will be expected to examine public bodies' overarching financial and performance management frameworks, rather than focusing on individual services.
David Aldous, the commission's senior manager for audit policy and appointments, told Public Finance the changes were intended to reflect the shift towards a more streamlined regulation of public services.
'The code seeks to recognise that auditors have most to contribute to improvement in terms of core corporate activities,' he said.
'Audit and inspection has moved on considerably in recent years and the new code makes clear where audit fits into the wider inspection framework.'
The statutory code of practice sets out how audits must be performed and must be updated and approved by Parliament every five years.
The latest code – which has two versions applying to local authorities and NHS bodies – still allows auditors to scrutinise the financial management of individual services. But this will be done only where auditors have specific concerns.
Aldous said the aim was to ensure auditors did not repeat work that was already being undertaken by others, for example service inspectorates.
For councils, there will also be a close correlation between auditors' inspections and the work undertaken for the 'use of resources' block, which is being introduced this year in the revised methodology for Comprehensive Performance Assessments.
The main objective, Aldous said, was to put in place a lighter-touch, less burdensome audit regime for public bodies.
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