By Lucy Phillips
4 April 2011
A local government think-tank has called for citizens to be
given a leading role in the audit regime that follows the abolition of the Audit
Commission.
In a report published today, the New Local Government
Network warns of a ‘disastrous’ impact on public faith in local government if
council finances fail because of the shake-up of the sector’s audit regime. The
effect on the government’s localism and Big Society agendas would be equally
damning, the report says.
To avoid this, the think-tank argues, the government should allow
citizens to sit on local audit committees, which would then approve auditor
appointments, as well as create a ‘citizen right of appeal’ in circumstances
where auditor independence might be compromised.
Financial reporting should also be simplified to make it
‘more accessible and meaningful’ to local citizens, enabling so-called
‘armchair auditors’ to hold elected officials to account.
The report, Show me
the money, came shortly after the government published a consultationinto the future of public audit. It examines what safeguards will be needed
after the Audit Commission is abolished and local authorities are able to
appoint their own auditor from an external market.
Olivier Roth, NLGN researcher and report author, said: ‘If
the new model doesn’t work and we see the deterioration or collapse of some
councils’ finances, then public confidence in localism will be seriously
undermined. With the audit landscape and public finance in turmoil, the best
way to reassure citizens is to let them take the front seat in the drive for
stable council finances.’
The NLGN also gave its backing to plans to turn the Audit
Commission’s in-house audit practice into a mutual.
Roth added: ‘Without the Audit Commission practice acting as
an additional player in the market, there are real concerns that the market
could become a closed shop, barring new business entry and raising the cost
faced by councils.’
