Council chiefs 'not ready' for audit changes

12 Jul 11
Local authority chiefs in England do not feel well-prepared for the government’s changes to their audit arrangements, according to a survey published today.

By Lucy Phillips | 13 July 2011

Local authority chiefs in England do not feel well-prepared for the government’s changes to their audit arrangements, according to a survey published today.

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The poll, by consultancy KPMG, found wide support for the coalition’s plans to allow local authorities to appoint their own auditors following the abolition of the Audit Commission. However, 44% of senior council staff said they were ‘not at all’ ready for the changes and had no experience of an audit procurement process. Another quarter (24%) were only ‘fairly’ prepared.

The changes are expected to take effect for the 2012/13 accounts but the timescale has yet to be confirmed.    

Some 68 local authority chief executives, finance directors and audit committee chairs in England responded to the KPMG survey, part of a report called Preparing for changes to the external audit regime.  The majority of respondents (70%) described the government’s proposals to appoint their own auditors as a ‘good thing’, with 62% expecting the move to result in better value for money.

But the timetable for reform also came under fire. Some 64% of respondents said the timing of the changes was unclear. Most council chiefs (85%) also indicated that they were satisfied with their current auditor.    

Views on whether the government’s changes would increase the quality of audits were split. Half the respondents believed the changes would improve audit and the other half either said they would not, or were undecided on the issue.  

Mike McDonagh, KPMG public sector partner, said: ‘The appetite is clearly there amongst authorities to appoint their own auditors. They now need a detailed timescale and process in order to proceed.

‘For many this will be completely new territory and the learning curve will therefore be steep.  With authorities under pressure to deliver more for less across the board, the financial stakes are high.’ 

Some 70% of local authorities are currently audited by the Audit Commission. The government’s consultation on how the future audit regime should operate closed at the end of June and ministers are analysing the responses before refining their proposals. They have also yet to decide whether to accept the Audit Commission’s bid to establish its in-house audit practice as a mutual.

McDonagh added: ‘The public sector audit marketplace is heading for major change which will bring both challenges and opportunities to authorities.  They will need to be able to show that they have made the right choice of auditor and are receiving value for money for the taxpayer.’

A draft Bill on local authority audit is due to be published in the autumn.

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