Green light for Audit Commission's audit firm
By Lucy Phillips | 28 July 2011
The Audit Commission is to be
split into two – one stand-alone audit company to bid for contracts against
other market players and a residual body to oversee contracts and appointments.
The government today said all the
commission’s work would be outsourced to the private sector in the next
financial year. This would allow some employees in the commission’s audit practice
to transfer into a stand-alone entity, subject to it winning contracts. Other audit staff will transfer to private firms with their work.
A small number of managerial and support staff at
the watchdog would remain in place to oversee contracts and make audit
appointments until the legislation has passed.
It is understood that Gareth
Davies, managing director of the audit
practice, will head the new company and commission chair Michael O’Higgins will
remain in charge of the residual body.
In a statement to Public Finance, Davies said: 'The leaders of the Audit Commission's audit practice confirm their
intention to bid for the work on offer in the coming procurement on behalf of
an employee-owned successor to the audit practice. More details on the proposed
bid will be provided when the procurement process starts.'
The announcement follows a
consultation by the government which ended on June 30.
Communities Secretary Eric
Pickles said: ‘We have set in train measures to save council taxpayers money by
radically scaling back on the centrally imposed, bureaucratic and costly audit
and inspections previously undertaken by the Audit Commission.
‘This government is determined to
refocus local audit on helping local people hold councils to account. We
believe that the next step is to outsource the audit practice next year as a
way to secure best value for money.
‘We are working closely with the
Audit Commission to design a fair procurement process that will allow a wide
range of bidders, whether a mutual or private sector accountancy firm, to
compete for the commission's audit business.
‘Outsourcing will also allow
further progress to be made on the new audit framework that will give councils
the power to appoint their own auditors.’
The commission has begun
preparatory work for outsourcing its 2012/13 contracts, which are expected to
run for three to five years, giving councils and other local bodies time to
plan for appointing their own auditors.
O’Higgins said: ‘Today’s
announcement brings welcome clarity about the future of our audit work. The Audit
Commission has been working with the Department for Communities and Local
Government for some time on potential options for our in-house audit practice.
The commission’s board had already put in hand preparatory work for outsourcing
and will now consider the next steps in the process in the light of the
announcement. We will continue to work closely with the DCLG and other
departments on this and other issues relating to the commission’s future.
'We will be writing to audited bodies
shortly to set out the implications for them.'
