Audit Commission to retender early audit contracts

2 Apr 13
Local audit contracts worth £25m a year are to be retendered in a bid to find further savings, the Audit Commission announced today.

By Vivienne Russell | 2 April 2013

Local audit contracts worth £25m a year are to be retendered in a bid to find further savings, the Audit Commission announced today.

The contracts, covering local authority and primary care trust accounts, were outsourced to private firms in 2006 and 2007, before the abolition of the commission was announced in 2010. They represent around 30% of the total audit work carried out at local bodies in England.

Following the break-up of the commission, the bulk of its remaining audit work – which had been carried out in-house – was outsourced to the private sector last year. This is expected to bring in savings of £250m over five years and allow statutory audit fees to be cut by up to 40%.

In the light of these expected savings, the commission has decided to terminate the earlier contracts and re-tender them, giving the required two years notice.

The new arrangements will come into effect for the 2015/16 accounts.

Audit Commission chair Jeremy Newman said: ‘We are not complacent and we’ve taken a step that we anticipate will reduce audit costs, passing on even more savings for local public bodies.

‘In this difficult financial environment, any savings we secure must be of benefit. We are grateful to the Department for Communities and Local Government, the Department of Health, the Local Government Association and the NHS Confederation for supporting this decision.’

The contracts being retendered are currently held by Deloitte, Grant Thornton, KPMG, PricewaterhouseCoopers and PFK.

Following the last tender round, two other firms entered the local public sector audit market: Ernst & Young and Mazars.

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