By Richard Johnstone | 10 May 2013
The National Audit Office has today welcomed confirmation from government that it will be able to undertake ‘value for money’ examinations of councils once the Audit Commission is abolished.
The NAO said publication of the Local Audit and Accountability Bill had ‘clarified’ the powers of the auditor general to look into ‘the economy, efficiency and effectiveness’ with which local public bodies use their resources.
The legislation, which was confirmed in Wednesday’s Queen's Speech, will formally abolish the Audit Commission, whose audits of local authorities and other public bodies, like NHS trusts, have already been outsourced.
The Bill will also put in place a new audit regime, with local authorities able to appoint their own auditors.
Under these plans, the NAO will prepare and maintain a Code of Audit Practice to set out the framework within which local auditors will work.
The legislation also confirms that the auditor general will be able to examine the work of councils under the National Audit Act (1983).
These examinations can cover ‘all relevant authorities’ and are intended to ensure ‘that the use of resources… represents an economical, efficient and effective use’. This will also allow the NAO to also provide ‘evaluation, commentary and advice’ to authorities on their use of funding.
However, it states that the auditor general will not be entitled to question ‘the merits of the policy objectives’ of either councils or Whitehall.
The NAO said the Bill clarified its powers, and would lead to ‘a small number’ of additional examinations to provide an ‘end-to-end’ view of the use of public funds. It added that it would work closely with councils and the Local Government Association as it developed this programme.
Auditor general Amyas Morse said the Bill provided 'welcome clarity about the government’s intentions for the future of local public audit’.
He added: ‘However, much work remains to be done. As the new devolved approach develops, the government will need a firm grasp of what is going on, so that it can be assured that the system overall is working well, in line with its policy objectives. The NAO remains committed to playing its part in the new framework, consistent with its core role and independent status.’
Responding to the bill, CIPFA said it had ‘significant concerns’ about the potential impact of the reforms on local accountability.
In particular, it was concerned that a definition of the scope of public audit hds not been included in the Bill.
CIPFA said public sector audit should go further than in the private sector, by requiring regularity, propriety, probity and value for money to be considered alongside an audit opinion on the financial statements.
Policy director Ian Carruthers said that, although the Bill provided some clarity on the future shape of local public audit in England, it was 'worrying' that its wider scope was not made clear in the Bill. This omission could 'actually serve to weaken rather than strengthen public accountability', he added.
