Audit Commission closure confirmed in law but questions remain

30 Jan 14
It is not yet clear what public sector bodies will take on some of the Audit Commission’s responsibilities after its abolition, the local spending watchdog said today as the date of its abolition was confirmed

By Richard Johnstone | 30 January 2014

It is not yet clear what public sector bodies will take on some of the Audit Commission’s responsibilities after its abolition, the local spending watchdog said today as the date of its abolition was confirmed.

Speaking after the Local Audit and Accountability Act that will shut the commission received Royal Assent, chair Jeremy Newman said discussions were continuing about what organisations would assume responsibility for its value for money profiles tool and counter-fraud work.

The Act confirmed the commission will close, as expected, on March 31 next year. In its place will be a new framework for local public audit, due to start after the current contracts with audit suppliers end in 2019/20 at the latest. Under this regime, local public bodies, including councils, will appoint their own auditors.

Newman said the passing of the act provided clarity to the commission’s remaining staff – of fewer than 70 – about the future. The watchdog will use the time until abolition to ensure a smooth and properly executed transition to the new arrangements, he added.

‘The commission is well prepared to pass on its responsibilities. In anticipation of our closure, we transferred our in-house team of around 700 auditors to the private sector and have ceased various strands of work, allowing us to become a much smaller organisation. Our new structure and business model continues to focus on our core functions. 

‘We have delivered significant savings for the public purse, remain fit for purpose and are committed to delivering our core business until March 31 2015. That core business includes managing the £85m per year local public audit market, which oversees some £200bn of public money.’

Among the transfer of functions already agreed, the National Audit Office will take over the statutory responsibility to produce and maintain the Code of Audit Practice and issue guidance to auditors.

The commission’s National Fraud Initiative will move to the Cabinet Office on April 1 2015.

Responsibility for managing the existing audit contracts will transfer to a transitional body, together with the relevant staff, that will assume statutory functions in relation to audit, such as setting fees and standards of performance.

The commission is working with several government departments to determine the most suitable organisation to take on both the value for money profiles tool and counter-fraud work, Newman said.

Welcoming the passage of the bill, the NAO said it would work with the Department for Communities and Local Government, the Audit Commission and other stakeholders to help ensure an effective transition. 

In a statement, it stated ‘some challenges remain for the government, particularly that of making arrangements for the oversight of the Audit Commission’s contracts – which run at least two years beyond March 2015 when the commission is scheduled to be abolished’. 

The NAO has recently appointed former DCLG director general of finance and corporate services Sue Higgins as the member of its leadership team with responsibility for its local government work. 

She said the challenge was now ‘to manage the transition to the new arrangements, and government will need to ensure they work in practice’.

Higgins added: ‘We are committed to building upon the strong foundation provided by the Audit Commission in taking on our new responsibilities.

'We are already experienced in testing value for money across the whole of the public sector, national and local. We will continue to develop that programme as we take on our new local audit role.’

Spacer

CIPFA logo

PF Jobsite logo

Did you enjoy this article?

AddToAny

Top