By Jaimie Kaffash
8 October 2010
The government is reconsidering its commitment to allow councils to choose their own auditors, Public Accounts Committee chair Margaret Hodge has told Public Finance.
Hodge said she had concerns about councils being able to ‘hire and fire their own auditors’ following the abolition of the Audit Commission, which she put to Local Government Secretary Eric Pickles.
But, after meeting him, she was assured ‘there was a clear understanding’ from Pickles over these concerns, she told PF. ‘He is clearly making some modifications to ensure various principles are upheld, such as the Scarman principle – which states you shouldn’t hire and fire your own auditors. I think he is thinking about how he limits the freedom he was talking about, so that’s good.’
Hodge met with Pickles after he announced in Parliament last month that the National Audit Office would take over the Audit Commission’s value-for-money work. Hodge said in Parliament that Pickles had no right to make this decision without consulting the PAC, which the NAO reports to.
The PAC would be ‘prepared for the NAO to take on the value-for-money work’, she said, but added: ‘We wanted to make sure the NAO and the PAC didn’t lose the focus of our core business.
‘We wouldn’t expect the NAO to get involved in appointing auditors and we wouldn’t expect the PAC to be involved if another Doncaster emerged on the horizon,’ Hodge said, referring to an Audit Commission inspection, published earlier this year, which found that the Yorkshire council was not being properly run. ‘[Pickles] understood that.’
The PAC chair also said she was ‘sceptical’ about whether the abolition of the commission would save money.
A spokesman for the Department for Communities and Local Government told PF that the policy to allow councils to choose their own auditors remained unchanged.
