By Vivienne Russell | 30 August 2011
The tendering process to outsource millions of pounds worth of public sector audit contracts will aim to encourage new players to enter the market, Audit Commission bosses have told Public Finance
The tendering process to outsource millions of pounds worth of public sector audit contracts will aim to encourage new players to enter the market, Audit Commission bosses have told Public Finance.
While precise details of the procurement are being kept under wraps, Audit Commission chief executive Eugene Sullivan has revealed that efforts will be made to ensure the outsourcing process is as competitive as possible.
‘We want to create the right environment for a good competition for bidders. Whether new players come in or not, only time will tell [but] we’ve had a high level of interest,’ Sullivan said in an exclusive interview he gave to PF along with Audit Commission chair Michael O’Higgins.
In July, Communities Secretary Eric Pickles confirmed that, from 2012/13, the 70% of local audits currently undertaken by the commission’s inhouse audit practice would be outsourced to private firms in either three or five year contracts. Commission staff will transfer to successful bidders under Tupe regulations. After the end of these contracts, local audited bodies would be free to appoint their own auditors.
The public audit market is relatively small at present. Only five firms carry out major public audits for the commission, while a further four work for the commission auditing town and parish councils and other smaller bodies.
O’Higgins told PF that the government’s proposal created an opportunity for audit firms not currently in the public sector to gain a foothold.
But he added that it would become ‘very difficult’ for firms to enter the market once the outsourcing had been done ‘because all the [public audit] skills will have been allocated’.
‘If you’re a director of finance at a council looking to appoint an auditor and you got an approach from a firm that had no track record in public audit you’d have to be brave to make that appointment.’
PricewaterhouseCoopers, Grant Thornton and PKF, which all carry out principal audits on behalf of the Audit Commission, confirmed to PF that they plan to bid for the extra work. A bid is also likely to be lodged by the audit practice itself on behalf of an employee-owned mutual enterprise.
But the local government sector expressed frustration at the timescales set out by ministers.
Dennis Skinner, head of leadership and productivity at the Local Government Group, said: ‘When is it that councils are going to be able to appoint their own auditors? It feels like a promise was made some time ago, and it’s now going to take years. I suspect councils are going to be disappointed by what seems to be a lengthy timetable. And that is before we get to where I think the DCLG and, certainly, the sector want to get to.’
The tendering process to outsource millions of pounds worth of public sector audit contracts will aim to encourage new players to enter the market, Audit Commission bosses have told Public Finance
The tendering process to outsource millions of pounds worth of public sector audit contracts will aim to encourage new players to enter the market, Audit Commission bosses have told Public Finance.
While precise details of the procurement are being kept under wraps, Audit Commission chief executive Eugene Sullivan has revealed that efforts will be made to ensure the outsourcing process is as competitive as possible.
‘We want to create the right environment for a good competition for bidders. Whether new players come in or not, only time will tell [but] we’ve had a high level of interest,’ Sullivan said in an exclusive interview he gave to PF along with Audit Commission chair Michael O’Higgins.
In July, Communities Secretary Eric Pickles confirmed that, from 2012/13, the 70% of local audits currently undertaken by the commission’s inhouse audit practice would be outsourced to private firms in either three or five year contracts. Commission staff will transfer to successful bidders under Tupe regulations. After the end of these contracts, local audited bodies would be free to appoint their own auditors.
The public audit market is relatively small at present. Only five firms carry out major public audits for the commission, while a further four work for the commission auditing town and parish councils and other smaller bodies.
O’Higgins told PF that the government’s proposal created an opportunity for audit firms not currently in the public sector to gain a foothold.
But he added that it would become ‘very difficult’ for firms to enter the market once the outsourcing had been done ‘because all the [public audit] skills will have been allocated’.
‘If you’re a director of finance at a council looking to appoint an auditor and you got an approach from a firm that had no track record in public audit you’d have to be brave to make that appointment.’
PricewaterhouseCoopers, Grant Thornton and PKF, which all carry out principal audits on behalf of the Audit Commission, confirmed to PF that they plan to bid for the extra work. A bid is also likely to be lodged by the audit practice itself on behalf of an employee-owned mutual enterprise.
But the local government sector expressed frustration at the timescales set out by ministers.
Dennis Skinner, head of leadership and productivity at the Local Government Group, said: ‘When is it that councils are going to be able to appoint their own auditors? It feels like a promise was made some time ago, and it’s now going to take years. I suspect councils are going to be disappointed by what seems to be a lengthy timetable. And that is before we get to where I think the DCLG and, certainly, the sector want to get to.’
