Smaller councils want new agency to appoint their auditors

1 Jun 12
Smaller public bodies have called for an agency to be created to appoint auditors for them once the Audit Commission is abolished.
By Richard Johnstone | 1 June 2012

Smaller public bodies have called for an agency to be created to appoint auditors for them once the Audit Commission is abolished.

In a submission to the government yesterday, the National Association of Local Councils and the Society of Local Council Clerks said a new agency would avoid the ‘complexity and cost’ that would result from the 9,000 smaller authorities in England procuring their own audit services individually. It would also monitor the quality and timeliness of auditors’ work.

The Audit Commission’s audit work has already been outsourced in five-year contracts that will start in September. When they expire, the Department for Communities and Local Government intends county, district and London borough councils to appoint their own auditors.

However, the future arrangements for smaller bodies have not been decided and ministers plan to work with parish councils to determine these.
In their letter to the government, the NALC and the SLCC say the proposed new body should be owned by the sector. They also reiterate their view that the limited assurance audit regime currently used by the commission should continue. This seeks to give an audit opinion based on limited procedures, rather than the 'true and fair' opinion used in the accounts of principal authorities.

Membership of the body should be voluntary, and town and parish councils would have the option to appoint their own auditors if they wished, through an independent audit appointment panel.

Funding would come from a top-slice of audit fees, meaning there would not be a need for public funding.

NALC chair Michael Chater said: ‘We are committed to promoting and supporting good governance and financial accountability in local councils and the smaller bodies’ sector. Our proposal for a sector-led body has received strong support from town and parish councils and other smaller bodies’.

Johnathan Bourne, chair of the SLCC, added: ‘Our proposal… provides a localist approach to the procurement and appointment of these services, whilst maintaining independence in the process. We would welcome ministers’ support for this proposal.’

Responding to the submission, local government minister Grant Shapps said: ‘I want to make sure that we provide the right solution for the audit of smaller local public bodies, and it's good to see the sector working together to come up with its own proposal.

‘It's clear that this proposal meets our objective of localism for the new framework, and I will consider it carefully. In developing the new framework, I want to place a higher level of trust in the sector, matched with an expectation of greater openness in return.’

The Audit Commission currently appoints auditors, but the government is set to disband the watchdog now that its work, including the auditing of parish councils, will be outsourced from September.

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