Talks underway to set up council audit procurement body

17 Feb 16

The body created by the Local Government Association to oversee council audits following the abolition of the Audit Commission is considering plans to jointly procure contacts across the sector from 2018/19.

Public Sector Audit Appointments has confirmed that it would “explore the feasibility and viability of PSAA itself becoming an sector-led body for principal local government bodies”.

As part of the reforms that led to the abolition of the Audit Commission last April, PSAA was formed to appoint auditors to local government and parts of the NHS, set audit fees, and manage the current outsourced audit contracts.

Following the end of these contracts – which is due following the audits of 2016/17 accounts but could be extended for up to three years – local authorities will be required to appoint their own auditors.

However, local government secretary Greg Clark has indicated the contracts will be extended for a period of one year for principal local government bodies only – councils, fire and rescue authorities and combined authorities.

The new framework for small bodies (mainly parishes and internal drainage boards, who will be allowed to jointly procure) and NHS bodies will therefore commence with the 2017/18 audits. Principal bodies would therefore have to appoint their own auditors starting with the 2018/19 audits.

Councils had previously shown interest in creating a body that could procure audits on a national level after a provision for this was included in the Local Audit and Accountability Act 2014. This would mean authorities would not need to create their own audit panels to oversee appointments.

PSAA’s corporate plan stated that it would now work with the LGA and the Improvement and Development Agency to explore the feasibility of PSAA seeking to enter into contracts and appoint auditors to local bodies in the new regime.

"The IDeA Board has asked PSAA to consider seeking to become the sector led body. It believes PSAA is well placed to take on such a role after the current transitional arrangements have concluded. PSAA’s board shares this view and has responded positively to the IDeA Board invitation. We will work with the IDeA Board, the LGA and other stakeholders to undertake further analysis and testing to explore the feasibility and viability of PSAA taking on the sector led body role in the future."

Chief officer Jon Hayes said that the firm’s strategy involves two parallel strands of work.

“First, we need to ensure that the existing audit contracts continue to deliver good quality and positive value for audited bodies and effective assurance to the public,” he stated. “Secondly, we need to provide as much support as possible to assist local bodies to prepare for, and be ready to meet, their new responsibilities as the legislation is fully implemented."

David Simmonds, the chair of the LGA’s improvement and innovation board added: “Councils will soon need to ensure they are compliant with the new Local Audit and Accountability Act. Giving them the option to join a sector-led arrangement that will oversee the procurement process and the appointment of auditors will allow them to access the very best deals available for the council taxpayer.”

In its role appointing and monitoring audit contracts, the PSAA has also published analysis of the financial reports of the NHS and local authorities.

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