ACCA: Local government audit needs to be strengthened and clarified

10 September 2012

ACCA released its official response to the [UK] Government's Draft Local Audit Bill about the future of local government audit. ACCA has suggested that the Government's proposals to establish audit panels are unnecessary and will introduce additional costs and burdens on local authorities.

The Local Audit Bill details the new proposed audit framework for local public bodies, the process for the appointment of auditors, and the regulatory framework for local public audit. ACCA is specifically concerned that a comprehensive impact assessment has not been conducted so far. The focus is wholly on cost without reference to the impact of downward fee pressures on audit quality. 

Gillian Fawcett, head of public sector at ACCA, says: "This lack of a comprehensive impact assessment also means costs have been understated, which make it likely that overall savings claimed as a result of the revised audit framework for local government are inflated and may not be sustainable".

She adds: "The issue for ACCA has always been about whether the government’s proposals for local government audits won’t place significant amounts of public money at risk, or would fail to provide assurance about value for money. ACCA is not convinced that proposals lay these concerns to rest."

ACCA is also seeking clarity over the threshold for public sector audits – currently at £6.5 million - as the Government is proposing a tiered level approach which would confuse rather than add clarity. The threshold of £6.5 million means that significant sums of money below that will not be subject to an audit. 

ACCA says that as the proposals stand, they will not bring a proportionate and risk-based approach to public audit, which delivers accountability and promotes public trust. ACCA is also concerned that a large proportion of local government contracts have now been let, and all contracts include a clause for a possible extension until 2020. This means that there is a potential for some local authorities not to be appointing their own local independent auditors for a further seven years. 

ACCA would want to see the regulatory function of the Audit Commission to be retained, at least during the life time of the contracts; the other option is for the management of contracts to be determined by HM Treasury and the National Audit Office – until locally independent audit appointments are made. 

Lastly, ACCA has said in its response to the consultation that it wants local authority audit committees to have oversight of the auditors and their work.

Press release


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