Smaller UK public sector bodies will receive large fee cuts as part of deals struck between the UK Audit Commission and private audit firms.
The cuts will apply to about 9,800 parish and town councils and drainage boards. About half of these bodies will be waived of any audit fees while most others will receive fee cuts of up to 30%.
The Audit Commission handed out contracts to audit firms as part of the privatisation its public sector audit work. Grant Thornton and BDO received contracts worth £900,000 each, Littlejohn was awarded a £700,000 contract and Mazars picked up a £300,000 contract. The contracts last five years and will begin in the 2012/2013 fiscal year.
In this segment of the public sector, three quarters of audit work was already being carried out by private firms.
“This shows the bulk purchasing power of the Audit Commission,” chief executive of Eugene Sullivan said.
“We have attracted very competitive bids from private audit firms, putting the money saved back into the budgets of local bodies. The commission’s scale of audit fees will be fixed at these lower levels for five years. The new scale fees will be announced in May by the commission.”
Earlier this month, the Audit Commission has awarded several five-year government body audit contracts worth over £425m ($672m) to Grant Thornton UK, KPMG UK , Ernst & Young UK and to DA Partnership alliance with Mazars.