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

“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.