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July 6, 2011

Committee calls for Big Four block on Audit Commission work

The UK Communities and Local Government Committee (CLGC) has called for the government to prevent a Big Four audit firm taking over the Audit Commission’s audit practice.

CLGC chair Clive Betts said as the Audit Commission is soon to be abolished government must help its audit practice to become a stand-alone body and retain its skilled staff.

“In a crowded market already dominated by too few players, we favour the establishment of a stand-alone company, preferably a mutual [company],” Betts explained.

The CLGC also called for the government to create “adequate legal safeguards and to help local government establish capable and independent local audit committees” after a proposal to abolish public body rights to appoint their own auditors.

“Ministers and the National Audit Office must move rapidly to establish a new audit framework for local government in the future that is effective, efficient and robust,” Betts said.

Last August, Department of Communities and Local Government secretary Eric Pickles revealed the Audit Commission will close by 2012 saving the government £50m ($80.2m) a year.

The Audit Commission has been the regulator, commissioner and major provider of local government audit services, undertaking 70% of local government audit and commissioning the remaining 30% to five audit firms.

Under the changes proposed, local government will appoint their own auditors through independent audit committees, and some Audit Commission functions, such as the responsibility for drawing up the scope of audit, will be passed on to the National Audit Office.

The DCLG has issued a consultation document on the future of public sector audit work and a draft bill is expected to be issued later this year.

Related link

Parliament Commons Select Committee announcement on audit

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