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.
Grant Thornton received the highest share of the work by winning contracts worth £41m a year mainly auditing local authorities and the National Health Service.
KPMG UK was awarded contracts worth £23.1m a year, Ernst & Young UK £20m and DA Partnership in alliance with Mazars £5m. The Audit Commission said the outsourced contracts represent 70% of audits previously carried out by the soon to be abolished body.
The other 30% of the Audit Commission’s work is already outsourced to Deloitte, Grant Thornton, KPMG UK, PwC UK and PKF UK.
The Audit Commission said it expects to reduce costs by 40%, as a result of outsourcing and other savings.
Audit Commission chief executive Eugene Sullivan said the procurement process has been a complex process delivered to a very challenging timetable. “But we should also acknowledge that this is a pivotal point in the history of public service. We will be losing a distinctive and publicly-owned, local public audit service and its District Auditors who have helped to protect the public purse effectively for over a hundred and fifty years,” she said.
The Audit Commission chairman Michael O’Higgins, said the procurement has been the result of a rigorous assessment of each bidder against published cost and quality criteria, and will mean significant audit fee savings for local councils, NHS trusts and other local bodies.
As a result of the dissolving of the Audit Commission 700 auditors will have to transfer to the private sector and the only tender DA Partnership includes former auditors of the body in alliance with Mazars.
DA Partnership and Mazars said in a statement that their excitement over the awarded contracts is tinged with disappointment as it was only awarded contracts in the North East and North Yorkshire.
“This means that we have insufficient work to launch as an employee-owned independent firm. Instead, DA Partnership becomes a wholly-owned subsidiary of Mazars and will trade as Mazars DA,” they said.
The Audit Commission said that following the end of the procurement process, there will be a consultation period with audited bodies on the appointment of their new auditors. The appointments will be formally approved by the Commission’s Board in July.