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July 12, 2011

UK local authorities unprepared for auditor procurement

UK senior local authority executives said the possibility of having to appoint their own auditors is ‘not yet on the radar’ but more guidance would be required if the government does decide to give them the responsibility, a KPMG UK survey found.

The government is currently reviewing the responses received in a public consultation on the future of the Audit Commission, with one of the possibilities being to give local authorities the power to procure their own auditors.

More than 44% of survey respondents admitted neither they nor anyone in their team had been part of a process to appoint an auditor before and only 24% feel “fairly” prepared for the process.

The majority of executives said they are satisfied with their current auditor but a massive 70% think it would be a “good thing” to be able to appoint their own auditors in the future, which they believe could result in better value for money.

KPMG UK public sector audit partner Mike McDonagh said the firm’s research shows the appetite is clearly there amongst authorities to appoint their own auditors but “they now need a detailed timescale and process in order to proceed.”

“For many this will be completely new territory and the learning curve will therefore be steep,” he added.

According to KPMG currently around 70% of local authorities are audited by the Audit Commission.

A draft bill on the future of the Audit Commission’s audits is expected later this year.

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