The New Local Government Network (NLGN) in the
UK has unveiled a series of proposals to protect against the
dangers of the “trend towards centralised regulation of public
sector audit,” following the abolition of the Audit Commission last
year.
In its report, ‘Show me the Money’, the
independent think tanks says that while a successor to the Audit
Commission is found, a series of important standards must be
retained.
The research report advocates auditor
independence be maintained and suggests a series of proposals to
protect against the dangers of centralised regulation to “ensure
cost-effective audit and clear systems of accountability and
independence”.
These include:
•Decentralising the responsibility to approve
appointment of auditors to local independent audit committees.
These should be statutory bodies with a lay chair and a majority of
lay members.
•Simplifying financial reporting to make it
more accessible and meaningful to local citizens so that ‘armchair
auditors’ can hold elected officials to account.
•Providing citizens with a ‘Right of Appeal’
in cases where the independence of auditors may be compromised.
The NLGN’s research also highlights three key
foundations for a new audit regime: independence, assurance and
accountability to citizens; ensuring a vibrant market for audit
services to reduce costs and retain quality; and providing local
choice, discretion and democratic accountability.
The report says that if these three
often-competing dynamics can be balanced then “the future of audit
is likely to be stable, productive and proactive in meeting the
needs and demands of central politicians, local government,
ambitious audit firms, the cost-reduction agenda and citizens
themselves.”
The UK government announced the abolition of
the Audit Commission in August 2010.
