Draft Local Audit Bill: Pre-legislative Scrutiny - Draft Local Audit Bill ad hoc Committee Contents

7  Conclusion

97.  An effective local audit regime is a vital way of providing assurance to both the electorate and Parliament that local bodies are spending public money efficiently. The Government's proposals represent a radical departure in the way in which the local public audit regime is currently managed. The draft Bill provides local bodies with the authority to appoint their own auditors on the advice of an independent auditor panel and outlines a new regulatory framework which aligns the provisions for local public audit more closely with those for private sector audit. The new audit regime is more complex and fragmented than the current regime where the Audit Commission performs the role of regulator, commissioner and provider of audit. The audit arrangements proposed by Government is workable but the complexity of these proposals exposes a number of gaps and risks which the DCLG must proactively manage in order for the regime to work effectively.

98.  The Government must ensure that a mechanism is developed to assure Parliament that public money is delivering value for money and local bodies are practicing sound financial management. The proposals for self-appointment of auditors risk compromising the independence of audit. The Government must intervene to ensure that existing governance structures within local bodies are not duplicated; existing contracts are managed proficiently; economies of scale in audit fees are not lost; quality of audit does not diminish; value for money can be measured comprehensively and consistently; fees, especially for smaller bodies, do not increase as a result of increased tendering costs and potential limitations to the market in audit and; processes for auditor removal, whistleblowing and public interest reporting are rigorous enough so that the regime is sufficiently robust in difficult circumstances.

99.  The majority of our concerns would be addressed if a procurement capacity were to be retained within the new regime for this mechanism most effectively safeguards the independence of audit and enables local bodies to benefit from economies in scale. If the Government implements its commitment to local auditor appointment, the current proposals for auditor panels should be replaced by a statutory requirement to strengthen existing audit committees.

100.  The Government should be open to our proposals and suggestions for amendments to the Bill to reinforce the independence of audit, the accountability of the tax-payers' pound and secure competitive audit fees for public bodies.

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Prepared 17 January 2013