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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