Draft Local Audit Bill ad hoc CommitteeMemorandum submitted by West Oxfordshire District Council

Summary

The Bill adequately deals with the mechanics for dismantling the Audit Commission and the procurement of external contracts for the first five years of audit post Audit Commission.

The Bill introduces further unnecessary burdens on local authorities by introducing an unnecessary tier of bureaucracy through the creation of an “audit panel”.

Local Authorities retain direct relationships with local electors unlike many other public or quasi public bodies ensuring higher levels of local oversight already.

The National Audit Office could comfortably retain a gamekeeper role in the very rare event of auditor dismissal or local disagreement on appointments.

The burden on local authorities in appointing external auditors would be higher in the public sector than the private sector despite the public sector already having additional safeguards to protect public funds.

1. Most of the Bill deals with the necessary mechanics for the end of the Audit Commission and the appropriate requirements for establishing the procurement of external audit services in local authorities once the new five year contracts procured by the rump of the Audit Commission come to an end. Whilst extensive it seems to cover the appropriate issues.

2. There is, however, one area that causes the Council concern given the stated desire of DCLG to minimise bureaucracy and red tape in local authorities is the requirement to establish an “auditor panel” which will run alongside all our other governance safeguards of internal and external audit; Audit Committee; Overview and Scrutiny Committee, Standards Committee and indeed the role of the National Audit Office which will hold the unallocated former Audit Commission duties.

3. The role of the auditor panel seems a level bureaucracy that is not necessary. All appointed external auditors must follow appropriate codes of practice and declare appropriate independence to the audited body. This is not an approach that the private sector has to follow.

4. Local authorities are in a unique position in government in that they are accountable to their local electorate in a way that no other part of government is (eg Health Service, Central Govt departments, Quango’s) because of the direct local relationship to electors.

5. The requirement to appoint “independent” non elected members dilutes the democratic principles of local government and would enable non elected persons to influence auditor appointments.

6. The Council believes that the control imposed by other clauses that auditor appointments are a matter for Full Council gives the appropriate controls to ensure the “executive” cannot exert undue influence on the process. In addition there is the statutory requirements of the s151 officer of each Council (again a role that is not mirrored in any part of government or the private sector).

7. The audit panel approach seems an unnecessarily bureaucratic and burdensome process which duplicates other controls whilst eroding the local democratic processes at a time when local resources are stretched by funding cuts.

October 2012

Prepared 16th January 2013