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Audit Commission powers handed to National Audit Office

Posted by admin on Thu, 09/09/2010 - 08:48
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The assessment of value for money in local government and health, currently run by the Audit Commission, is to be handed to the National Audit Office.

Communities minister Eric Pickles announced on 13 August that the Audit Commission would be scrapped and a new auditing framework would be developed to ensure councils and local health bodies will still be subject to robust auditing. 
 
The Audit Commission, which employs 2,000 staff, was set up by Margaret Thatcher's Conservative government in 1983 to monitor spending by councils and some health organisations. "[The Audit Commission] was once a great organisation. It did much to challenge local government. But local government has changed itself and it's time to move on... The Audit Commission itself cannot live on past glory," said Pickles. 
 
Pickles promised there would be rotation of auditors to prevent cosy relationships, and that the NAO and the profession will jointly operate a statutory regime to oversee it. Extra commissioners will be appointed to oversee the transfer out of public ownership the commission’s auditing function, which handles two-thirds of local government audit.
 
"The move will end up costing more than it will save," insisted shadow communities secretary John Denham said: "The Audit Commission was not perfect, but isn't the secretary of state destroying one of the things that is there to ensure challenge and improvement?"
 
Pickles earlier in the week refused to appoint Jenny Watson, the chair of the Electoral Commission, to a second term as an audit commissioner, saying that she someone who had “built their career on incompetence,” was “not fit for the role” and that the department, having “had a bonfire of the quangos” was now having “a bonfire of the quangocrats”.
 
Meanwhile Gareth Davies has been appointed to oversee a potential employee buy-out of its audit function.  Davies, the commission’s managing director for local government, housing and community safety since 2007, has been appointed managing director of its audit practice. 
 
Davies has 23 years’ experience of public audit and was the commission’s MD for local government housing and community safety since 2007. If he is successful in creating a turning the 2,000-strong commission private, it will compete with existing accountancy firms for audit work among public sector bodies.
 
“We want to ensure that councils, foundation trusts and other local public services are offered a distinctive alternative to the major audit firms,” commented Davies. “Our experience of competing successfully for foundation trust audits since 2005 shows that there is a strong demand for unrivalled specialist sector expertise at a competitive price.”
 
The commission's audit staff will remain focused on their current work, he confirmed. “The top priority as always is delivering an excellent service to our clients for the rest of this audit year and the next. That's the single most effective investment in any future we might have”.