Statutory arrangements for audit

The Audit Commission Act (1998) sets out the framework for audit of local authorities. It consolidated the provisions of the Local Government Finance Act (1982), which established the Audit Commission in 1983. These provisions have now been largely replaced by the Local Audit and Accountability Act 2014.

The Audit Commission closed at the end of March 2015 and therefore a number of their responsibilities were transferred to other organisations.

The Local Audit and Accountability Act 2014 lays the foundations for the arrangements following closure of the Audit Commission including the transitional arrangements. The new framework for local public audit is due to start after the Commission's current contracts with audit suppliers end at the conclusion of the 2017/18 audits for local governments sector bodies. A transitional body (Public Sector Audit Appointments Limited, or ‘PSAA'), established by the LGA, is overseeing the contracts in the intervening period and has been specified by the Secretary of State to be the ‘appointing person' to appoint a local auditor to audit the accounts of any relevant authority that ‘opts in' to the national scheme run by PSAA.

Responsibility for preparing and issuing Codes of Audit Practice and guidance to auditors, and a power to carry out examinations into the economy, efficiency and effectiveness with which relevant authorities have used their resources, passed to the Comptroller and Auditor General on 1 April 2015. The Local Audit and Accountability Act 2014 also provides for the Commission's data matching powers and the National Fraud Initiative to transfer to the Cabinet Office. The Commission's counter-fraud function transferred to the ‘Counter Fraud Centre' established by the Chartered Institute of Public Finance and Accountancy (CIPFA).

With regards to inspection, the powers to carry out Best Value inspections transferred to the Secretary of State for Communities and Local Government on 4 April 2014.

30 November 2016