The sector led body
In response to a letter from the LGA's Chief Executive, Mark Lloyd, in March 2016, approaching 300 eligible bodies have now expressed an interest in opting-in to a sector led body to act as the ‘appointing person' under the Local Audit (Appointing Person) Regulations 2015.
As a direct result of this demonstrable level of support from across the sector, the Secretary of State for Communities and Local Government has now specified PSAA as the appointing person. The LGA has achieved its objective of establishing a national sector led body to deliver economic and efficient external arrangements for the benefit of all authorities who wish to opt-in to this arrangement.
The LGA is delighted that PSAA, the company previously established by the LGA to act as the transitional body, will continue to use its skills and experience to secure efficient and effective arrangements for the independent appointment of auditors on behalf of the sector.
PSAA has now issued its prospectus to explain how it is developing its scheme for auditor appointments. The prospectus is available on its website, which is also regularly updated with FAQs providing the latest information: www.psaa.co.uk/supporting-the-transition/appointing-person/.
The timetable for issuing formal invitations to opt-in has now been clarified. PSAA issued the invitation to ‘opt in' to all councils on 27 October 2016, with a response required by 9 March 2017. Full details are available on the PSAA website. To opt in councils and other relevant authorities will need take this decision at a meeting of full council or the authority, which clearly needs to be taken in time to submit a formal acceptance to PSAA by the required date. The LGA is keen to support the sector-led body approach and encourages as many councils as possible to opt in by this date in order to provide certainty about the volume of work included in the procurement exercise and to secure the best possible prices.
A specimen report that can be adapted and taken to a council/authority meeting for the decision to opt in is available here. This specimen report lists the principal benefits from using the sector led body approach as follows:
- PSAA will ensure the appointment of a suitably qualified and registered auditor and expects to be able to manage the appointments to allow for appropriate groupings and clusters of audits where bodies work together
- PSAA will monitor contract delivery and ensure compliance with contractual, audit quality and independence requirements
- Any auditor conflicts at individual authorities would be managed by PSAA who would have a number of contracted firms to call upon
- It is expected that the large-scale contracts procured through PSAA will bring economies of scale and attract keener prices from the market than a smaller scale competition
- The overall procurement costs would lower than an individual smaller scale local procurement;
- The overhead costs for managing the contracts will be minimised though a smaller number of large contracts across the sector
- The will be no need for the council/authority to establish alternative appointment processes locally, including the need to set up and manage an ‘auditor panel',
- The new regime provides both the perception and reality of independent auditor appointment through a collective approach
- A sustainable market for audit provision in the sector will be easier to ensure for the future.
Further updates and guidance on the options available to councils will be published via this webpage. Please contact Tim.Watkinson@local.gov.uk with any queries.
2 December 2016