Audit and inspection


Draft Local Audit Bill – opportunity to submit evidence to the pre-legislative scrutiny

The new ad-hoc Committee of the House of Commons, established to conduct pre-legislative scrutiny of the draft Local Audit Bill, has issued a call for evidence. The committee aims to report by Christmas 2012, and their conclusions and recommendations are likely to have an important influence on the final drafting of the Local Audit Bill.

The committee's call for evidence identifies a number of specific issues it is keen to hear about including the proposed arrangements for the appointment of auditors, the availability of performance data so that local bodies can be held to account, the role of the National Audit Office, and so on. We also think this is a good opportunity to remind the committee about the strength and breadth of arrangements councils make to help people to hold them to account locally.

Draft Local Audit Bill ad-hoc Committee – on the Parliament UK website

It is important that the committee hears a strong voice directly from councils on these issues and we would encourage you to submit evidence. The closing date is Monday 15 October.

The LGA expects to be invited to give oral evidence and in preparation it would be really helpful to receive examples of innovative steps councils are taking to strengthening local accountability. 

Please send a copy of any submission you make and/or accountability case study to Nick Easton (email: nick.easton@local.gov.uk) so that this can inform the LGA's work.

Draft bill on the future of local public audit

The LGA has responded to the draft Bill on the future of local public audit. Read the LGA's response below. In terms of key messages:

LGA response to draft bill on future of public audit (PDF, 5 pages, 53KB)
52.7 KB - PDF


We fully acknowledge the need for appropriate safeguards to preserve the independence of audit but the requirement for independent auditor panels is excessive and unnecessary.

The draft Bill should be amended to introduce a requirement on the NAO to consult and agree with the LGA its programme of studies and to involve the sector in the conduct of individual studies.

We are very concerned about the proposal for the National Audit Office to have powers to undertake studies for the purposes of identifying "improvements" which may be made by councils. Such studies could duplicate the sector's own arrangements and the proposed powers should be deleted.

Read the draft bill – on the Department for Communities and Local Government website.

This draft legislation provides the means to implement the plans announced in August 2010 by the Rt Hon Eric Pickles MP, Secretary of State for the Department for Communities and Local Government (DCLG), to disband the Audit Commission and refocus audit on helping the public to hold councils and local public bodies to account for spending decisions. These proposals included giving councils the freedom to appoint their own auditors from the open market. The Government anticipates total expected savings to the public purse of £650 million over the next five years.

Alongside the draft bill, the DCLG has also published a policy overview including a range of further consultation questions.

Read the LGA's On-the-day briefing

Audit

On 13 August 2010, Eric Pickles MP, Secretary of State for DCLG, announced plans to disband the Audit Commission and to refocus audit on helping local people hold councils and local public bodies to account for local spending decisions. 

In summary:

  • the Audit Commission's responsibilities for overseeing and delivering local audit and inspections will stop
  • the commission's research activities will end
  • audit functions will be moved to the private sector
  • councils will be free to appoint their own independent external auditors from a more competitive and open market
  • there will be a new audit framework for local health bodies.

DCLG published a consultation paper on the future of local public audit on 30 March 2011. The deadline for responses was 30 June 2011.

Download 'The future of local public audit: consultation' from the DCLG website

The Local Government Association (LGA) responded to the consultation.

Read the LGA response to the DCLG consultation on the future of local public audit
61.05 KB - PDF


 (PDF, 8 pages, 61KB)

Following this consultation exercise DCLG published (on 4 January 2012) its proposals for the new arrangements for the audit of local public bodies.

New arrangements for the audit of local public bodies – on the DCLG website

In terms of next steps, this will be followed in the spring by the publication of a draft bill for pre-legislative scrutiny.

Procurement for 2012/13 and beyond

The Audit Commission has recently announced the results of its process to procure local public audit.

Local public audit – on the Audit Commission website

The results of the procurement exercise should save £250 million over five-years, leading to fee reductions of around 40 per cent for local bodies.

Responding to the announcement, Sir Merrick Cockell, Chairman of the LGA, said:

"The Local Government Association would like to see councils themselves procuring their audit services and we have been working with Government to that end. In the current financial climate this next step towards that goal represents significant and guaranteed savings for five years and that is good news for local government. At a time when they are facing very hard decisions about budgets, this will be a tangible financial benefit to them."

The contracts awarded by the Audit Commission will begin on 1 September 2012 and last for five years with the option to extend for an additional three years.

Audit fees for 2012/2013

On 5 September 2011 the Audit Commission issued a consultation paper on its work programme and fees for 2012/13. 

Visit the 'Proposed work programme and scales of fees' pages on the Audit Commission website

Read the LGA response to the Audit Commission consultation on the proposed work programme and scale of fees 2012/13 (Word, 3 pages, 323KB)

In April 2012, the Audit Commission published  'Work programme and Scales of fees 2012/13: Local Government – April 2012'. This document sets out the work the Audit Commission plans to undertake at local government, fire and police audited bodies during 2012/13, with the associated scales of audit fees for 12/13.

It says: "Through the Commission's unique bulk purchasing power, we have been able to secure significant reductions in the cost of audit services. Together with further savings achieved through the Commission's own internal efficiencies, the Commission will now pass on reductions of up to 40 per cent in audit fees for local public bodies".

Fees information on the Audit Commission website

DCLG Select Committee

The DCLG Select Committee also conducted an inquiry into the future of local authority audit and inspection.

Read the Select Committee's report on this inquiry on the UK Parliament website

Read the LGA's response to the Select Committee's report
81 KB - DOC


(Word, 17 pages, 84KB)

The Government has published a response to the DCLG Select Committee report on audit and inspection of local authorities.

Read the response on the Official Documents website (PDF, 23 pages, 180KB)

Key points to note are:

  • On self-regulation: "The sector as a whole must be robust in challenging poor performance. The Local Government Group [now LGA] has an important role to play in identifying where the challenges lie and how to overcome them. We believe the sector is committed to fulfilling this role, as demonstrated by the Local Government Group's 'Taking the lead' publication earlier this year." (para 32)
  • On performance data: "Under a localist system, it is primarily for local authorities themselves to provide citizens with the information they need to hold them to account; a substantial proportion of which will be purely local in nature. It is also primarily the responsibility of local government as a whole to ensure that citizens can access appropriate comparable performance data, and we welcome the steps taken by the Local Government Group to assist local authorities in this task." (para 35)
  • "The Local Government Accountability System statement will set out an overview of the process that would be used in moving towards intervention. The Secretary of State would intend to use those powers only in cases of serious corporate failure in an authority. These cases are rare, and can vary in their circumstances, so prescriptive criteria for when intervention would be needed would not be appropriate. However, these are cases where relationships between councillors and officers have irretrievably broken down and there is failure across a number of services. To identify these cases, Government can draw on range of information flows, including from the remaining inspectorates of local government services, and from information sharing with sector-led improvement processes. If necessary, Government has, and intends to retain, the power to commission a further investigation."
  • "Working with the Local Government Group, we have initiated an Information Sharing Network to ensure that Government is informed on progress of sector-led improvement, and that any concerns from Government are fed back to the sector. However, we have been clear that decisions related to how and when Government may intervene are matters for the Secretary of State." (paras 37&38)