Before referring to the decision of Communities Secretary, Eric Pickles to scrap the Audit Commission, protector of the ‘public purse’ which pays for local government, health, housing, police, fire and rescue and other public services, David Hencke questions the wisdom of doing this.
Will its work be done more effectively by private companies which are part of that corporate-political nexus (‘cosy relationships’) deplored by the Vested Interest in Politics people and the public in general?
“Basically Pickles wants to leave it to local councils, health trusts and the new NHS commissioning bodies to police themselves by appointing their own auditors, taking away a whistleblower hot line to the Audit Commission, and allowing big accountancy firms free rein to up their charges by picking off individual councils. It also allows even more cosy relationships to be built between the auditor and the local council and leaves whistleblowers nowhere to go”.
The Commission has already had to start outsourcing
In March last year it awarded the following contracts to:
- Grant Thornton (UK) LLP, a total notional value of £41.3 million a year covering four contract areas in the North West, West Midlands, London (South) Surrey & Kent, and South West;
- KPMG LLP a total notional value of £23.1 million a year covering three contract areas in Humberside & Yorkshire, East Midlands, and London (North);
- Ernst & Young LLP a total notional value of £20 million a year covering two contract areas in Eastern and South East; and
- DA Partnership Ltd a total notional value of £5 million a year covering one contract area in the North East & North Yorkshire.
The Commons Public Accounts Committee has come to some damning conclusions on what the government is about to do – see Hansard. Points include:
- The government claims it will save £137m a year but the MPs say the figure is more likely to be £2.4m.
- The audit regime will be fragmented and more complex.
- The proposals for self-appointment of local auditors risk compromising the independence of audit.
- There are risks of duplicating governance structures, losing economies of scale in audit fees, diminished quality of audit and increased tendering costs
It also stresses that there must be provision to enable auditor removal, whistleblowing and public interest reporting.
There is a full report by Hencke on the Exaro News website.