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21.03.14

LGA to create ‘transitional body’ following Audit Commission closure

The Local Government Association (LGA) has been appointed to establish a new company to act as a “transitional body” when the Audit Commission closes.

Local government minister Brandon Lewis announced the initiative as part of plans to save £1.2bn from the closure of the Audit Commission.

The LGA will be responsible for managing the Commission's £85m audit contracts as well as the Value for Money profiles when it shuts at the end of March 2015.

It will also establish a new company with a new board for the sole purpose of being the transitional body. It will take on the Audit Commission's statutory functions, managing the audit contracts of nearly 11,000 public sector organisations including councils, police, health services and fire authorities, until the legal introduction of local appointment in 2017.

LGA chairman Sir Merrick Cockell said: “Placing the LGA at the heart of this process will help ensure that high quality audit continues to be delivered with stable fees. We are pleased that government has recognised the unique strengths of the LGA which make it ideally suited to set up the transitional body.

“It is our aim that councils that wish to do so will have the opportunity to access external audit from a national body when the current contracts come to end. We believe this will continue to provide the public sector nationally with the best prices for external audit.”

Already the government has abolished the Audit Commission’s “expensive” inspection regime and, in 2012, its audit practice was outsourced to private audit firms. The Local Audit and Accountability Act 2014 will disband the residual Audit Commission and introduce a new local audit framework.

The decision to close the Audit Commission has already led to savings of over £400m, according to DCLC. The transitional body is provide a step further towards achieving savings to the taxpayer of £1.2bn over 10 years, the government has claimed.

Lewis said: “Today’s decisions mark an important step towards greater localism and our audit reforms that will save £1.2bn. The LGA will play a key role in getting arrangements in place to pave the way for the new local audit regime that passes power down through more local choice and transparency. This will leave more time for councils to get on with the business of local government.”

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