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Pickles unveils new council audit regime

The Government has unveiled new legislation that will overhaul the local government audit system inEngland. Communities secretary Eric Pickles says the new auditing regime – which has been talked about since the very first days of the Coalition – will save £650m over the next five years.

The legislation shifts responsibility previously held by the Audit Commission, which is having its work outsourced to the private sector, with around 700 of its staff transferring to new employers in October 2012 and only a small number remaining in place to oversee contracts with private firms. These new contracts will cut fees paid by public bodies by up to 40%.

Under the provisions of the Local Audit Bill, councils will be able to appoint their own auditors, taking over the responsibility for tendering audit contracts. The process will be supervised by the National Audit Office Financial Reporting Council, which will also produce a small number of value for money reports. 

Smaller parish councils with an annual turnover below £25,000 will no longer be subject to external audit and will instead be subject to new transparency requirements. 

The average total saving per year per local body is estimated to be just over £150,000 by 2019-20, although the costs of procurement are difficult to predict, according to the impact assessment.

Pickles said: “Today’s draft Bill will recast local audit – making councils more accountable to local citizens, stripping out unnecessary bureaucratic costs, and letting councils appoint their own auditors from an open, competitive market.

“By replacing the centralised Audit Commission with a more streamlined and transparent system we will save the public purse £650m over the next five years. But we are determined to ensure that councils continue to deliver the high quality service their residents deserve, which is why our new framework will uphold the tough standards of auditing we expect.”

Chairman of the LGA’s improvement board, Peter Fleming, said: “Allowing town halls to appoint their own auditors is positive and a step in the right direction. However, while there is a need for appropriate safeguards, we have concerns that the proposals for independent audit panels would be bureaucratic and we would ask the government to look again at this.

“Audit makes an important contribution to providing reassurance about how public money is spent. However, the new system must be based on allowing local people to hold town halls to account, rather than through central prescription and red tape.”

The draft Bill is now out for consultation until August 31.

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