LGA nets £85m Audit Commission contracts, CIPFA to run counter-fraud

The Audit Commission’s £85m contracts for audit services are to be managed from March 2015 by an independent, private company to be created by the Local Government Association, it has been announced.

The counter-fraud arm of the Commission will also transfer at the same time to a new body set up by the Chartered Institute of Public Finance and Accountancy.

The Local Audit and Accountability Act 2014 requires that a transitional body, responsible for overseeing the Commission’s current external audit contracts with private audit firms for both principal audited bodies and smaller bodies, is set up until the new audit framework comes fully into force.

At that point – which according to the Commisssion could be “as early as 2017” – local public bodies will be required to appoint their own auditors and manage their contracts individually or collectively.

The Commission’s Value for Money (VFM) Profiles tool, which brings together data about the cost, performance and activity of local councils and fire authorities, will be part of the transfer to the LGA’s new body.

Jeremy Newman, Audit Commission chairman, described the DCLG’s decision to choose the LGA as a “bold move”.

He said: “They will create a new private company in order to establish the necessary independence. This company will be taking on the Commission’s statutory functions, which are required to manage the audit contracts of nearly 11,000 public organisations, spanning local authorities, police, health, fire bodies and rescue services, as well as smaller bodies such as parish councils.

“The private company will need to maintain the integrity of the contracts, manage conflicts of interest and resolve any disputes between auditors and audited bodies. Given that all these aspects must to be operational from day one, there is a lot to be done and this is an ambitious timetable.”

Audit Commission Controller of Audit, Marcine Waterman, said: “The transfer means that the public sector will retain access to specialist skills, in which the Audit Commission and its staff have invested considerable time and resource. We will work with the LGA, and the new independent private company, to optimise the retention of staff and minimise any disruption.”

CIPFA said its new ‘Counter Fraud Centre’ would build on the Commission’s existing work, such as the annual Protecting the Public Purse report and its tailored fraud briefings for local authorities.

The Chartered Institute will also continue the survey of fraud and corruption in England, although it will not have the same statutory powers as the Audit Commission to require public bodies to take part.

On this initiative, Newman said: “The annual Fraud and Corruption Survey has provided a backbone for the Audit Commission’s ‘Protecting the Public Purse’ series for the past six years. Last year, all of England’s principal public bodies receiving the survey completed it, providing a unique and comprehensive view of fraud and emerging frauds against local government.

“We are pleased that the valuable work of the Commission and our specialist counter-fraud staff are transferring to CIPFA. We wish them all well for the future and are pleased that their important work will continue.”