Audit Commission hits out at burden of proposed audit regulations for parishes

July 21, 2014

The Government’s proposed new auditing arrangements will “place a much greater burden on parish councils and their clerks than the Government intends”, the Audit Commission has warned.

In its response to the Department for Communities and Local Government’s consultation on local audit regulations, the watchdog argued:

Under the draft proposals external checks would not happen routinely for local authorities spending less than £25,000 a year. “However these bodies will have to appoint an auditor to enable local people to contact an auditor with questions or objections. This will inevitably cost them more than the current arrangements” (where all local authorities have their financial documents subjected to review by an external auditor appointed by the Audit Commission). The latter “is at no cost for most councils spending less than £25,000 a year and has a maximum cost to them of £100 a year”. The new arrangements are expected to start in 2017.
Regulations making provision for all procurement possibilities (exempt opted-out authorities, exempt opted-in authorities, non-exempt opted-in authorities, and non-exempt opted-out authorities) are “close to impenetrable”. Administering these new arrangements would also “require any collective procurement body to hold and keep up to date large amounts of information about all 10,000 or so small bodies across the country”.

Jeremy Newman, the Audit Commission’s chairman, said: “We need to find a way to overcome some fundamental practical problems about how smaller local authorities, such as parish councils, should be held to account. The Audit Commission is not challenging the Government’s policy intentions; however we believe it is time for the Government to rethink how its goals can be achieved.

“The Government wants high quality and cost-effective assurance that promotes transparency. It is trying to reduce the burden on authorities, but its proposals will do the opposite. The Government needs to either keep the current assurance arrangements in place, or accept that the small spending levels of these bodies, coupled with their closeness to their communities, means that external audit is disproportionate.”

Newman added: “The Government is seeking to reduce the burden by ending audit for many authorities, while keeping the right of all local tax payers to approach an auditor to challenge their authority’s spending. This has created complex regulations that are difficult to understand. The Government should create simple regulations suitable for busy local councillors and part-time clerks. This requires the Government to be clearer about what it really values.”

The watchdog’s submission also covered the Government’s proposals for collective procurement for larger authorities, accounts and audit regulations, and transparency provisions applying to Internal Drainage Boards.

The response from the Audit Commission, which is due to close in March next year, can be viewed here.