Pickles publishes draft audit Bill

Communities secretary Eric Pickles today published draft legislation to localise council audit arrangements, promising to save £650m over the next five years.

According to the impact assessment of the consultation on the draft local audit Bill, which continues until 31 August, total savings from the audit overhaul will amount to more than £1.1bn.

In addition to abolishing the Audit Commission and transferring its assets and functions to other bodies, other main provisions of the Bill include a requirement on local public bodies to appoint external auditors on the advice of an independent audit panel.

Spending watchdog the National Audit Office (NAO) would assume responsibility for setting a high level code of audit practice and be given powers to carry out value for money studies in the local authority sector – and rights to access necessary information.

Also detailed among the provisions is the establishment of a new regulatory framework to oversee how local audit services are provided, to be overseen by a Financial Reporting Council and professional accounting bodies.

Mr Pickles said the draft Bill permitting councils to appoint their own auditors would make the sector more accountable and remove 'unnecessary bureaucratic costs.

'By replacing the centralised Audit Commission with a more streamlined and transparent system we will save the public purse £650 million over the next five years,' said Mr Pickles.

Mr Pickles added: '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.'

Cllr Peter Fleming, chairman of the Local Government Association’s improvement board, said ‘allowing town halls to appoint their own auditors is positive and a step in the right direction’.

However, Cllr Fleming said council chiefs are concerned independent audit panels would be bureaucratic, and asked ministers to review these plans. ‘The new system must be based on allowing local people to hold town halls to account, rather than through central prescription and red tape,” he said.

Ian Carruthers, policy and technical director at the Chartered Institute of Public Finance and Accountancy (CIPFA), said: 'The draft bill provides welcome clarity on the overall shape of the future local public audit regime, as well as the role of qualified professionals within this.'