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Following the passage of the Local Audit and Accountability Act, the National Audit Office has welcomed its role in the new arrangements for the audit of local public bodies.

The Act introduces a new responsibility for the Comptroller and Auditor General, the head of the NAO: to prepare and maintain the Code of Audit Practice setting out the framework within which auditors of local bodies carry out their work.

With the Act now in place, the NAO will continue to work with the Department for Communities and Local Government, the Audit Commission and other stakeholders to help ensure that the transition to the new audit framework is carried through as effectively as possible.

Some challenges remain for the Government, particularly that of making arrangements for the oversight of the Audit Commission’s contracts, which run at least two years beyond March 2015, when the Commission is scheduled to be abolished.

For its part, the NAO has been working closely with the Commission for some time on a plan for taking on the Code of Audit Practice, and to facilitate the transfer of staff where required.

The provisions of the Act clarify the Comptroller and Auditor General’s power to undertake examinations regarding the economy, efficiency and effectiveness with which local public bodies have used their resources.  The NAO has already started to augment its programme of work with a small number of additional examinations providing a more ‘end to end’ view of the use of public funds – helping to inform Parliament while adding value at the local level. The next such report, scheduled for publication in early 2014, will look at the challenges of delivering value for money in adult social care, one of the most significant services delivered by local authorities.

The NAO has recently recruited Sue Higgins as the member of the leadership team with responsibility for its local government work.  Sue, who has extensive experience of working in both local and central government, will be leading on the development of the NAO’s forward programme of value for money work with local government, working closely with local government representative bodies and other stakeholders.   

Sue Higgins, Executive Leader, Local Government, said today:

“The National Audit Office welcomes the passage of the Local Audit and Accountability Act. The challenge now for all those with a role to play in the new local audit framework is to manage the transition to the new arrangements, and government will need to ensure they work in practice.

“We are committed to building upon the strong foundation provided by the Audit Commission in taking on our new responsibilities.  We are already experienced in testing value for money across the whole of the public sector, national and local. We will continue to develop that programme as we take on our new local audit role.”

Notes for Editors

1.    The Local Audit and Accountability Act 2014 provides for the abolition of the Audit Commission, and the introduction of new arrangements for the audit of local public bodies such as local authorities, clinical commissioning groups, and police and crime commissioners.  The key elements of the Act as regards audit arrangements are as follows:

•    The Audit Commission will be abolished and the Audit Commission Act 1998 will be repealed;

•    Local bodies will be able to appoint their own auditors, once existing audit contracts have run their course (contracts currently run until 2017, and will be overseen by a transitional body once the Audit Commission has been abolished); 

•    To help underpin auditor independence, local audit appointments will be overseen by an Independent Auditor Panel.  The Act also enables collective audit procurement should local bodies wish to join together in this way;

•    The Comptroller and Auditor General (C&AG) will take on from the Audit Commission the role of preparing the Code of Audit Practice which sets out the framework within which local auditors carry out their work.  The C&AG will also be empowered to produce guidance to local auditors to which they should have regard;

•    Arrangements for the monitoring of audit quality will align with those in place for audits of private sector companies carried out under the Companies Act, with the Secretary of State for Communities and Local Government delegating oversight of this work to the Financial Reporting Council;

•    The Secretary of State for Communities and Local Government is empowered to set out, by regulation, alternative arrangements for the appointment of auditors to “smaller bodies” (i.e. parish and town councils and other smaller local public bodies).

2.    The National Audit Office scrutinises public spending for Parliament and is independent of government. The Comptroller and Auditor General (C&AG), Amyas Morse, is an Officer of the House of Commons and leads the NAO, which employs some 860 staff. The C&AG certifies the accounts of all government departments and many other public sector bodies. He has statutory authority to examine and report to Parliament on whether departments and the bodies they fund have used their resources efficiently, effectively, and with economy. Our studies evaluate the value for money of public spending, nationally and locally. Our recommendations and reports on good practice help government improve public services, and our work led to audited savings of almost £1.2 billion in 2012.