Big firms scoop up Audit Commission work

by Kevin Reed

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05 Mar 2012

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Grant Thornton sign

LARGE FIRMS have scooped up the majority of the local government contracts up for grabs with the closure of the Audit Commission's practice.

Grant Thornton was the biggest winner, picking up four contracts worth £41.3m a year. The five-year contracts cover the north-west, west Midlands, London (south) Surrey & Kent, and the south-west.

KPMG won three contracts, for Humberside & Yorkshire, east Midlands, and London (north). The contracts are worth £23.1m

Ernst & Young won two contracts worth £20m a year, covering two contract areas in Eastern and South East; and

DA Partnership, set up as a spinoff by Audit Commission head of practice Gareth Davies, won just one contract - for the north-east and Yorkshire - worth £5m a year. As a result of failing to win other contracts, the partnership cannot launch as an employee-owned independent firm. Instead it becomes a wholly-owned subsidiary of Mazars, trading as Mazars DA.

The contracts cover 70% of the Audit Commission's work, with the appointments starting from 1 September. Audit Commission staff will transfer to the new suppliers on 31 October. The contract values are notional, based on proposed scale fees for 2012/2013.

The deals are expected to save public bodies more than £30m a year, with the commission looking to save £19m a year through internal efficiencies.

Chairman of the Audit Commission, Michael O'Higgins, said: "This procurement has been the result of a rigorous assessment of each bidder against published cost and quality criteria, and will mean significant audit fee savings for local councils, NHS trusts and other local bodies.

"Its outcome will promote a skilled, well-resourced and diverse public audit market. Only the Audit Commission could have delivered this, given its statutory powers and unique audit procurement arrangements."

The other 30% of local government audits are already undertaken by the private sector, by: Deloitte; Grant Thornton; KPMG; PwC; and PKF. These contracts run until 2016/2017.

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