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05 Mar 2012
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.
Further reading
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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Visitor comments Add your comment
As predicted
Yes, just as many observers though this process has simply created a powerful cartel of suppliers with little encouragement for smaller firms to enter the market(as promised). The only new entrant to the market are Ernst & Young, who (last time I checked) are quite a large firm. An absolute shambles; it does confirm one thing - that it was right to abolish the Audit Commission; they couldn't run a bath never mind a tendering process.
Posted by: D.Smith, 05 Mar 2012 | 16:14
make the audit firms accountable to the public
How right D Smith is. The Audit Commission is a complete waste of space!
A little while ago I looked at the Audit Commission’s work at the lowest level of public bodies (i.e Parish & Town Councils)
The results proved alarming
Currently I am well into a study into the Hampshire Police Authority who have lost over £11m by buying a building in June 2008 that they did not want and have not used
And the District Auditor has signed off that the Authority is giving value for money
These reports are available at the bottom of the Strategic Planning page of www.llcsinternational.com. There are no fees or recording to the free download.
Providing that the public has recourse to make the external auditors accountable the abolition of the Audit Commission is long overdue
Posted by: Roger Lewis, 08 Mar 2012 | 14:21
End of an era
I wouldn't lay the blame of the contract decisions solely at the Commission's feet. There was DCLG involvement in the panel making the decisions. It's pretty clear to me the government were pulling the strings. The savings figures are misleading, and based on a different audit model. This is just the next stage in a personal decision by Eric Pickles, which has resulted in the end of 168 years of the District Audit Service. Allowing themselves to be subsumed into the Commission in 2002 was a bad move (not that they had any choice)
Posted by: Jason Palmer, 10 Mar 2012 | 07:24
From bad to worse
The Audit Commission going is no great loss but the end product where the monopoly of the biggest Audit firms is only further enhanced will not result in any improvements within Auditing. Indeed it is likely to make matters worse as they will only be in it for their own personal financial gain (as a business should)!
The Audit Commission should have been kept as an Independent Body just in a more practical and accountable form than it previously was.
With the new system there is even less recourse for the public as the Privately owned Audit firms now handling matters have no responsibility to the public at all.
Posted by: Vince, 13 Mar 2012 | 09:16
Public auditors
The UK experience of the public sector auditor is at odds with experiences in other countries. In South Africa the work of the public sector auditor is a source of reassurance for the public. Pity it's not the case elsewhere.
Posted by: Fred, 20 Jul 2012 | 08:29