THE ICAEW has waded into an argument over the future of public interest reporting, calling on government to ensure firms can recoup fees from these investigations.
Changes to the way local authorities are audited and how they pay for those audits have caused the ICAEW to urge government to rethink funding methods.
The government has dismantled its Audit Commission by farming out local authority audits to private firms, which has led to the introduction of a draft Local Audit Bill.
However, as part of that draft bill public interest reports (PIRs), which can hold local authorities accountable for financial decisions, could be lost because of the future pricing structure.
Previously, all local authorities were audited by the Audit Commission, which often hired firms to undertake PIRs. Critics argue firms will be less inclined to investigate local authorities for fear that charging for PIRs could see them lose future audit contracts.
Vernon Soare (pictured), ICAEW’s executive director, professional standards, who was giving evidence to an parliamentary ad hoc committee on the draft Local Audit Bill, said: “Currently when auditors carry out extra work required for a Public Interest Report, the Audit Commission provides support and indemnifies them for the extra work.
“Under the new regime, the responsibility will now fall to the firms themselves with recovery of their costs ultimately through a court process if the audited organisation does not pay.
Marcine Waterman, controller of audit at the Audit Commission, argued at a parliamentary committee debate at the end of October that a mechanism should be included in the draft Local Audit Bill to ensure firms can recover costs for PIRs.
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The select committee heard that GT had not met up with the BHS pension scheme advisers or trustees, but had done so with Deloitte, Arcadia’s pension advisers