ON AUDITING PARISH COUNCILS - Simplifying audit requirements.
The Audit Commission, of which I used to be a member, have recently produced a discussion document about the future if audits of parish, town and community councils.
These concerns are generally very small (average spend £26,000 pa and half less than £5,000 pa) and it seems the present audit regime satisfies nobody; not the accountants themselves, nor those that do the audit, nor the commission nor, probably, the public. Value for money it isn’t.
The discussion document sets out a number of possible options for change of which the main ones involve raising the audit fee, relaxing accounts and audit regulations, introducing ‘lighter touch’ audit regimes, having a look at who does the audit, and improving regulatory and support rules independent of the audit function.
The discussion document is a useful one, especially in that it compares and contrasts the regime for these small councils, the regime for small companies, charities and churches.
But while it lays out a menu of options, it doesn’t home in enough on the core issue. This is that for these bodies, generally speaking, audit as understood by the standard setters, even cut down for the smaller organisation, is an expensive and unnecessary luxury.
One wouldn’t argue some form of external examination is not needed for small councils, charities and churches where public money and particular legal requirements are involved. The question is what this examination should be, and who should carry it out. The answer is easy.
What’s needed is a drastic simplification of the audit requirements to reduce them to a basic test of where the money has gone walk about, shifting examination to a three or even five year, or possibly random basis. And employing small local firms, or independent unqualified individuals, to give a certificate.
PricewaterhouseCoopers apparently sparked off the debate by saying they wanted to get out of local council audits; the only surprise is that they were ever in there at all.
Such a simple conclusion is not one all accountants would support, to put it mildly. This makes it important that non-accountants should speak out. DETR should take a lead.
Best value is the policy and the present audit regime does not provide it. Common sense should take over. There is too much audit, here and everywhere.
Incidentally it’s good to see the Audit Commission producing a document about audit. One of the interesting things about this body, which overseas the audit of something like #100bn of public money, is it has virtually no qualified accountants, though they are now desperately advertising.
Talk about a pub with beer.