PracticeConsultingAudit Commission goes on private partner hunt

Audit Commission goes on private partner hunt

After two high-profile audit withdrawals, the Commission has reviewed appointment procedures. Damian Wild reports

The Audit Commission has pledged to free up its procedure forreviewed procedure. appointing private-sector auditors following the recent high profile withdrawals of Binder Hamlyn and Ernst & Young from local government and health markets.

Launching its annual report last week, Roger Brooke, chairman of the commission, said the process to appoint auditors will be simplified. Central to this will be easier entry to and exit from audit markets.

Peter Wilkinson, the commission’s director of corporate resources, said he hoped to name firms new to the market. ‘That is what we are trying to achieve,’ he said. ‘None have come on board yet.’

The commission maintained there had been strong competition to fill the gaps left by Binders and E&Y and Brooke said there was no reason why the market should not continue to be attractive to the private sector. ‘It is a good, stable business. It doesn’t decline in periods of recession,’ he said.

The process of liberalisation could take ‘three to five years’, according to the commission’s annual report in an ‘incremental not radical’ process.

Wilkinson said the review would extend to the audit services provided to public bodies and the client base.

‘We are going to look at whether we can cut up the market in different ways,’ he said. ‘In order to keep the market fresh you have got to have some entries and exits.’

Wilkinson acknowledged downward pressure on fees – which are 17% lower than the financial sector – had made the market less attractive to private firms. ‘Inevitably it’s going to squeeze the market,’ he said.

Assessment of local auditors’ performance continued to rise – 83% in 1996/1997 from 73% the year before. ‘We have been successful at pushing up quality and driving down price,’ Wilkinson said.

COUNCIL REGULATION

The Audit Commission has admitted it is concerned that council regulation could become overwhelming – just days before ministers are expected to expand its role in policing local authorities.

The long-awaited white paper on local government was due this week and is expected to propose a new commission-run standards inspectorate to monitor the government’s best-value regime. Councils are reviewed from specialist inspectorates.

Last week, commission chairman Roger Brooke conceded that councils could soon be over-regulated and the commission may look to co-ordinate ‘these various regulatory regimes and remove overlap,’ he said.

‘If you could imagine an Ofsted inspection of a local education authority descending in the same month as the social services inspectorate, plus, under the new best-value regime, an inspection of other services, initiated by us, all hitting the council at the same time, it would make life impossible.’

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