The decision will open up a significant area of work for firms and see them expand their role from giving the all-clear to accounts to having their say on whether taxpayers’ money has been well spent.
While private firms undertake around 30% of public sector audits on behalf of the commission, including local-government authorities, health trusts and housing bodies, they have so far been kept away from inspection.
But following a comprehensive review of the commission’s work, and several successful trials with private firms, it has opened up the value-for-money inspection process to outsiders.
‘We’re only at the moment working out how we might approach it, but we’ve had a small number of pilots where we’ve had inspections undertaken by firms,’ said commission chief executive Steve Bundred. ‘We’ve been very happy with the results and it’s given us confidence that we can create a mixed market in inspection.’
He added that, although the commission was currently reviewing the level of audit work tendered to the profession, the body remained ‘absolutely committed to there being a mixed market in audit’.
The commission is playing its cards close to its chest over how many inspections will be offered to private firms, but the process is expected to begin in the next year and will initially look at areas such as environment, housing, leisure and culture.
The big accounting firms are also keeping quiet about what could be a potentially lucrative market for them. In 2003-04 the commission spent £105m on inspections. By comparison, £125.6m was used to fund public sector audit.
Whereas a public sector audit looks at the internal arrangements for how a service is delivered and what arrangements are in place for providing a service, inspections look at service quality and prospects for improvement.
This involves finding out whether customers’ needs are being met, whether information is online and in sufficient languages. The inspections are also a crucial part of the local government assessment process.
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