PracticeAuditFirms to judge public services

Firms to judge public services

Firms working in the public sector are to be handed a radical new role after the Audit Commission decided they should be allowed to make 'value for money' judgements as part of its revamped inspection regime.

Link: Full interview: Steve Bundred

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.

Related Articles

Is predictive analytics the end of the annual audit?

Audit Is predictive analytics the end of the annual audit?

4d Martin Herron, MHA MacIntyre Hudson
Auditors ‘in the dock’ over Carillion as report calls for Big Four break-up

Audit Auditors ‘in the dock’ over Carillion as report calls for Big Four break-up

1w Emma Smith, Managing Editor
PCAOB sanctions former Deloitte Turkey CEOs over altered documents

Audit PCAOB sanctions former Deloitte Turkey CEOs over altered documents

2w Alia Shoaib, Reporter
KPMG South Africa to review past audit work amid fresh scandal

Audit KPMG South Africa to review past audit work amid fresh scandal

1m Alia Shoaib, Reporter
FRC introduces £10m sanctions for Big Four firms

Audit FRC introduces £10m sanctions for Big Four firms

2m Alia Shoaib, Reporter
Ukraine’s PrivatBank files $3bn claim against PwC

Audit Ukraine’s PrivatBank files $3bn claim against PwC

2m Alia Shoaib, Reporter
Grant Thornton to exit FTSE 350 audit market, citing Big Four dominance

Audit Grant Thornton to exit FTSE 350 audit market, citing Big Four dominance

2m Alia Shoaib, Reporter
Big Four dominate FTSE 250 audit market in Q1 rankings

Audit Big Four dominate FTSE 250 audit market in Q1 rankings

3m Alia Shoaib, Reporter