CIPFA AUDIT CONFERENCE: STANDARDS - Demand for realism

Unrealistic and impractical standards in public-sector auditing will affect the quality and scope of work, a senior member of the profession said this week, writes Kathy Greene.

Michael Dallas, public-service audit partner at Coopers & Lybrand, called for an urgent review of current audit systems to bridge the gulf between the cost of audits and the quality of service expected.

Addressing the CIPFA annual audit conference in Blackpool, Dallas predicted chaos in local government audits if the review is not undertaken before the introduction of Best Value.

‘The workload of auditors is expected to increase with the implementation of Best Value, but local authorities need to review their budgets if they expect the scope of work to increase or improve.

‘To meet expectations there is a cost and it may be higher than what is currently being paid. One way to bridge the gap is to re-examine current standards,’ he said.

Dallas also said the increasingly litigious climate would widen the gulf, as auditors sought to limit their risks.

‘The fear of litigation or of a loss of reputation is preventing auditors from becoming fully involved in both internal and external audits. Local authorities need to address the issues such as proportionate liability and the limitation of liability of auditors,’ he said.

‘Local government auditors need the creation of an environment where they are not driven to adopt a defensive and legalistic attitude.’

Dallas called for a more symmetrical relationship between public and private-sector auditing. ‘More remains to be done to harmonise the standards which apply to different audits in different sectors, he said.

Proof that inconsistencies exist can been seen from the consultation draft published last month by the Accounting Practice Board on providing assurance on internal control, which is significantly different to expectations in the Audit Commission’s code of practice, said Dallas.