PracticeAuditBenefits of scrapping Audit Commission may be short lived: ACCA

Benefits of scrapping Audit Commission may be short lived: ACCA

ACCA warns of consquences of scrapping Audit Commission

The decision to scrap the Audit Commission will lead to inconsistency and
uncertainty in local government reporting, a chief accounting body has warned.

ACCA, which represents 13,000 workers in the public sector, believes the
government decision to axe the commission will prove costly in the long term and
will make it harder to make comparisons between local government accounts.

Staff learned it would be scrapped via an email on Friday. The move will save
£50m and cost 2,000 jobs, but critics say it will erode consistency in the
finances of local government.

The commission, which audits about £200bn in funds spent by 11,000 local
public bodies, will be replaced by a combination of volunteers and private
auditors.

Gillian Fawcett, ACCA’s head of public sector, said there needs to be a
consistent structure in the future to avoid a “postcode lottery” in public
audit.

“While much of the Audit Commission’s work is already contracted out to large
private sector audit firms, the experienced team at the commission ensures there
is a consistency in approach, something which will be much more difficult to
achieve in future”, she said.

Will Abbott, partner with Gloucestershire-based firm Randall and Payne, said
the decision to axe the body may favour the larger accounting firms.

“My experience is that local authorities have a tendency to set arbitrary
thresholds when it comes to tendering for any type of work,” he said.

“The consequence is that the smaller local operators are excluded at an early
stage, leaving only larger national contractors, who are arguably more
expensive, to do the work.”

Anthony Harris, director at accounting firm Critchleys, worries that smaller
local firm may be “low-balled” as private auditors fill the gap left by the
audit commission.

“When matters come up to district and particularly county council level, I
have a fear that if the work is ‘privatised’, local government officers will
find themselves being ‘low-balled’ by top four or top 12 firms,” he said.

Further reading:

Audit
Commission to be scrapped, government confirms

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