BATTLE LINES have been drawn in a recent parliamentary committee debate on proposed changes to a local audit draft bill.
Voices were raised right from the outset between the committee and experts over the potential pitfalls within the bill.
Marcine Waterman, controller of audit at the Audit Commission, argued there were three main risks and gaps: the absence of NHS representation, a lack of accountability in audit, and the need to strengthen safeguards to auditor independence.
“One of the results of the draft bill is the fragmentation of the audit regime,” she argued.
All at the committee agreed that perhaps there should be more NHS representation. However, the other points were heatedly debated during the rest of the session.
Regarding accountability, Waterman said the bill offers no platform in which an individual could check all audits across local authorities, which was the case at the commission.
The Audit Commission’s website allowed all public sector audits to be viewed. It was argued local authorities should have to publish these reports, although no definitive answer was given.
One of the chairmen said he would be very “surprised” if there is no legal obligation to publish the audits in a public place, and it would need to be rectified.
Waterman, leading the debate, also raised the issue that there was a danger public interest reports (PIRs) could be lost, reducing accountability in local authorities.
It was suggested that the private sector would be less inclined to produce these reports as it would be apprehensive of losing an audit contract.
She recommended a mechanism to be included in the bill to ensure an audit firm could recover costs of producing a report and pursuing a PIR investigation.
To strengthen auditor independence, Waterman suggested an audit committee make recommendations on auditor choice, with the decision to appoint to include both the committee and the local authority.
Currently, the bill only states that the committee must recommend the removal of an auditor, not the appointment.
Following the dismantlement of the Audit Commission, a draft local audit bill was created as part of a new audit regime where local public bodies appoint their own auditors.
A select committee met to discuss possible changes to the draft and to consider whether the draft bill will meet government objectives to create an efficient and transparent local audit system. It included appropriate safeguards for the integrity of the audit system, as well as to ensure accountability to local people.
The event was chaired by Margaret Hodge (pictured), a Labour MP for Barking and chairwoman of the Public Accounts Committee, with eight other MPs including Richard Bacon (Conservative) and Valerie Vaz (Labour) also sitting on the committee.
Evidence was given by experts such as Michael O’Higgins, ex-chairman of the Audit Commission, and Jessica Crowe, executive director for the Centre for Public Scrutiny.
The next debate on the issue is due to take place on 6 November.
An improved internal audit code is "vital' to developing the City's risk management, former shadow chancellor Ed Balls has said
Internal auditors are earn more than external consulting auditors, analysis by salary-bench marking site Emolument.com has found
ICAS and the FRC have called for action to prevent a potential audit skills gap in the future, with the launch of a new report