Mario Christodoulou, Accountancy Age, Monday 16 August 2010 at 13:27:00

ACCA warns of consquences of scrapping Audit Commission

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

ACCA, which represents 13,000 workers in the public sector, believes thegovernment decision to axe the commission will prove costly in the long term andwill 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 thefinances of local government.

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

Gillian Fawcett, ACCA?s head of public sector, said there needs to be aconsistent structure in the future to avoid a ?postcode lottery? in publicaudit.

?While much of the Audit Commission?s work is already contracted out to largeprivate sector audit firms, the experienced team at the commission ensures thereis a consistency in approach, something which will be much more difficult toachieve in future", she said.

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

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

?The consequence is that the smaller local operators are excluded at an earlystage, leaving only larger national contractors, who are arguably moreexpensive, to do the work.?

Anthony Harris, director at accounting firm Critchleys, worries that smallerlocal firm may be ?low-balled? as private auditors fill the gap left by theaudit commission.

?When matters come up to district and particularly county council level, Ihave a fear that if the work is ?privatised?, local government officers willfind themselves being ?low-balled? by top four or top 12 firms,? he said.

Further reading:

AuditCommission to be scrapped, government confirms