Kevin Reed and Mario Christodoulou, Accountancy Age, Thursday 19 August 2010 at 00:00:00

The demise of the Audit Commission could spark a feeding frenzy for thebody's work between the big firms


It?s difficult to fully understand the ramifications of the coalitiongovernment?s decision to scrap the Audit Commission so soon after the event, butwhat is already clear is that the accounting industry is set for upheaval ? andopportunities ? as part of that process.

The commission audits around 200bn in funds across 11,000 local publicbodies, and leans on the Big Four firms to carry out some of its work.

There have already been suggestions that scrapping the body, from 2012, toallow local decision-making over who undertakes the work, will be a boon for thetop firms. Some advisers have suggested the move will allow the Big Four andother large firms to ?low-ball? to win work, which would fly against thecoalition?s plans to open up government contracts to smaller firms.

?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 12 firms,? said Critchleys directorAnthony Harris.

Conversely, others believe the biggest firms will be able to carve up themarket and charge a premium for the pleasure. Will Abbott, partner withGloucestershire-based firm Randall and Payne, said: ?My experience is that localauthorities have a tendency to set arbitrary thresholds when it comes totendering for any type of work.?

The Big Four were reticent to talk about an existing client, but PwC?sgovernment and public sector assurance leader Paul Woolston said the firmwelcomed the opportunity to ?respond to a more open market?. It ?would want towork closely with the Audit Commission to ensure an orderly transition, were weto take on any of its current clients.?

In our view

The issue covered here, on what the Big Four will charge individual councilsfor work, is just the tip of the iceberg. For example, will we see an influx ofpublic sector accountants into the top 20 firms to cover this free market of?public? audit work?